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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

#111

Post by cm2187 »

speedplane wrote: post #83
qwtel wrote: post #32

Earlier quoted context omitted.

I find it hard to believe there’s any day trader using any kind of information making a consistent profit. Isn’t everybody just dabbling around hoping to be in the 50% that outperform by chance? i’ve read about ed thorp pioneering statistical arbitrage in the 80s (?) which would fit the bill of “consistent returns”, but I doubt that there is any of that left close to 50 years later. I’m wondering what all these quant…

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…

Could also be confirmation bias. If you see the stock going up before a good news you notice it and think this is insider dealing. If you see the stock going down you don’t notice it because it is just a random movement.

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

#112

Post by neilharbinger »

speedplane wrote: post #85
saosebastiao wrote: post #69

Earlier quoted context omitted.

I trade futures and currencies. Short positions happen about as frequently as long positions. My average trade lasts less than 5 minutes. Macro trends don't really affect my strategy outside of the fact that I tend to watch Fed and ECB news announcements as a way of predicting short term volatility.

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. Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading.…

"Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading."

You'd think so. It turns out that there is plenty of news out there at the right time. Thing is, no-one has the time to continuously check the top 50 or so online news sources to see if their individual interests are being mentioned.

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

#113

Post by nickthemagicman »

speedplane wrote: post #83
qwtel wrote: post #32

Earlier quoted context omitted.

I find it hard to believe there’s any day trader using any kind of information making a consistent profit. Isn’t everybody just dabbling around hoping to be in the 50% that outperform by chance? i’ve read about ed thorp pioneering statistical arbitrage in the 80s (?) which would fit the bill of “consistent returns”, but I doubt that there is any of that left close to 50 years later. I’m wondering what all these quant…

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…

There's an article recently where a hacker hacked a bunch of journalists and was selling that information to investors on wall street.

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

#114

Post by nickthemagicman »

saosebastiao wrote: post #92
speedplane wrote: post #85

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. Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading.…

> 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…

Seems like you can automate those technical analysis algorithms that you have and just sit back and rake in the cash

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

#115

Post by tsycho »

To play Devil’s Advocate: How is this different from being a market maker? I am presuming that if the customer actually made money, these guys would pay them from their own pocket.

Or alternately, assuming zero or low enough transaction costs, if these guys just took the opposite position of their customers for each trade (also known as hedging) in the market, then wouldn't the net positions be exactly the same?

Basically, the crime here seems "technical" or some sort of "you lied to me", it's not that people actually got different returns than what their trades entailed.

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

#116

Post by sahila »

tsycho wrote: post #115

To play Devil’s Advocate: How is this different from being a market maker? I am presuming that if the customer actually made money, these guys would pay them from their own pocket. Or alternately, assuming zero or low enough transaction costs, if these guys just took the opposite position of their customers for each trade (also known as hedging) in the market, then wouldn't the net positions be exactly the same? Basi…

Taxes would certainly play out differently.

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

#117

Post by reacweb »

darksaints wrote: post #42
qwtel wrote: post #32

Earlier quoted context omitted.

I find it hard to believe there’s any day trader using any kind of information making a consistent profit. Isn’t everybody just dabbling around hoping to be in the 50% that outperform by chance? i’ve read about ed thorp pioneering statistical arbitrage in the 80s (?) which would fit the bill of “consistent returns”, but I doubt that there is any of that left close to 50 years later. I’m wondering what all these quant…

FWIW, I'm day trading and I'm making consistent returns, well above the rates of most mutual funds and hedge funds. The caveat is what most fund managers would call capacity. My trading strategy can't scale without severe cuts in those returns. It's extremely easy to buy 10 contracts and hold for 5 ticks. I've never experienced slippage at all. Operating at mutual fund sizes, I would be trading at volumes that would…

Sometimes a strategy becomes reliably successful, the people start to notice, then it stops working. Do not be lazzy. The only way to earn money in trading is to work hard to gather information and to analyse it. This gives you an advantage on all the gamblers.

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

#118

Post by cardmagic »

tsycho wrote: post #115

To play Devil’s Advocate: How is this different from being a market maker? I am presuming that if the customer actually made money, these guys would pay them from their own pocket. Or alternately, assuming zero or low enough transaction costs, if these guys just took the opposite position of their customers for each trade (also known as hedging) in the market, then wouldn't the net positions be exactly the same? Basi…

It's this presumption that's wrong: "I am presuming that if the customer actually made money, these guys would pay them from their own pocket."

In a corporation, the owners enjoy limited liability, so should someone actually makes money, they can file for bankruptcy and never have to pay out.

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

#119

Post by Lost_BiomedE »

tsycho wrote: post #115

To play Devil’s Advocate: How is this different from being a market maker? I am presuming that if the customer actually made money, these guys would pay them from their own pocket. Or alternately, assuming zero or low enough transaction costs, if these guys just took the opposite position of their customers for each trade (also known as hedging) in the market, then wouldn't the net positions be exactly the same? Basi…

If they are doing this without disclosure, they are adding counterparty risk without consent. Just because they didn't blow up does not mean they can't. It doesn't even have to be due to your trade but someone else's. There have been single trades that have blown up international banks. Rare, and probably irrelevant here, but a point for perspective.

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

#120

Post by 88 »

speedplane wrote: post #87
Timmah wrote: post #82

Earlier quoted context omitted.

Yeah irresponsible people do. But it's not necessary to bet the farm to make a living. Although it's certainly easier to eke a living off a $600k bankroll than a $50k

Many hedge funds and active traders do this every day. Maybe they're irresponsible, but they're the norm.

It’s different when it’s someone else’s farm.
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