5 ms·

Day Traders 2.0: Wired, Angry and Loving It

21 points by ojbyrne 17y ago

axiom 17y ago
I'd bet good money that they make most of their money selling subscriptions to their stock tips platform rather than actually trading.
- rdtsc 17y ago
  Bingo! The way to be a successful day trader is to: 1) Make other believe you are a succesfull trader (just use lots of technical mumbo jumpo and a trading platform with a black background with lot and lots of bright colored graphs, lines and abbreviations that nobody, including you understands) 2) Sell subscription for others to "virtually" look over you shoulder. 3) Profit Maybe I should sell subscription for others to "virtually" look over my shoulder while I program. I use emacs with a dark colored background and bright text, so there'll be plenty colorful "technical" looking crap to look at. Besides, I talk out loud to myself, so subscribers get to listen my grunts, exclamations of excitement and swearing ($10/hour more for audio streaming?) Or maybe not, they'll just make fun of my segfaults and how untidy my APIs are...
- mattmaroon 17y ago
  More than 100% would be my guess.
simon_ 17y ago
These guys are obviously charlatans. He claims to reliably make >$100K/yr trading his $100K account. If he could really generate 100% return on capital, he would be the richest person in the world. (Or... at least he would have more than $100K to manage.) The author isn't totally uncritical, but it's annoying that he gave these guys so much space in the Times to advertise.
- davemabe 17y ago
  There's no question there are a lot of snake oil salesmen in this business. That said, there are a small number of elite traders out there that make these types of returns and are fully content not growing their account infinitely. Also, as your account gets larger, trading it for the same types of returns becomes more and more difficult just because of the position sizes you have to take. This reason alone is why the little guy still has a built in advantage over institutional traders who have to move around very large amounts of money to be worth it. I don't know if these guys are charlatans or not, but there are guys and gals doing similar things making similar returns consistently.
  - yardie 17y ago
    Consistently is a stretch. the journalist covered the Taiwanese study. Only 20% were profitable (winning streak). Only 1% were consistent.
- lrm242 17y ago
  Assuming he compounded all of his returns he'd be the richest person in the world. Making 100% on 100k is demonstratively easier than making 100% on 100m and is not unheard of. So why doesn't this guy manage other people's money? No where in this article does it mention his account volatility or average draw down. This guy might be making 100% return with a peak to valley draw down of 75%. Don't assume they are charlatans just because you don't understand what they're doing.
  - borism 17y ago
    exactly, they're probably spending most of the returns. what they do is highly dubious, but they're not charlatans because they mostly account only to themselves.
  - cynicalkane 17y ago
    The reason I find it dubious is because $100k is not very much. You need to make very large trades--risking thousands of dollars at a time--or else you'll be eaten by fees and commissions. I don't know anything about day trading, but I used to play poker (profitably), and know sports betters. $100k is simply not enough to be risking thousands of dollars on single bets, unless the bets have an enormous edge--an edge that is economically impossible in the algo-dominated, limited-information world of day trading. You will go bust. I could produce math for you, but I'm lazy. But I've seen so many poker players go bust taking risks like this, and poker is a game where it's unbelievable how many morons are willing to throw money at you. Not like day trading.
    - lrm242 17y ago
      There are a lot of subtleties with trading. To make money you need positive expectancy and you need 'inventory', or tradeable markets. They don't have to make large trades to make money. You have to consider transaction costs, rebates, avg win size, avg lose size, holding period, and a number of other criteria before you can judge these traders. I don't claim they won't go bust, but I do take issue that simply because they make out-sized returns they are labeled charlatans.
rrc 17y ago
It's easy to be a profitable day trader when the market is melting up. Even the most incompetent traders would have been making money in the late nineties. The problem occurs once the market stops going up. At that point even the best day traders are at a disadvantage, being on the bottom of the food chain for information and transaction cost/speed.
aidanf 17y ago
"He starts off poorly, losing about $500. But a timely bet on a company called Rackspace Hosting (“I don’t know what they do,” he says), as well as quick investments in Applied Materials, Eagle Bulk Shipping and a few others, have turned things around." "Asked about the Today Trader method of buying and selling, both men seem momentarily stumped, as if they never saw the question coming. Then they talk about the search for “set-ups,” which seems to translate roughly as “golden opportunities,” but they struggle to put a finger on what set-ups are, or how to spot them." There's not a lot of detail about their trading strategies, but it sounds like they're just pushing buttons.
mattmaroon 17y ago
"'Up $210,' he says, removing his headset. Factoring in commissions, he’s made $60." Who wouldn't want to try to make a living at a game with a 70% rake? Oh, plus taxes.

