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FWIW, I'm day trading and I'm making consistent returns, well above the rates of most mutual funds and hedge funds. The caveat is what most fund managers would

FWIW, I'm day trading and I'm making consistent returns, well above the rates of most mutual funds and hedge funds. The caveat is what most fund managers would call capacity. My trading strategy can't scale without severe cuts in those returns. It's extremely easy to buy 10 contracts and hold for 5 ticks. I've never experienced slippage at all. Operating at mutual fund sizes, I would be trading at volumes that would slip 25 ticks before filling completely. My strategy can't and won't ever scale to that level...it would degrade to negative profitability likely with two or three million dollars of daily volume. Effectively this means I have major limits to compounding...like most day traders, I merely skim returns off of a fixed amount of capital. So yeah, I do well enough for myself, and there are thousands of traders just like me. The quant firms may be on another level, but it's not because they have better returns than you can get as a day trader, it's because they have better capacity.

ISL 8y ago
What stops big firms from automating a great many small trading strategies?
- saosebastiao 8y ago
  Honestly I have very little insight into how the bigger firms work. I've only ever done this by myself. But I can imagine that it's a lot harder to come up with 1000 strategies that don't compete with each other for the same opportunities than it would be to hire a team of geniuses that can build a single high capacity strategy.
  - jamiek88 8y ago
    How long have you been doing this? Sounds like you are eyes wide open anyway.
- Timmah 8y ago
  Because one strategy returning $50-100k a year is a pittance to an investment bank. And (I bet) those strategies require a lot of manual intervention. Plus the risk value if they go haywire.
- SEJeff 8y ago
  Nothing, I work for one, but we often won't bother with the smallest of the strategies. It just depends on the markets and the players more than anything. They call us Quantitative Trading Firms or Algo Firms or HFTs.
toephu2 8y ago
You're an individual retail day trader? Come back to us in 10 years and lets see if you are still making money. Or rather lets see if you can beat the S&P 500 for 10 years straight.
- oldandtired 8y ago
  There are some important rules when doing day trading. 1). never stop studying about what is going on 2). practise, practise, practise (otherwise known as paper trading) before you ever lay down any coinage 3). don't let emotions ever take you away from whatever strategy your paper trading comes up with 4). whatever the environment you had when you did your paper trades, don't allow that to change when you finally put some coinage down. 5). take a holiday from trading if the markets get too volatile (your definition of volatile applies here) 6). remember that many of your trades will lose coinage, it is up to you to determine what you put in place to mitigate this, others will make enough to cover these losses, if you keep to the rules you have. 7). if your success at paper trading does not see the same success in coinage trading, stop and do a complete review of what has happened and go back to paper trading. 8). keep meticulous records of all your trades, paper or real and continually look for further insights into yourself as you do this. 9). continually look at what your goals are and why you are doing this. 10).don't spend any coinage that you cannot afford to spend on this, in other words, keep calm and steady.
  - jliptzin 8y ago
    I feel like it's a lot easier to just get a job or start a business that makes at least double the average successful day trader
    - speedplane 8y ago
      The way traders personally make money isn't by making good bets, it's by taking fees. If they make good bets, they get huge rewards, if they make bad bets, they get fired, but otherwise lose very little. So once you start betting with other people's money, you can do pretty well, it's just a matter of how long.
jerkstate 8y ago
Nice. You know the market has been in a historic long bull run these past 9 or so years, right?
- Timmah 8y ago
  He never said he's making money on long positions though. Options allow you to buy and sell volatility, and short underlying securities.
- saosebastiao 8y ago
  I trade futures and currencies. Short positions happen about as frequently as long positions. My average trade lasts less than 5 minutes. Macro trends don't really affect my strategy outside of the fact that I tend to watch Fed and ECB news announcements as a way of predicting short term volatility.
  - speedplane 8y ago
    If your average trade lasts less than 5 minutes, then you can conceivably make money only if you can read 5 minutes into the future (not currently possible), or have tools that allow you get news/information faster than everyone else, analyze that information, and act on it, 5 minutes before everyone else. Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading. Also, doing such quick analysis can be pretty error-prone, it's not uncommon that bad stories send a stock up and good stories send it down because the price is based on the perception rather than the fundamentals. So even if you have the right information, you may make the wrong bet. I'm sure some are better than others at this, but to make money, you'll need to be better than 50% of everyone else.
    - mikestew 8y ago
      Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading. You're assuming parent is trading on news, information, or fundamentals. A technical trader wouldn't care about anything you've mentioned.
reacweb 8y ago
Sometimes a strategy becomes reliably successful, the people start to notice, then it stops working. Do not be lazzy. The only way to earn money in trading is to work hard to gather information and to analyse it. This gives you an advantage on all the gamblers.
danmaz74 8y ago
Out of curiosity, how much manual work that can't be automated does this require?
_fizz_buzz_ 8y ago
How much did you outperform the market e.g. S&P 500 over the past 3 years or so?
Ftuuky 8y ago
Hey, your name refers to the ill-fated Portuguese king, right? I'd love to pick your brain on a few things related to daytrading, could we talk at your best convenience? I'm @Ftuuky on Twitter and Telegram, Monteiro on Keybase. Thanks.
learnstats2 8y ago
It's unclear to me why you are not hitting the same problems as a mutual fund would - are you and your thousands of parallel traders not creating the same problem of scale?
bigmanwalter 8y ago
How much would you say is the smallest amount of capital you would need to use in order to run a profitable strategy such as yours?
toephu2 8y ago
and how long have you been doing this? I doubt longer than 5 years profitably.

