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Don't Steal Money from Day Traders Before They Lose It

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Re: Don't Steal Money from Day Traders Before They Lose It

#101

Post by speedplane »

colechristensen wrote: post #94
speedplane wrote: post #83

Earlier quoted context omitted.

The only way you can consistently make money is by knowing things others do not (e.g., insider trading) or by taking advantage of structural problems or inefficiencies in the trading platform (e.g., high frequency trading). I do believe that insider trading is rampant. I've seen many occasions where a large corporate announcement sends a stock up or down, but hours before, you can see the price of the stock slowly sl…

Information asymmetry doesn't have to be on insider information.

> Information asymmetry doesn't have to be on insider information.

In theory, yes, in practice no.

Re: Don't Steal Money from Day Traders Before They Lose It

#102

Post by robk »

anonu wrote: post #25

I was a trader at a big bank for many years. The tools and access I had there put me in a different class of trader that very few other firms or individuals can attain. There is such information and technology asymmetry in this business - its not worth trying to day trade as an individual. Buy and hold forever... only way to invest.

What sorts of proprietary data?

Re: Don't Steal Money from Day Traders Before They Lose It

#103

Post by ajdlinux »

msmith10101 wrote: post #91
tedunangst wrote: post #57

Earlier quoted context omitted.

You use the numbers provided by your broker at the end of the year.

So the IRS has no way of validating these numbers (they do require brokers to provide the numbers these days)? Overall I'm just not buying that this story is true, in other words.

What makes you think the operators are giving correct numbers to the IRS, or that the IRS would necessarily detect something like that on a fairly small scale?

(I have no idea how any of this works, but I would assume that if they're willing to defraud their own customers they're probably not acting entirely above board on the associated tax paperwork either.)

Re: Don't Steal Money from Day Traders Before They Lose It

#104

Post by vlasev »

speedplane wrote: post #98
saosebastiao wrote: post #92

Earlier quoted context omitted.

> If your average trade lasts less than 5 minutes, then you can conceivably make money only if you can read 5 minutes into the future (not currently possible), or have tools that allow you get news/information faster than everyone else, analyze that information, and act on it, 5 minutes before everyone else. I can't perfectly read 5 minutes into the future, nor is it necessary. All that is necessary is to have a slig…

Okay, so you need to read 5 minutes into the future with some X% accuracy, where X is large enough to provide a return. You're still trying to read the future, if you could do that well, you could make money betting on coin flips.

If it's a temporarily biased coin, you can make some money off of it.

Re: Don't Steal Money from Day Traders Before They Lose It

#105

Post by vlasev »

saosebastiao wrote: post #66
toephu2 wrote: post #48

Earlier quoted context omitted.

You're an individual retail day trader? Come back to us in 10 years and lets see if you are still making money. Or rather lets see if you can beat the S&P 500 for 10 years straight.

Formula 1 cars probably couldn't even beat a Vespa in a 3000 mile endurance race. Does that mean f1 cars are slow? Does that mean Vespas are fast? Comparing returns between income-oriented day traders and compounding-orieted mutual funds is like comparing top speed between f1 cars and endurance cars. You can certainly do it, but you're not doing anything worthwhile with your time by doing so. My strategy has high ret…

If you reduce the Formula 1 car's performance by as little as 25%, you would be able to get a much much higher mileage. Those things are so optimized that they break down much faster and easier.

Re: Don't Steal Money from Day Traders Before They Lose It

#106

Post by luckman212 »

speedplane wrote: post #86

I don't day trade, I mostly keep my money in ETFs and other dumb securities. But every now and again, I see the market move in such a completely unreasonable way, most often hammering a stock on some bad, but not awful news. In these cases, I've made small gambles and bought the stock when it's low to see it recover every time. My sample size is small and I'm too conservative to bet the bank, but I haven't been wrong…

That "strategy" only works when markets are behaving irrationally, such as they have been for the last 10 years, where basically everything just goes up. If you tried that in 2000 (like I did) or 2008, you'd be quickly destroyed.

Re: Don't Steal Money from Day Traders Before They Lose It

#107

Post by skookumchuck »

sumedh wrote: post #93
speedplane wrote: post #86

I don't day trade, I mostly keep my money in ETFs and other dumb securities. But every now and again, I see the market move in such a completely unreasonable way, most often hammering a stock on some bad, but not awful news. In these cases, I've made small gambles and bought the stock when it's low to see it recover every time. My sample size is small and I'm too conservative to bet the bank, but I haven't been wrong…

> I'm too conservative to bet the bank, but I haven't been wrong yet. You are being cocky because you are dabbling with small money, when you play with big money, your emotions will immediate change and that is when you will make mistakes.

True enough. I've realized that my investment strategy would be completely different if I was using Monopoly money, and I'd probably have made 10x as much money.

Re: Don't Steal Money from Day Traders Before They Lose It

#108

Post by monadgonad »

speedplane wrote: post #98
saosebastiao wrote: post #92

Earlier quoted context omitted.

> If your average trade lasts less than 5 minutes, then you can conceivably make money only if you can read 5 minutes into the future (not currently possible), or have tools that allow you get news/information faster than everyone else, analyze that information, and act on it, 5 minutes before everyone else. I can't perfectly read 5 minutes into the future, nor is it necessary. All that is necessary is to have a slig…

Okay, so you need to read 5 minutes into the future with some X% accuracy, where X is large enough to provide a return. You're still trying to read the future, if you could do that well, you could make money betting on coin flips.

Estimating likely changes in the future based on current information is different from divining the outcome of a completely independent chance-based event.

Re: Don't Steal Money from Day Traders Before They Lose It

#109

Post by downandout »

sumedh wrote: post #93
speedplane wrote: post #86

I don't day trade, I mostly keep my money in ETFs and other dumb securities. But every now and again, I see the market move in such a completely unreasonable way, most often hammering a stock on some bad, but not awful news. In these cases, I've made small gambles and bought the stock when it's low to see it recover every time. My sample size is small and I'm too conservative to bet the bank, but I haven't been wrong…

> I'm too conservative to bet the bank, but I haven't been wrong yet. You are being cocky because you are dabbling with small money, when you play with big money, your emotions will immediate change and that is when you will make mistakes.

>and that is when you will make mistakes.

While some trades using this method may not work out, the idea that he must make mistakes simply because he is risking larger amounts is not at all a given. Some people have no sensitivity to such things.

I know a couple of advantage gamblers that sometimes play $10,000+/hand on blackjack, and it might as well be $5 to them - not because they are super wealthy, but because they know they have an advantage, and understand that the math will work out over the long term. Whether they win or lose on a given hand, or wind up winning or losing on a given day, is meaningless to them and they rarely get emotional about it. The same certainly applies to many stock traders.

Re: Don't Steal Money from Day Traders Before They Lose It

#110

Post by closeparen »

luckman212 wrote: post #106
speedplane wrote: post #86

I don't day trade, I mostly keep my money in ETFs and other dumb securities. But every now and again, I see the market move in such a completely unreasonable way, most often hammering a stock on some bad, but not awful news. In these cases, I've made small gambles and bought the stock when it's low to see it recover every time. My sample size is small and I'm too conservative to bet the bank, but I haven't been wrong…

That "strategy" only works when markets are behaving irrationally, such as they have been for the last 10 years, where basically everything just goes up. If you tried that in 2000 (like I did) or 2008, you'd be quickly destroyed.

The business cycle is a thing. Passive investing means expecting that, and not selling at the bottom. (For short-term liquidity needs, you shouldn't be in the stock market at all).
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