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Day Trading for a Living?

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Re: Day Trading for a Living?

#261

Post by Retric »

teawrecks wrote: post #118
georgespencer wrote: post #84

Earlier quoted context omitted.

Wouldn't you need a basis for believing that day trading Brazilian futures has unique properties not present in other markets to assert this? E.g. the volatility or spread is significantly larger than European futures or the information flow is more tightly de/regulated etc. Is there a basis for believing this?

Making an assumption about the population based on a small non-random sample is usually the belief that needs to be justified by evidence.

20,000 people is not a small sample. Sampling bias is still an issue with large populations, but generally significantly less important.

Re: Day Trading for a Living?

#262

Post by nickles »

mattkrause wrote: post #245
nickles wrote: post #234

Earlier quoted context omitted.

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 unprofitabl…

> Isn't that example nearly zero-sum (ignoring the spread)?

But ignoring the spread is incorrect, and nearly zero sum is not the same as zero-sum. The spread is the fee that market makers earn for a service they provide. You're also not considering other participants. The price changes you're talking about could be driven entirely by end users, or they could be driven by speculators, arbitrageurs, and others who are providing separate services (price discovery, liquidity, balance sheet, arbitrage, etc.) and are also capturing some of the value.

> futures trading is unprofitable[0], except for the market makers

If you are explicitly excluding participants who profit by providing financial services to markets, then you are begging the question.

> Obviously, it doesn't capture non-cash considerations. Starbucks and the farmer both might be thrilled with reduced risk.

Transferring risk can definitely provide economic value (insurance policies exist for this reason), but it should be noted that there are other advantages as well. These futures transactions can help Starbucks manage inventory without needing to maintain large stockpiles of perishable or reduce the volatility of prices charged to consumers.

Re: Day Trading for a Living?

#263

Post by Macross8299 »

JackFr wrote: post #163
melling wrote: post #61

Earlier quoted context omitted.

I’ve noticed a lot of successful traders trade commodities versus equities. What makes commodities easier to trade? Ed Seykota has been doing it for decades: https://en.m.wikipedia.org/wiki/Ed_Seykota

No inside information on commodities. (However trading on embargoed government press releases is illegal. Though rather than kidnapping Clarence Beeks on the train, you can just interview the Florida farmers yourself.)

There is definitely inside information on commodities, it's just rare that insider trading on commodities is prosecuted.

You would definitely have an advantage in trading oil/gas futures if you had access to ExxonMobil's seismic exploration reports, for example.

Re: Day Trading for a Living?

#264

Post by vpEfljFL »

osrec wrote: post #119
codeplea wrote: post #100

Earlier quoted context omitted.

5k into 5.3k is 6%. You can get much more than that in the long run by just putting it in an index fund. Why bother day trading?

Property is not a great option in the UK currently due to rather high stamp duty (i.e. property tax, payable by the buyer) - if stamp duty were lower, I would probably put my money in more property. Equities were a reasonable second choice - my portfolio is fairly diversified now, so I am not making trades on a daily basis but I do keep an eye on it all the time. I probably re-balance my holding about once a week. In…

Why equity though? Could you please elaborate why you don't like bonds.

Because for me stocks look like a hot potato game. Literally the whole reasoning behind price is you can sell it higher to someone later.

The price is not supported by anything (book value is 10 to 100 times lower) and you don't get anything because liabilities come first on overvalued assets.

Re: Day Trading for a Living?

#265

Post by waylandsmithers »

agumonkey wrote: post #246
pintxo wrote: post #162

Earlier quoted context omitted.

> 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 t…

Right, but the point was, day trading isn't a "job" -- a day on the tough job you described would never end with you needing to write a check to your employer.

Re: Day Trading for a Living?

#266

Post by tialaramex »

ummonk wrote: post #250
superfrank wrote: post #243

Earlier quoted context omitted.

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.

The nominal dealing on a future's market will be on some paper that entitles the holder to the commodity delivery at a future date. When you buy oil futures, you are NOT buying oil since the oil doesn't exist (well I guess it exists underground somewhere, maybe), you are buying a contract to deliver crude oil and that needs to really exist. If the contracts don't exist that's a Bucket Shop.

It matters when things go badly wrong, because with a Bucket Shop you're left penniless, it was all imaginary anyway. Whereas with a futures market even if the exchange blows up those are real contracts you can sell to somebody who wants the commodity you were trading in, at worst a mild inconvenience and a small haircut to your final profit.

Re: Day Trading for a Living?

#267

Post by hash872 »

pembrook wrote: post #252
hash872 wrote: post #180

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

Goldman Sachs isn't profitable because of prop trading. They charge fees for services. It's that simple.

So then why do they trade at all then? I'm not arguing for trading, I'm just curious.

It seems like the existence of 'trader' as a job at all of these financial institutions kind of disproves EMH if you have enough market data

Re: Day Trading for a Living?

#268

Post by glitchc »

osrec wrote: post #83

I've done ok trading stocks and FX, probably enough to live off. There is a caveat however; you need to have a sizeable portfolio to begin with. Otherwise, the risks you'll need to take are simply too large. If you think you're going to turn £5k into £500k in a year, forget it! But turning £5k into £5.3k is certainly doable. Scale that initial portfolio to £5m, and you can take home £300k with relative ease in a good…

I prefer property. 5% long-term annual returns, and you get a rent cheque every month. Best combination of short-term income and long-term equity that I've seen anywhere. Condos in downtown hubs of major cities are essentially recession-proof.

Re: Day Trading for a Living?

#270

Post by jiscariot »

WalterBright wrote: post #253
ummonk wrote: post #239

Earlier quoted context omitted.

Well, I’ve seen a few people blogging about how they make money by blogging about how to make money.

There's a classic one where one places a classified ad that says: "How to make money at home! Send XXX $10 for information." Send them $10, and you get a letter that says: "Place a classified ad that says: How to make money at home! Send XXX $10 for information."

This was probably 30 years ago--make $100's "Stuffing envelopes."
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