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Day Trading for a Living?

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Re: Day Trading for a Living?

#241

Post by spir »

amluto wrote: post #144
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…

> One interesting thing: they normally sell the course with a private platform to trade the stocks included. I believe that they use that platform to collect data and operate against the traders that use that platform. They know the strategy that they are going to use (because they teach them), so it is easy to operate against. You’re assuming a complex strategy is needed when a simple one can easily suffice: simply…

  To improve this, the broker can throw out the best
  performing clients, since they might genuinely
  know what they’re doing.
This practice is pervasive in sports betting. It's a common practice to ban winners, especially in the US and UK.

https://augur.net is an Ethereum-based betting market that will help traders/bettors avoid these kinds of malicious practices. Augur v2 is being developed now, you can expect it to be Really Cool by about April 2020. Millions of dollars will be wagered on Augur for the 2020 election.

Re: Day Trading for a Living?

#242

Post by ummonk »

ChuckMcM wrote: post #213
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…

Welcome to 1999 :-) Or China 2010 or so. It almost feels like there are people who look at these events, figure out who made the money, and then work to recreate them in a new environment where they can be in the position to make all the money. My experience from the dot com day trading frenzy was that there were three kinds of investors; Those that had no clue and just followed a bunch of investment "tip" sources an…

Yeah, I’m in the second group. I use a diversity of buy and hold strategies (picking individual stocks based on fundamentals or personal brand experience, buying certain sector ETFs, etc). The efficient market hypothesis index ETF promoters think I can’t beat the market, but if they’re right it doesn’t matter, since I make sure to keep my transaction costs low and only use low expense ratio ETFs, and I have a diversified portfolio so I’ll just end up matching the market on average.

Re: Day Trading for a Living?

#243

Post by superfrank »

ummonk wrote: post #236
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)

I have a hard time telling the difference between the “bucket shop” described in the lede there and a modern options trading market. I guess the difference is that in a market third parties eat the spread by market making whereas in a bucket shop the market itself profits off the spread?

I'm not sure if it's the only difference, but according to the wikipedia definition, in a bucket shop there is "no transfer or delivery of the stock or commodities nominally dealt in", which would be one difference from the option market.

Re: Day Trading for a Living?

#244

Post by outime »

mawburn wrote: post #40
outime wrote: post #32

Putting aside the potential quality issues of the study, the headline here in HN isn't accurate and made a lot of people comment about how wrong it is. The study doesn't literally say "impossible" but "virtually impossible" and they do say that a very small percentage was able to make about $310 a day which is about ~110k a year.

> which is about ~110k a year $310 * 5 days a week * 52 weeks a year = $80,600

Yeah you’re right, I just multiplied by 7 days. Then again you don’t work 5 days every single week (depends of the location) but 80k is definitely closer to the actual figure.

Re: Day Trading for a Living?

#245

Post by mattkrause »

nickles wrote: post #234
mattkrause wrote: post #228

Earlier quoted context omitted.

I get that the insurance has a value of its own, but what about the trading of futures specifically? Suppose I buy a biotech stock at $10/share. They make a breakthrough, and the stock shoots up to $110/share. I make +$100/share, but no one has lost the corresponding $100. Suppose I agree to buy an ounce of silver from you for $20 in January. If silver is $21 then, you effectively lose a dollar , since you need to ch…

Suppose a farmer wants to lock in the price of milk produced the farmer's dairy. The farmer wants to sell futures and sees a market of 18.30 / 18.50. These prices are probably being shown by a market maker. The farmer sells the futures to the market maker at 18.30. A few minutes later, Starbucks would like to buy the same contracts, to lock in its costs for the next month. Starbucks buys at 18.50. These two participa…

Isn't that example nearly zero-sum (ignoring the spread)? If the spot price for milk goes down later, Starbucks loses a bit of money. If it goes up, the farmer has effectively "paid" for an advance.

My point is that futures are by construction zero-sum (ignoring spreads) or negative sum (including them). Thus, any analysis that averages across market participants' P&L will conclude that futures trading is unprofitable[0], except for the market makers. This is true regardless of the savvy of market participants.

[0] Obviously, it doesn't capture non-cash considerations. Starbucks and the farmer both might be thrilled with reduced risk. But paper doesn't consider those factors either.

Re: Day Trading for a Living?

#246

Post by agumonkey »

pintxo wrote: post #162
wtvanhest wrote: post #29

If you take Jan 1, 2013 to Dec 31st, 2015, the Brazillian stock market did very, very poorly. That probably explains why it was nearly impossible since most traders are probably long, not short the market. So even taking 1 day positions in stocks, still on average over 3 years will experience signifigant downward price pressure. That said, the fact that the market is bad, is just randomness and shows one of the major…

> Its probably the hardest way to make money in the world Just no. Certainly it's not easy. But the hardest? I'd say there is a long list of occupations which most people would consider harder on various dimensions.

I just left a 4am part time delivery job. The constant interruption and sitting then walking then sitting was hurting me more than daily half marathon or power tools injuries + full time car repair work. And it's slightly below minimum wage. So your health is torn, and you're not even able to plan long term because you earn so few. I can quit (it was a planned interim thing) but my colleagues can not. And they have two jobs.

Since that, I consider any job with a desk a god damn luxury. Bonus point: you have your own toilets.

Re: Day Trading for a Living?

#248

Post by pembrook »

Macross8299 wrote: post #209
cardimart wrote: post #126

The results are fairly obvious to anyone who has read "A Random Walk Down Wall Street". Day traders rely on technical analysis which is the equivalent of astrology in the financial sector.

"Random Walk Down Wall Street" is somewhat outdated and a lot of the evidence from behavioural finance doesn't really support its central thesis. It's more dogma than anything.

The central thesis of short term market movements (say day to day or week to week or month to month) being a random walk is about 99.7% correct.

This is a statistical reality, you can literally crunch the numbers! Behavioral finance has nothing to do with it.

Re: Day Trading for a Living?

#249

Post by ivalm »

RandomBacon wrote: post #224
mruts wrote: post #199

Earlier quoted context omitted.

You have absolutely no idea what you’re talking about. RenTec is the most profitable money making machine the world has ever seen (and likely will see). RenTec’s Medallion fund has an annualized return for over 30 years in excess of 35% net of fees. I’m not sure what their management fee is, but their performance fee is like 45%. This means they are making like 80% returns YoY before fees. I suspect you don’t work in…

I'm not in the industry, but I wonder: did people have the same kind of reverence for Madoff?

Madoff was a ponzi scheme that relied on new investment (since it was simple pyramid). Medallion fund limits outside investment (so there is no outside source of money) and has operated for many decades (ie more money was withdrawn from it than put in).

Re: Day Trading for a Living?

#250

Post by ummonk »

superfrank wrote: post #243
ummonk wrote: post #236

Earlier quoted context omitted.

I have a hard time telling the difference between the “bucket shop” described in the lede there and a modern options trading market. I guess the difference is that in a market third parties eat the spread by market making whereas in a bucket shop the market itself profits off the spread?

I'm not sure if it's the only difference, but according to the wikipedia definition, in a bucket shop there is "no transfer or delivery of the stock or commodities nominally dealt in", which would be one difference from the option market.

I don’t think most commodities traders actually transfer or take delivery of the commodities though. Sure there are some firms that actually are engaged in the commodities business, and use the futures markets to offset price risk, but most traders in the commodities markets are basically just betting on commodities prices.
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