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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

#251

Post by tlynchpin »

froindt wrote: post #188
tomp wrote: post #183

Earlier quoted context omitted.

The problem with that is that it could be insider information (or, at least, it isn't obviously not insider information, the way info about the serial numbers from iPhones that anyone could buy is public information).

The gist I've read in the past is that basically as long as it's not obtained illegally (e.g. breaking in and stealing) and there's no benefit to the person providing the information, it's not insider trading. Matt Levine writes on the topic pretty regularly. Here's an example with a number of interesting situations. www.businesslive.co.za/amp/rdm/business/2018-02-01-matt-levine-the-fine-line-between-insider-trading-…

"pork bellies..."

This is famously the Eddie Murphy rule - it was a crime to steal the briefcase, but not to trade on the knowledge gained from the contents of said briefcase.

iirc 'Trading Places' is on netflix, and Planet Money[0] did an entertaining episode about this.

[0] https://www.npr.org/sections/money/2013/07/09/200401407/epis...

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

#252

Post by toomanybeersies »

kgwgk wrote: post #210
toomanybeersies wrote: post #21

Earlier quoted context omitted.

IG will offer me, here in Australia, 5% margin on shares (20x leverage), 0.5% margin on forex (200x leverage), 0.5% on indices, and form 0.7-4% on commodities [1]. I set up a demo account a while back, and it's pretty impressive the amount of money you can quickly make (and lose) with CFDs. It was possible on a $30,000 capital to make (or lose) over $1000 per day. I'm a pretty risk averse guy, and also can't be bothe…

> It was possible on a $30,000 capital to make (or lose) over $1000 per day. Maybe there is a typo in your example? Making or losing 3.3% in one day does not seem that impresive...

I was trading while I was still at work doing my real job, so I wasn't putting 100% of my attention to it.

3.3% daily (if you could consistently make a profit) is a very good return, think about how fast that compounds. Most savings accounts aren't even 3.3% per annum.

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

#253

Post by jliptzin »

moate wrote: post #247
jliptzin wrote: post #241

Earlier quoted context omitted.

What he describes isn't gambling though, it's a very detailed and tedious list of tasks that are apparently necessary to succeed.

>What he describes isn't gambling though... That's like saying that having a very complex system for playing blackjack to have an advantage over the house isn't gambling. My definition of gambling is "any event in which money is bet on the outcome of an event in which the user does not have 100% perfect knowledge". If you're an insider trader, you're not gambling. If you're Joe-average day trader, you're a gambler. B…

Well you framed it in the context of an adrenaline junky. If someone has a specific system they're tediously following, expecting a certain regular profit at regular time intervals, I don't think that's an adrenaline pumping endeavor, that's more like a job.

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

#254

Post by tlight »

mabbo wrote: post #209
H1Supreme wrote: post #191

Earlier quoted context omitted.

> Hands off the wheel, don't think about it, don't mess with it I'm the same way. I put money in, buy more shares of whatever ETF I deem worthy, and outside of the occasional sell to fund another ETF purchase, I don't touch it. It fluctuates, but ultimately goes up. But, man oh man, do I fantasize about trading. When I look at the underlying stocks in an ETF that's doing good for me, and some of them have these massi…

I suspect I could do that successfully. What I do instead is give up 0.5% per year and let WealthSimple[0] do it for me. Automatic weekly payments from my bank account get invested in whatever way gets me closer to a balanced portfolio. It's a big cut for doing something I could do manually but I'm super lazy and it's a percentage of not much money anyways. [0] https://wealthsimple.com or https://wealthsimple.com/inv…

That's a pretty hefty fee when you compare relative to average annual returns. Plus the compounding nature of those costs is not insignificant. Jack Bogle (Vanguard) has a nice chapter demonstrating this in "The Little Book of Common Sense Investing".

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

#256

Post by cheez »

speedplane wrote: post #100
gonehome wrote: post #99

Earlier quoted context omitted.

That’s the real trick - convince others to give you a lot of money and when you win you get a big cut and when you lose it’s not your money and you just do something else. Seems to be the way all hedge funds operate, maybe can even charge membership fees too.

Right... most traders get big bonuses when they win, but if they lose, at worst they get fired. If you can win for a while and then get fired eventually, you'll still end up on top.

Many firms implement clawbacks for this instance

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

#257

Post by mabbo »

tlight wrote: post #254
mabbo wrote: post #209

Earlier quoted context omitted.

I suspect I could do that successfully. What I do instead is give up 0.5% per year and let WealthSimple[0] do it for me. Automatic weekly payments from my bank account get invested in whatever way gets me closer to a balanced portfolio. It's a big cut for doing something I could do manually but I'm super lazy and it's a percentage of not much money anyways. [0] https://wealthsimple.com or https://wealthsimple.com/inv…

That's a pretty hefty fee when you compare relative to average annual returns. Plus the compounding nature of those costs is not insignificant. Jack Bogle (Vanguard) has a nice chapter demonstrating this in "The Little Book of Common Sense Investing".

It is. But like I said, I'm really lazy, haha. It works out to a few hundred dollars per year for me, which I'm willing to pay.

There's also discounts for referrals which helps lower it.

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

#258

Post by grkvlt »

akanet wrote: post #8

This is so interesting - one wonders if this is strictly immoral. I propose this thought experiment: What if there was a version of this fraudulent brokerage that conducted this behavior in the open? Let's say their policy is something like, "You trade for real under favorable commissions and margins. If we decide via internal algorithms that you are liable to lose money, we will instead pocket your trade and credit…

Dangerous. What happens when your incredibly clever internal algorithm decides a customer is liable to lose money and you pocket their cash, and the trade goes a huge amount the other way? The customer demands their 1000% profits, and sues you when you can't pay up.

Also, if you really had this super always correct algorithm, just use it to place short trades or options trades based on what it predicts across the market and sit back and rake in the cash.

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

#259

Post by moate »

jliptzin wrote: post #253
moate wrote: post #247

Earlier quoted context omitted.

>What he describes isn't gambling though... That's like saying that having a very complex system for playing blackjack to have an advantage over the house isn't gambling. My definition of gambling is "any event in which money is bet on the outcome of an event in which the user does not have 100% perfect knowledge". If you're an insider trader, you're not gambling. If you're Joe-average day trader, you're a gambler. B…

Well you framed it in the context of an adrenaline junky. If someone has a specific system they're tediously following, expecting a certain regular profit at regular time intervals, I don't think that's an adrenaline pumping endeavor, that's more like a job.

I framed it as 3 different, possibly unrelated causes that could be contributing. We'll just chalk this up to "communicating on the internet can be hard" and say it was a misunderstanding.

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

#260

Post by toephu2 »

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…

and how long have you been doing this?

I doubt longer than 5 years profitably.

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