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Can Day Trading be profitable for retail?

  #105 (permalink)

Dallas, Texas
Trading Experience: Intermediate
Platform: TOS
Favorite Futures: AAPL, /ES, IWM, SPY Options
Posts: 330 since Oct 2012
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artemiso View Post
Seems like your argument rests on a very narrow generalization of equities and FX traders and trading style (beta exposure) such as:

and incorrect assumptions such as:

You can match your first order risk measures like vol simply by adjusting leverage.

The supporting data for no-arbitrage between asset classes is staring in your face even without my input. There are huge asset managers that are in the business of finding inefficiencies between asset classes and their rebalancing decisions may include moving $1B from value stocks in 1 Asian market to another, or $1B from commodities to equities, or developing country FX pairs to US equities. Harvard's endowment is in the business of moving hundreds of millions from Brazilian lumber to US equities on a low frequency. We know that there's almost no such asset manager with >2 Sharpe, so their R^2s must be extremely weak, meaning there's very few advantages from choosing between equities or FX.

Bear in mind that a significant portion of the accounts I deal with are institutional in nature, including fairly large hedge funds, which do not shoot to turn 10k into 100k. Also, 2000+ is also a much larger sample than your meetup group.

Diversifying, beta, sharp ratio. I agree there are few advantages for having fund managers other than admin and for them to consistently beat the market. That has led to index, target funds.

As far as institutional, yes myriad of reasons for trading forex, hedging risk.

But as a retail trader (this thread) with no global implications, Leverage and Return are the main drivers

Specifically referring to your chart on win rate(trades forex 79%losers) 1:5 win

There are significant differences. My personal experience (equities) it is much higher and Im not an outlier.

Are there any scholarly studies with evidence of this over the long term? Equities having a 1:5 win rate ratio

Volatility is good for the market and trading.

Preservation of capital is the most important concept for those who want to stay in the trading game for the long haul. - Van Tharp

Last edited by blb014; February 23rd, 2018 at 07:28 PM.
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