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Are You Trading or Gambling?

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Re: Are You Trading or Gambling?

#221

Post by bredren »

jw1224 wrote: post #211
hourislate wrote: post #186

Earlier quoted context omitted.

I believe "Market Wizards - Jack D. Schwager" highlights this. When speaking with some of the best and most successful traders in the markets, he found that the one common thing between them was "Game Perspective". They understood human emotion and had this desire to be the best at the game. The money/wealth was not the focus but the reward. If I remember correctly (read the book a couple of decades ago), most did no…

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

Sounds like a fun project. How much rope does your bot have? What did you write it in / what’s the deployed stack?

Re: Are You Trading or Gambling?

#222

Post by DSingularity »

NOTaCODERR wrote: post #61
DSingularity wrote: post #50

Earlier quoted context omitted.

GameStop price spiked because of a short squeeze. Short squeeze happened because hedgefunds over extended in their short positions. Do you think GameStop was shorted more than float because of games learned by cryptocurrency traders? That’s a stretch.

It’s really interesting seeing how HN can be so uninformed when the topic changes to their area of expertise, this thread is insightful and I’ll use the search button to get an understanding of how many morons are on this forum, this is great for me as I’m not a coder and thought this crowd was ‘smart’.

You are pretty limited if you don’t think that a short squeeze occurred when an activist investor brute forced his way onto a board by buying shares. Not to mention tens of thousands of teenagers taking the opposite end of the trade whether they knew it or not. The percent of shares sold short is verifiable. If you know know how the basic arithmetic necessary to realize how the short squeeze conditions were there then... who is unintelligent again?

Also who makes a throwaway to call HN stupid?

Re: Are You Trading or Gambling?

#223

Post by DSingularity »

BasedInfra wrote: post #59
DSingularity wrote: post #48

Earlier quoted context omitted.

You are wrong. HF traders front run to profit off individual trades by beating them to better prices. Day traders try to get an edge and exploit it to profit intraday by simply selling higher than they bought.

Front running is illegal. Its payment for order flow which is earning off the spread while also keep it tight and liquidity in the market.

So... basically front running ?? That’s what it seems like you are describing. They make money when they manage to get ahead and provide the liquidity needed to fill the orders. What am I missing?

Re: Are You Trading or Gambling?

#224

Post by optimiz3 »

chrchang523 wrote: post #219
jw1224 wrote: post #211

Earlier quoted context omitted.

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

I assume you've heard of index funds; out of curiosity, what makes that investing choice unappealing to you?

Cliche but the best investment is in yourself. The parents project was a form of this. Doesn't mean they don't also have a percent of portfolio in other asset classes like indexes.

Re: Are You Trading or Gambling?

#225

Post by DSingularity »

andi999 wrote: post #55
DSingularity wrote: post #48

Earlier quoted context omitted.

You are wrong. HF traders front run to profit off individual trades by beating them to better prices. Day traders try to get an edge and exploit it to profit intraday by simply selling higher than they bought.

And why would that be sustainably possible?

HF firms? Or pattern traders?

I’m not sure if my answer is good enough but the volatility is always there to exploit.

Re: Are You Trading or Gambling?

#226

Post by ryandrake »

hntrader wrote: post #178
ab111111111 wrote: post #104

"Gambling occurs when you have a poor understanding of risk, resulting in either (1) negative expected value bets, or (2) poor bet sizing that leads to ruin." Not so. Top poker players are still gambling, but have an excellent understanding of the risks. Their skill doesn't turn them into investors. Gambling is taking a high risk bet. Whether the expected pay off is high enough to justify the risk and whether you can…

"Top poker players are still gambling." This all hinges on how we define "gambling". A lot of top poker pros do not subscribe to the definition that includes them as gamblers, since colloquially "gambling" isn't always synonymous with the game itself but instead connotes reckless abandon and negative EV decision making.

Everyone has a different definition of gambling. I don't think it has to do with EV. Poker players can definitely achieve long-term, sustainable +EV, especially in rake-free games, because they are playing against other players and not a house. I still think it's gambling (along with the stock market), which to me simply means wagering something of value on a future event whose outcome is unknown.