21 points by ojbyrne 17y ago

axiom 17y ago

I'd bet good money that they make most of their money selling subscriptions to their stock tips platform rather than actually trading.

rdtsc 17y ago
Bingo! The way to be a successful day trader is to: 1) Make other believe you are a succesfull trader (just use lots of technical mumbo jumpo and a trading platform with a black background with lot and lots of bright colored graphs, lines and abbreviations that nobody, including you understands) 2) Sell subscription for others to "virtually" look over you shoulder. 3) Profit Maybe I should sell subscription for others to "virtually" look over my shoulder while I program. I use emacs with a dark colored background and bright text, so there'll be plenty colorful "technical" looking crap to look at. Besides, I talk out loud to myself, so subscribers get to listen my grunts, exclamations of excitement and swearing ($10/hour more for audio streaming?) Or maybe not, they'll just make fun of my segfaults and how untidy my APIs are...
mattmaroon 17y ago
More than 100% would be my guess.

simon_ 17y ago

These guys are obviously charlatans. He claims to reliably make >$100K/yr trading his $100K account. If he could really generate 100% return on capital, he would be the richest person in the world. (Or... at least he would have more than $100K to manage.) The author isn't totally uncritical, but it's annoying that he gave these guys so much space in the Times to advertise.

davemabe 17y ago
There's no question there are a lot of snake oil salesmen in this business. That said, there are a small number of elite traders out there that make these types of returns and are fully content not growing their account infinitely. Also, as your account gets larger, trading it for the same types of returns becomes more and more difficult just because of the position sizes you have to take. This reason alone is why the little guy still has a built in advantage over institutional traders who have to move around very large amounts of money to be worth it. I don't know if these guys are charlatans or not, but there are guys and gals doing similar things making similar returns consistently.
- yardie 17y ago
  Consistently is a stretch. the journalist covered the Taiwanese study. Only 20% were profitable (winning streak). Only 1% were consistent.
lrm242 17y ago
Assuming he compounded all of his returns he'd be the richest person in the world. Making 100% on 100k is demonstratively easier than making 100% on 100m and is not unheard of. So why doesn't this guy manage other people's money? No where in this article does it mention his account volatility or average draw down. This guy might be making 100% return with a peak to valley draw down of 75%. Don't assume they are charlatans just because you don't understand what they're doing.
- borism 17y ago
  exactly, they're probably spending most of the returns. what they do is highly dubious, but they're not charlatans because they mostly account only to themselves.
- cynicalkane 17y ago
  The reason I find it dubious is because $100k is not very much. You need to make very large trades--risking thousands of dollars at a time--or else you'll be eaten by fees and commissions. I don't know anything about day trading, but I used to play poker (profitably), and know sports betters. $100k is simply not enough to be risking thousands of dollars on single bets, unless the bets have an enormous edge--an edge that is economically impossible in the algo-dominated, limited-information world of day trading. You will go bust. I could produce math for you, but I'm lazy. But I've seen so many poker players go bust taking risks like this, and poker is a game where it's unbelievable how many morons are willing to throw money at you. Not like day trading.
  - lrm242 17y ago
    There are a lot of subtleties with trading. To make money you need positive expectancy and you need 'inventory', or tradeable markets. They don't have to make large trades to make money. You have to consider transaction costs, rebates, avg win size, avg lose size, holding period, and a number of other criteria before you can judge these traders. I don't claim they won't go bust, but I do take issue that simply because they make out-sized returns they are labeled charlatans.

rrc 17y ago

It's easy to be a profitable day trader when the market is melting up. Even the most incompetent traders would have been making money in the late nineties. The problem occurs once the market stops going up. At that point even the best day traders are at a disadvantage, being on the bottom of the food chain for information and transaction cost/speed.

aidanf 17y ago

"He starts off poorly, losing about $500. But a timely bet on a company called Rackspace Hosting (“I don’t know what they do,” he says), as well as quick investments in Applied Materials, Eagle Bulk Shipping and a few others, have turned things around." "Asked about the Today Trader method of buying and selling, both men seem momentarily stumped, as if they never saw the question coming. Then they talk about the search for “set-ups,” which seems to translate roughly as “golden opportunities,” but they struggle to put a finger on what set-ups are, or how to spot them." There's not a lot of detail about their trading strategies, but it sounds like they're just pushing buttons.

mattmaroon 17y ago

"'Up $210,' he says, removing his headset. Factoring in commissions, he’s made $60." Who wouldn't want to try to make a living at a game with a 70% rake? Oh, plus taxes.