Day Trading for a Living? • Hacker News Board

Re: Day Trading for a Living?

#171

Post by cshimmin » Wed, Sep 11, 2019, 4:53 PM UTC

AYBABTME wrote: post #145

In the whole paper, there's no mention of whether the market itself was growing or shrinking. This makes the results kind of hard to trust. Assume the market lost money for these dates, then it would follow that most traders on that market lost money as well. The results should at least be controlled for the overall rate of change of the market.

I don't think that's how day trading is supposed to work. Successful day traders are supposed to make money whichever way the market is moving, by taking short positions when the market is going down and long when the market is up. Buy-and-hold investors (quite the opposite of day traders) are the ones who make money when the market as a whole goes up.

Re: Day Trading for a Living?

#172

Post by linsomniac » Wed, Sep 11, 2019, 4:55 PM UTC

"The easiest way to make a small fortune in the stock market is to start with a large one."

Re: Day Trading for a Living?

#173

Post by inerte » Wed, Sep 11, 2019, 4:56 PM UTC

melling wrote: post #81

For anyone interested in a great story about a world class mathematician who built a company that has used algorithms to beat the market for the last few decades, James Simons has an impressive record: https://www.ted.com/talks/jim_simons_a_rare_interview_with_t... https://m.youtube.com/watch?v=QNznD9hMEh0 https://en.m.wikipedia.org/wiki/Jim_Simons_(mathematician) One other thing, the Simons Foundation funds Quanta M…

Someone will always beat the market, because that's what we're looking for.

I think it was on "Thinking Fast and Slow" that I read it's pointless to analyze the stock market winners, since it's a random process. Imagine there are 30 million entities that own stocks in the US - individual, companies, funds, etc... If on a given year half of them did better than average (with some rounding liberty):

  1st year: 15M better than average
  2nd year: 7.5M better than average
  3: 3.25M
  4: 1.6M
  5: 800k
  6: 400k
  7: 200k
  8: 100k
  9: 50k
  10: 25k

And so on... after 20 years, probably 25 traders will have beaten the market for 20 years straight. Next year, same thing, 25 traders will have beaten the market, and so on. In the US, there's always someone who has beaten the market over the last few decades - there's nothing special about them. Randomly picking stocks would give you the same end result. But since we're storytellers, we build an explanation and go with it.

Re: Day Trading for a Living?

#174

Post by Fr0styMatt88 » Wed, Sep 11, 2019, 4:57 PM UTC

debatem1 wrote: post #165

alexhutcheson wrote: post #161

Earlier quoted context omitted.

A business using this approach is called a Bucket Shop - it's both fairly well-known and explicitly illegal in most places: https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)

Interesting, thanks for the link. I wish there were some comprehensive list or taxonomy on these kinds of scams.

There was a really interesting talk I saw a few years back that dealt with this sort of thing. Very much worth watching:

https://www.youtube.com/watch?v=L7G0OfJUON8

Re: Day Trading for a Living?

#175

Post by hellodetroit » Wed, Sep 11, 2019, 4:59 PM UTC

dav1app wrote: post #117

They have a reason to make that article: there is a lot of companies fooling the Brazilian people over this. I'm a Brazilian software developer for the financial market. I also made some financial courses on the same university that the authors. Brazilian stock exchange market has exploded in the last years and most of my friends decided to 'work' as traders. None of them with prior knowledge or experience in the mar…

Hey. Brazilian here too. How can I get in touch?

Re: Day Trading for a Living?

#176

Post by kolbe » Wed, Sep 11, 2019, 4:59 PM UTC

In the time frame tested, Brazil's equity markets fell about 60%. I'm sure more than just 'day traders' failed to make money.

Re: Day Trading for a Living?

#177

Post by kolbe » Wed, Sep 11, 2019, 5:02 PM UTC

Kranar wrote: post #102

melling wrote: post #81

For anyone interested in a great story about a world class mathematician who built a company that has used algorithms to beat the market for the last few decades, James Simons has an impressive record: https://www.ted.com/talks/jim_simons_a_rare_interview_with_t... https://m.youtube.com/watch?v=QNznD9hMEh0 https://en.m.wikipedia.org/wiki/Jim_Simons_(mathematician) One other thing, the Simons Foundation funds Quanta M…

Renaissance Technologies did not use algorithms to beat the market... they used tax schemes to do so: https://www.bloomberg.com/news/articles/2019-04-10/renaissan... When you factor in the money they saved from dodging taxes and how they managed to compound the growth on that money, their returns end up being no more impressive than any other hedge fund. Even if it turns out that what they did wasn't illegal, the bul…

> When you factor in the money they saved from dodging taxes and how they managed to compound the growth on that money, their returns end up being no more impressive than any other hedge fund.

That's a bold claim that you should be prepared to defend. If not, you should remove it.

Re: Day Trading for a Living?

#178

Post by short_sells_poo » Wed, Sep 11, 2019, 5:02 PM UTC

nradov wrote: post #111

elephant_7 wrote: post #91

Earlier quoted context omitted.

Swing trading with baskets as opposed to daytrading seems to be a better way to go according to historical performance, for example https://www.elastic.co/blog/generating-and-visualizing-alpha...

Anything that worked consistently yesterday will no longer work tomorrow as the HFT's arbitrage that market inefficiency away. That's one of the reasons why even extensive back testing isn't a reliable indicator that a trading strategy will be successful.

HFTs don't arbitrage the single person day trader because those guys are are like a mouse farting in a hurricane. There is no point trying to identify and scalp someone who trades at most some $ millions a day, unless the person is doing it on really swampy stocks with no liquidity. Even then, the capacity in those markets for HFTs is also extremely limited.

HFTs will target big insitutional traders who have to shift a billion dollars at rebalancing time in a single day.

Even that is a dying business today because they themselves have been arbitraged away to a degree.

Re: Day Trading for a Living?

#179

Post by newfangle » Wed, Sep 11, 2019, 5:03 PM UTC

codingslave wrote: post #27

Day trading seems similar to online poker, where 98% of players are loosing players.

As a poker player this is exactly what i was thinking. Poker is probably more winnable though because you arent competing against super computers with ai built by a team of highly paid mathematicians.

Re: Day Trading for a Living?

#180

Post by hash872 » Wed, Sep 11, 2019, 5:03 PM UTC

While I agree that day trading anything is an extremely poor idea- why is trading by banks/hedge funds/Goldman Sachs etc. consistently profitable? (Or if isn't profitable, why do they do it?) Is it just the massive informational advantage that they have? I'm not advocating for trading per se (I certainly don't do it!)- just curious about how large financial institutions presumably turn trading profits in light of EMH