Re: Are You Trading or Gambling?

#227

Post by optimiz3 »

vermilingua wrote: post #150
BelenusMordred wrote: post #144

Earlier quoted context omitted.

You forgot no share dilution in this offtopic tangent. Every stock out there can double their issuance if they want to.

As can bitcoin, and it would only take a soft fork.

It wouldn't be Bitcoin then; a change in rules creates a new coin. There would have to be incredibly strong incentives for people to accept a fork that would debase their assets.

Nit: it would also require a hard, not a soft fork.

Re: Are You Trading or Gambling?

#228

Post by throw0101a »

elygre wrote: post #13

Around 20 years ago, I had the opportunity to listen to a member of Nasdaq top management talk about the stock market. It's all a _tiny_ bit blurry, being a long time ago, but I remember how he talked about three different perspectives for investing in stock: First, the "company perspective". An investor would buy stock in a company they believed in. Maybe they had good products, or good management, or something else…

> Second, the "stock perspective". An investor would ignore the underlying company, but look at the stock itself. It didn't really matter if the company was doing good, but only if the stock itself had good potential. […]

> Finally, the "game perspective". An investor would not really care about the stock, but only about the behavior of other investors.

Well, momentum investing does give good returns over the market average:

> Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period.[1][2]

* https://en.wikipedia.org/wiki/Momentum_investing

* https://en.wikipedia.org/wiki/Momentum_(finance)

Basically:

> Every January 1st you look at the newspaper and find the best performing stocks of the prior year. You invest your money among those stocks and then go about your life for 12 months.

> On January 1st of the next year you check the newspaper again to find the best performing stocks over the past year. Any of your current holdings that are no longer on the list are sold and any newcomers are added to your portfolio.

> Repeat every year until rich.

* https://ofdollarsanddata.com/let-them-vote/

Excess returns are respectable:

> From 1927 to 2011, momentum had a monthly excess return of 1.75%, controlling for the Fama and French factors. Moreover, momentum is not just a US stock market anomaly. Momentum has been shown in European equities, emerging markets, country stock indices, industry portfolios, currency markets, commodities, and across asset classes.

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2041429

Re: Are You Trading or Gambling?

#229

Post by jw1224 »

chrchang523 wrote: post #219
jw1224 wrote: post #211

Earlier quoted context omitted.

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

I assume you've heard of index funds; out of curiosity, what makes that investing choice unappealing to you?

Oh yeah, I'm well aware there are probably far more sensible ways to invest my money. This sort of thing just really suits my personality type — it was an exciting idea, and I just ran with it.

I have my own business too, which needs investment every so often, so that'll always be the first priority for me.

Re: Are You Trading or Gambling?

#230

Post by Ntrails »

jw1224 wrote: post #211
hourislate wrote: post #186

Earlier quoted context omitted.

I believe "Market Wizards - Jack D. Schwager" highlights this. When speaking with some of the best and most successful traders in the markets, he found that the one common thing between them was "Game Perspective". They understood human emotion and had this desire to be the best at the game. The money/wealth was not the focus but the reward. If I remember correctly (read the book a couple of decades ago), most did no…

I’m a terrible trader, and had no shame in admitting it. The moment I saw red, I panicked and sold. If I had open orders on the market, I couldn’t concentrate on anything else. I found trading to be all-consuming, exhausting, and completely demoralising. But I also couldn’t bear to just let my hard-earned savings sit there, wasting away. A cup of coffee cost more than I was earning in annual interest! About 3 months…

Active investing is a negative sum game. Even if your broker is not directly charging you comms, they exist. So, the average trade is a loss.

However, I don't even think that is the main insight here. No single trade is really profitable. There is one conceptual entity, your portfolio. There is a benchmark (An index representing your investing universe).

As a straw man: Making 20% on every trade when you always have half your portfolio in cash feels good but is not a useful perspective.

Don't focus on the micro, analyse overall performance dispassionately vs an equivalent level of risk and discover whether you actually have an edge.

Good luck!

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