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Reddit’s profane, greedy traders are shaking up the stock market

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Re: Reddit’s profane, greedy traders are shaking up the stock market

#281

Post by conanbatt »

sjc33 wrote: post #211
safog wrote: post #23

Come on man, there's no where near enough volume there to move anything but the most low volume of stocks. All they trade in is meme stocks like TSLA, NFLX, MSFT, AAPL etc., and a few 100k on calls here or there won't budge the price in the slightest. On top of that, it's not even a P&D group, people there are just trading against each other, you have both bears and bulls and thetas. There's never been a concerted ef…

I wish people talked more about how Robinhood really enabled this sort of reckless speculation. Day trading on your smartphone was not really a "thing" pre-Robinhood, and then they came along with commission free trades on both stocks and options. So not only did they make it easier to day trade given no explicit fees for doing so, they also mainstreamed options trading, which is actually what most people in WSB do a…

The Gain/Loss posts on that sub are surreal. There's a guy that made 500k with 12k in two weeks with a series of daily bets that is off the charts.

Re: Reddit’s profane, greedy traders are shaking up the stock market

#282

Post by kgwgk »

hnews_account_1 wrote: post #254
zelly wrote: post #214

Earlier quoted context omitted.

There is no way Wall Street is using trades by retail traders as a signal (except maybe to counter-trade them). Also btw Wall Street can easily differentiate trades made by big players versus hordes of retail traders, because the banks and HFT firms are who executes the trades from retail brokerages. Retail brokerages like Robinhood don't have the authority to execute trades. They subcontract to a HFT firm who then u…

You contradicted your sentences. I do know Robinhood gives zero commission trades by selling order flow data to hft and market making hedge funds but I don't think those funds execute the orders themselves. The orders still go to brokerages I think (may be wrong about this) or just hit Prime Services from non hft hedge fund books. Either way, those hft firms definitely like retail order flow data. My guess is they're…

> selling order flow data to hft and market making hedge funds but I don't think those funds execute the orders themselves

The order flow data is worthless (because the orders come from uninformed traders) the value is in filling them without the risk of being shortchanged (because the orders come from uninformed traders).

Re: Reddit’s profane, greedy traders are shaking up the stock market

#283

Post by jasonmunro »

Sentiment analysis is not new, and I would imagine it's ancillary at best to a proper trading outfit. Well equipped market makers and HFTs make money on price movement (and exchange rebates). A flurry of out-of-the-money calls is unlikely to adjust an underlying equity price significantly enough to be statistically important.

Re: Reddit’s profane, greedy traders are shaking up the stock market

#285

Post by trengorilla »

geneticswag wrote: post #74
martin_bech wrote: post #66

Earlier quoted context omitted.

Nope his theory is that most trading is algos, and you can mess with algos, by doing crazy stuff.

Case and point, just five years ago Redditors figured that out that by upvoting a post of image of a potato titled "Gaming Console. If you upvote this potato it will show up on Google Images when people search for Gaming Console." It even borked their news algorithm - https://i.imgur.com/A0zLPSR.png

People have been doing this pretty much since Google existed.

Re: Reddit’s profane, greedy traders are shaking up the stock market

#286

Post by SifJar »

zelly wrote: post #219
mixedbit wrote: post #36

Earlier quoted context omitted.

Can they be bad at trading? https://xkcd.com/2270/

I wonder why this wouldn't work. If 90% of retail traders lose money, then why doesn't Etrade and Robinhood bet against its worst performing customers? Is there some law against this?

As I understand it, this is effectively what CFDs (Contracts For Difference) are, which seem to be offered by a lot of discount brokerages etc. (at least here in UK, not sure if CFDs exist in US)

A bet between trader & brokerage that the price will move a particular direction, with no actual trading or stock ownership occurring

https://www.investopedia.com/articles/stocks/09/trade-a-cfd....

EDIT: It occurs to me this may not be quite what you meant after all, but I think the end result is fairly similar

Re: Reddit’s profane, greedy traders are shaking up the stock market

#287

Post by zelly »

cameronh90 wrote: post #230
zelly wrote: post #219

Earlier quoted context omitted.

I wonder why this wouldn't work. If 90% of retail traders lose money, then why doesn't Etrade and Robinhood bet against its worst performing customers? Is there some law against this?

Consider that even if you're right 75% of the time, if you bet all your money each time, you're going to go broke pretty quickly. Their biggest losers are probably making essentially random bets in such a stupid way that they lose all their money.

The Kelly criterion provides the optimum bet size given the chance of winning. The adversarial brokerage could use the Kelly criterion and only make a wager commensurate with the likelihood of the trader's failure. It should be profitable. Suppose the brokerage just puts 5% of their cash toward this. It could be a nice profit center without risking everything.

Re: Reddit’s profane, greedy traders are shaking up the stock market

#288

Post by maayank »

AnotherGoodName wrote: post #29
safog wrote: post #23

Come on man, there's no where near enough volume there to move anything but the most low volume of stocks. All they trade in is meme stocks like TSLA, NFLX, MSFT, AAPL etc., and a few 100k on calls here or there won't budge the price in the slightest. On top of that, it's not even a P&D group, people there are just trading against each other, you have both bears and bulls and thetas. There's never been a concerted ef…

I have a theory that WSB are so bad at trading that they actually do manipulate stocks due to messing up every automated trading platform that assumes there'd be some logic to the trades being made. Someone's just bought a $1000 call option on a stock that's currently $400? Automated trading systems will probably raise alerts on that stock since someone must know something for that to happen. This appeared to happen…

> Someone's just bought a $1000 call option on a stock that's currently $400? Automated trading systems will probably raise alerts on that stock since someone must know something for that to happen.

The trading system and its operators deserve whatever fate results from such a decision.

Re: Reddit’s profane, greedy traders are shaking up the stock market

#290

Post by pbhjpbhj »

kgwgk wrote: post #282
hnews_account_1 wrote: post #254

Earlier quoted context omitted.

You contradicted your sentences. I do know Robinhood gives zero commission trades by selling order flow data to hft and market making hedge funds but I don't think those funds execute the orders themselves. The orders still go to brokerages I think (may be wrong about this) or just hit Prime Services from non hft hedge fund books. Either way, those hft firms definitely like retail order flow data. My guess is they're…

> selling order flow data to hft and market making hedge funds but I don't think those funds execute the orders themselves The order flow data is worthless (because the orders come from uninformed traders) the value is in filling them without the risk of being shortchanged (because the orders come from uninformed traders).

Surely the order flow is mostly going to look like noise, random. But things like local information and employee information would provide some signal - correlated trading patterns - that indicates there could be some information available to inform a trade. Allowing one to either trade on the meta-signal or seek the information behind it (and then trade).

So if you've got a company and the city in which it's headquartered just gets a strong buy signal, sure that could be random but I'd imagine ...

Surely having the meta-data on who is trading and linking that to trades is the primary benefit?

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