Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Day Trading for a Living?

papers.ssrn.com

Post reply on HN
Print view View original

271–280 of 377 posts

Re: Day Trading for a Living?

#271

Post by Legogris »

mumblemumble wrote: post #153
hn_throwaway_99 wrote: post #115

Earlier quoted context omitted.

Yes, it certainly looks like what would be dictated by statistics with random chance that eventually reverts to a slightly negative mean. In the short term it's not that unusual to flip a coin and get 5 heads in a row, but the more you throw the closer to a 50-50 split you'll see.

I'd also be very interested to see what would happened, hypothetically, if everyone just stopped trading after some fixed number of hours, held that position until the point when they decided to give up trading, and then liquidated it. My hypothesis is that their average returns would end up being much higher than the returns they realized by day trading that whole time, due to less money being lost to fees.

ICO bagholders disagree

Re: Day Trading for a Living?

#272

Post by norswap »

georgespencer wrote: post #84
DSingularity wrote: post #51

Earlier quoted context omitted.

Because that is not a representative sampling of the day trader population. Assuming the techniques of the study were sound, at best we can conclude whether or not day trading Brazilian futures is a sustainably profitable undertaking.

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?

As per the top comment at the moment of writing, most of these day traders were likely to be clueless people roped in by scammy "day trading courses".

Re: Day Trading for a Living?

#273

Post by dbsights »

mattkrause wrote: post #228
nickles wrote: post #99

Earlier quoted context omitted.

This is a common misconception. Futures contracts are very often used for nonspeculative purposes (e.g. Starbucks locking in prices for buying milk or farmers locking in prices to sell wheat). This is a form of insurance. While the end users are ultimately may net with each other, the intermediaries who take risk matching these parties charge a fee (the spread) for doing so. Why can't the end users trade with each ot…

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…

All trades are zero-sum. For any price change in a stock, the money made by one party is equal to the money that could have been made by the other. Given the choice to either buy now or buy later, if the price appreciates, buying later is a loss and if it falls, it is a gain.

So in your example with the biotech stock, the person who loses the corresponding $100 is whoever sold it to you prior to the news event. If they had not made that trade, they would be $100 ahead, and if you had not made the trade, you would be $100 behind. Every transaction has a winner and a loser when considered over a period of time.

Re: Day Trading for a Living?

#274

Post by pembrook »

hash872 wrote: post #267
pembrook wrote: post #252

Earlier quoted context omitted.

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

They don't.

After the Volcker rule the big banks had to close their prop trading groups: https://en.wikipedia.org/wiki/Proprietary_trading

The idea that investment banks are filled with human "traders" is Hollywood nonsense.

Most trading activity (and even filling of retail order flow) is now done by quant-driven funds.

Re: Day Trading for a Living?

#275

Post by f00zz »

Something that's probably not mentioned in the article is that it's really easy to get into day trading in Brazil. I think I read somewhere that in the US you need a US$ 25k account to day trade; in Brazil with a US$ 50 account you're in the game. There are many zero-fee brokers (though those are a recent development, I don't remember those in 2013), and capital gain taxes are 20%.

In fact I'm surprised that day trading in Brazil is not more popular than it already is. It's basically legalized gambling. I do remote work as a software developer in Brazil and I've been playing a bit with options swing trading on the side (which is even cheaper than day trading); I don't plan to make a living out of it, but it can be fun (and a bit addictive).

Re: Day Trading for a Living?

#276

Post by hellodetroit »

neves wrote: post #247

Is it just me who thinks really weird the idea of "working" without producing anything?

Think of a used car dealership. They buy cars and resell them later for (usually) a higher price. Are they not producing anything?

As the sibling comment pointed, participants in a market are producing and consuming liquidity.

Re: Day Trading for a Living?

#277

Post by justinmeiners »

inerte wrote: post #195
kolbe wrote: post #187

Earlier quoted context omitted.

If you think everything is just random, you should educate yourself the impact of superior information sources or technology on producing returns. Are you telling me someone who runs the fastest market data feed between Chicago and New Jersey, doing arbitrages between S&P futures and S&P ETFs is just getting lucky over and over again, and it will eventually be revealed that they just won 30,000 coin tosses in a row?

Correct. There are numerous studies showing professional traders (individual or companies) are in fact no better than randomly picking stocks. Just the sheer number of players and variables will eventually produce winners, then we will justify why it happened in the first place.

Think about how the underlying market works though. Is success or failure actually a random process? Or are cause and effect relationships happening? Isn't it possible to identify traits of a good business that others aren't recognizing.

Re: Day Trading for a Living?

#278

Post by esmi »

ivalm wrote: post #249
RandomBacon wrote: post #224

Earlier quoted context omitted.

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).

I know nothing of Medallion, but I'm curious if only private insiders can invest, how do you know they're not just lying about how much they return?

Re: Day Trading for a Living?

#279

Post by hash872 »

pembrook wrote: post #274
hash872 wrote: post #267

Earlier quoted context omitted.

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

They don't. After the Volcker rule the big banks had to close their prop trading groups: https://en.wikipedia.org/wiki/Proprietary_trading The idea that investment banks are filled with human "traders" is Hollywood nonsense. Most trading activity (and even filling of retail order flow) is now done by quant-driven funds.

According to LinkedIn there are 573 people with the job title 'trader' at Goldman Sachs. I'm scanning through the list now- titles like Fixed Income Trader, Mortgage Trader, Rates Trader, Oil Trader, Equity Sales Trader, FX Trader, Emerging Markets Trader, Base Metals Trader, Interest Rates Trader, Investment Grade Bond Trader, Equity Derivatives Trader, Commodity Trader.... I found all of these on the first page of results (25 people)

Re: Day Trading for a Living?

#280

Post by Drdrdrq »

spir wrote: post #241
amluto wrote: post #144

Earlier quoted context omitted.

> 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…

Betting could very well be the killer feature for Ethereum.
Post reply on HN