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Can Day Trading be profitable for retail?
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View Poll Results: Can Day Trading be profitable, consistently, for retail traders
Yes 72 72.00%
No 13 13.00%
Can't say 15 15.00%
Voters: 100. You may not vote on this poll

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Can Day Trading be profitable for retail?

  #91 (permalink)
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mrphr View Post
"Can Day Trading be profitable for retail"?

It depends what is ones definition of day trading.

High Frequency Trading - No
Scalping - Maybe
Day Trading - Yes


I agree. Trading on a daily basis most definitely can be profitable.

Scalping and having unrealistic expectations probably not for most.

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
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  #92 (permalink)
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artemiso View Post
Yes, if in doubt, apply the no-arbitrage rule.

If there's magically a much higher win rate trading futures instead of cash FX, then everyone would be trading futures and not cash FX. Otherwise, you usually have to trade off something to get that higher win rate, be it a higher cost of entry (market data, connectivity), higher operational risk, higher regulatory burden, lower liquidity, and so on.

How would they know which instrument has the higher win rate?

I would think The players in the cash Fx would be more traders with smaller accounts and less experience. I know forex is a huge market but I have viewed it as a riskier market hence riskier traders

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
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  #93 (permalink)
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blb014 View Post
How would they know which instrument has the higher win rate?

I would think The players in the cash Fx would be more traders with smaller accounts and less experience. I know forex is a huge market but I have viewed it as a riskier market hence riskier traders

They don't need to. We're talking about the first order statistics of the whole group, not its individual agents. All you need is classical multi-agent swarm/contagion/network effects.

If you're talking about individual agents, of course there's second order effects like "Optiver has better profitability in options than in futures", which is why firms do specialize in asset classes and people do spend a lot of time deciding which asset class to go for in hopes for a minor optimization. But these second order effects are weaker than the no-arbitrage on the first order, which is partly why Optiver doesn't just concentrate all their efforts in options.

I trade in a good number of markets and I can tell you that the no-arbitrage rule across asset class is extremely strong.

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  #94 (permalink)
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artemiso View Post
They don't need to. We're talking about the first order statistics of the whole group, not its individual agents. All you need is classical multi-agent swarm/contagion/network effects.

If you're talking about individual agents, of course there's second order effects like "Optiver has better profitability in options than in futures", which is why firms do specialize in asset classes and people do spend a lot of time deciding which asset class to go for in hopes for a minor optimization. But these second order effects are weaker than the no-arbitrage on the first order, which is partly why Optiver doesn't just concentrate all their efforts in options.

I trade in a good number of markets and I can tell you that the no-arbitrage rule across asset class is extremely strong.

Thanks for your response but I never wrote a thesis or dissertation
Would you agree equiites and options have a higher win rate with less risk than forex, inherently stocks have a positive bias. And High risk=high reward requiring higher profitability such as forex which has much lower win rate than equities

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
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  #95 (permalink)
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blb014 View Post
Thanks for your response but I never wrote a thesis or dissertation
Would you agree equiites and options have a higher win rate with less risk than forex, inherently stocks have a positive bias. And High risk=high reward requiring higher profitability such as forex which has much lower win rate than equities

My point again is that there's little marginal difference between the asset classes. There's different issues in all of them.

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  #96 (permalink)
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I don’t know if realisticly I can agree with that especially concerning FX where it is riskier market with riskier traders. If you referring to FX as an asset class (debatable)

Undoubtly the vast majority of people invested in equities the last few years have made money hence very high win rate as compared to a market like FX

How about bitcoin? No marginal differences

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
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  #97 (permalink)
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I don't want to be splitting hairs about whether @artemiso's cash FX data applies to other traders in other markets. After all, it doesn't have to be the same to make a point: that smaller traders generally do less well, as a group. I think that's a general perception, and this data just gives a precise result for one group of small traders. It's probably reasonable to extend the general result to other small traders as well, to some extent at least, and it doesn't have to be exact to be meaningful.

Certainly there can be differences between markets. But the argument of "no arbitrage" is essentially that if there were big differences between how easy it is to make money in one market compared to another, then everyone would abandon the hard one and go to the easy one. (I think that is worth a "Duh." )

This implies, to a degree, that any existing markets will tend to be similar in terms of opportunity, when all factors affecting opportunity are considered. (There may be more liquidity in one market, etc., and this may matter, as @artemiso mentioned):

artemiso View Post
Otherwise, you usually have to trade off something to get that higher win rate, be it a higher cost of entry (market data, connectivity), higher operational risk, higher regulatory burden, lower liquidity, and so on.

The players are probably about the same, however.

If we take traders who are:
1) Not well-capitalized,
2) Are trading short time horizons (mainly day-trading) -- I am assuming this is mostly true of these FX traders,
3) Are heavily margined,

then you've got a lot of similarity between them, no matter what markets they are in. Will futures traders fitting this profile do well, while similar cash FX traders do not? Really?

That is possible, I suppose, but it would be a surprise and would take some proof. It is more likely that most (certainly not all) traders with this profile would tend to do about as well, or poorly, in most markets.

For example, it would be a big surprise if many equity traders who fit this profile (low capitalization, day trading, heavily margined) do very well either. Yes, I know there has been a big equity bull market (until recently, perhaps ), but the question is about highly leveraged day traders with very little money. I have watched ES (S&P futures) traders losing money in their FIO journals during this entire market cycle, during an equities bull market. It's very easy to lose money. It also helps if you can't sustain a very big loss and you are using maximum margin and are doing fast in-and-out trading.

So, I suppose I did split some hairs, but I think there is bottom-line significance to the data that has general importance. Until we have something like it for other groups of traders, I think it helps to flesh out the overall picture of how small traders generally do in the markets.

Bob.

Edit: We're also obviously dealing with traders in the aggregate. A particular individual may do better or worse than the average, and may find one market more suited to him/her than another, for any number of reasons.


Last edited by bobwest; February 18th, 2018 at 11:11 AM.
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  #98 (permalink)
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there's another point one could argue

the original question is about "retail" traders and not necessarily about small traders. I consider $100,000 cash equity still as retail...

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  #99 (permalink)
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Silvester17 View Post
there's another point one could argue

the original question is about "retail" traders and not necessarily about small traders. I consider $100,000 cash equity still as retail...

Yupp..lol. however I think there is a slight twist. I think money is money. There is no smart money just because it's an institution..hf..prop etc. Likewise it is baseless to assume just coz a firm, individual,etc is trading a smaller size or money value that they're dumb money.

As in life's various enterprenurial vocations it is the job of the enterpreneur to take $ and put into his,her pocket. Same with trading. Ones who cannot do this may not have much success.

Again my very small mind rambling away on a sunny Sunday...and I do not know much.

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  #100 (permalink)
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Two different profiles of traders in different markets. It is not realistic to apply stats from small subset of non asset market broadly, The reason why theses traders are in riskier markets such as forex is for the higher return not win rate. Thatís why they are trading currency and not equities with higher win rate but lower return. It really has very little to do with win rate IMO. I have never tracked win rate in 16 years of value investing/trading equities and options

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
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