ISL 8y ago

What stops big firms from automating a great many small trading strategies?

saosebastiao 8y ago
Honestly I have very little insight into how the bigger firms work. I've only ever done this by myself. But I can imagine that it's a lot harder to come up with 1000 strategies that don't compete with each other for the same opportunities than it would be to hire a team of geniuses that can build a single high capacity strategy.
- jamiek88 8y ago
  How long have you been doing this? Sounds like you are eyes wide open anyway.
Timmah 8y ago
Because one strategy returning $50-100k a year is a pittance to an investment bank. And (I bet) those strategies require a lot of manual intervention. Plus the risk value if they go haywire.
SEJeff 8y ago
Nothing, I work for one, but we often won't bother with the smallest of the strategies. It just depends on the markets and the players more than anything. They call us Quantitative Trading Firms or Algo Firms or HFTs.

toephu2 8y ago

You're an individual retail day trader? Come back to us in 10 years and lets see if you are still making money. Or rather lets see if you can beat the S&P 500 for 10 years straight.

oldandtired 8y ago
There are some important rules when doing day trading. 1). never stop studying about what is going on 2). practise, practise, practise (otherwise known as paper trading) before you ever lay down any coinage 3). don't let emotions ever take you away from whatever strategy your paper trading comes up with 4). whatever the environment you had when you did your paper trades, don't allow that to change when you finally put some coinage down. 5). take a holiday from trading if the markets get too volatile (your definition of volatile applies here) 6). remember that many of your trades will lose coinage, it is up to you to determine what you put in place to mitigate this, others will make enough to cover these losses, if you keep to the rules you have. 7). if your success at paper trading does not see the same success in coinage trading, stop and do a complete review of what has happened and go back to paper trading. 8). keep meticulous records of all your trades, paper or real and continually look for further insights into yourself as you do this. 9). continually look at what your goals are and why you are doing this. 10).don't spend any coinage that you cannot afford to spend on this, in other words, keep calm and steady.
- jliptzin 8y ago
  I feel like it's a lot easier to just get a job or start a business that makes at least double the average successful day trader
  - speedplane 8y ago
    The way traders personally make money isn't by making good bets, it's by taking fees. If they make good bets, they get huge rewards, if they make bad bets, they get fired, but otherwise lose very little. So once you start betting with other people's money, you can do pretty well, it's just a matter of how long.

jerkstate 8y ago

Nice. You know the market has been in a historic long bull run these past 9 or so years, right?

Timmah 8y ago
He never said he's making money on long positions though. Options allow you to buy and sell volatility, and short underlying securities.
saosebastiao 8y ago
I trade futures and currencies. Short positions happen about as frequently as long positions. My average trade lasts less than 5 minutes. Macro trends don't really affect my strategy outside of the fact that I tend to watch Fed and ECB news announcements as a way of predicting short term volatility.
- speedplane 8y ago
  If your average trade lasts less than 5 minutes, then you can conceivably make money only if you can read 5 minutes into the future (not currently possible), or have tools that allow you get news/information faster than everyone else, analyze that information, and act on it, 5 minutes before everyone else. Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading. Also, doing such quick analysis can be pretty error-prone, it's not uncommon that bad stories send a stock up and good stories send it down because the price is based on the perception rather than the fundamentals. So even if you have the right information, you may make the wrong bet. I'm sure some are better than others at this, but to make money, you'll need to be better than 50% of everyone else.
  - mikestew 8y ago
    Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading. You're assuming parent is trading on news, information, or fundamentals. A technical trader wouldn't care about anything you've mentioned.

reacweb 8y ago

Sometimes a strategy becomes reliably successful, the people start to notice, then it stops working. Do not be lazzy. The only way to earn money in trading is to work hard to gather information and to analyse it. This gives you an advantage on all the gamblers.

danmaz74 8y ago

Out of curiosity, how much manual work that can't be automated does this require?

_fizz_buzz_ 8y ago

How much did you outperform the market e.g. S&P 500 over the past 3 years or so?

Ftuuky 8y ago

Hey, your name refers to the ill-fated Portuguese king, right? I'd love to pick your brain on a few things related to daytrading, could we talk at your best convenience? I'm @Ftuuky on Twitter and Telegram, Monteiro on Keybase. Thanks.

learnstats2 8y ago

It's unclear to me why you are not hitting the same problems as a mutual fund would - are you and your thousands of parallel traders not creating the same problem of scale?

bigmanwalter 8y ago

How much would you say is the smallest amount of capital you would need to use in order to run a profitable strategy such as yours?

toephu2 8y ago

and how long have you been doing this? I doubt longer than 5 years profitably.