5 ms·

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 rea

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.
  - speedplane 8y ago
    > You're assuming parent is trading on news, information, or fundamentals. A technical trader wouldn't care about anything you've mentioned. I don't believe it's possible to consistently make money ignoring "news, information, or fundamentals". Otherwise you're just fitting curves to noisy data. If it could work consistently, then you would be able to read the future.
    - baq 8y ago
      It's educated guesses. At small scale you're just a speck traveling with the wind. Your job is to guess if direction suits you long enough. If you see someone with a leaf blower, it's just easier.
    - kgwgk 8y ago
      The data may be noisy but as long as it’s not just noise it may be possible to find a signal that can be exploited. By the way, people read the future all the time: it will rain today and it will snow in four months.
    - pasabagi 8y ago
      I've never tried it myself, but I don't think it sounds impossible. Realistically, the greatest single stimulus for traders is the curve itself. So it would stand to reason that there would be patterns to its movement, since people and machines expect there to be patterns.
    - mikestew 8y ago
      I don't believe it's possible to consistently make money ignoring "news, information, or fundamentals". I’m not here to argue if it works, I’m arguing that there are people who trade stocks with no concern for anything that you mentioned. Argue the effectiveness all you like, people still do it.
    - usefulcat 8y ago
      If you haven't heard of arbitrage, you might want to look that up before assuming that all forms of profitable trading require knowledge of the future or inside information.
- saosebastiao 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. I can't perfectly read 5 minutes into the future, nor is it necessary. All that is necessary is to have a slight edge. Just like running a casino, a small statistical edge is enough assurance that any individual game outcome doesn't matter because you will have more wins than losses. And a tiny edge is not hard to do. I'm doing fine without news feeds at all. An economic calendar and some basic technical analysis is sufficient enough of an edge to win more than I lose.
  - speedplane 8y ago
    Okay, so you need to read 5 minutes into the future with some X% accuracy, where X is large enough to provide a return. You're still trying to read the future, if you could do that well, you could make money betting on coin flips.
    - vlasev 8y ago
      If it's a temporarily biased coin, you can make some money off of it.
      - pbhjpbhj 8y ago
        If it's a fair coin you can make money off it, and convince yourself you can predict the "market" "because the coin is biased" ... but it's just 'luck' (ie statistical anomaly).
        HeadsUpHigh 8y ago
        It evens out in the long run so this doesn't apply to this person's trading.
        pbhjpbhj 8y ago
- neilharbinger 8y ago
  "Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading." You'd think so. It turns out that there is plenty of news out there at the right time. Thing is, no-one has the time to continuously check the top 50 or so online news sources to see if their individual interests are being mentioned.
  - PeterStuer 8y ago
    This is why text analysis software is used. Humans are far too slow at reading and reacting.
- sinstein 8y ago
  I am not a trader but in this scenario won't he have to read (news, signal, trigger, etc.) just 5 minutes before everyone reads it? The larger corporations might be on top of things but there will be plenty of individual investors reacting to the news. You just need to react before they do.
  - riskneutral 8y ago
    Reacting before “individual investors” and trying to read the news 5 minutes faster than them is not a sufficient edge to consistently beat the market. You have to react faster than the market moves, which means you have to move faster than hedge funds, banks, prop shops, mutual funds, etc. The market moves very fast, and it is dominated by very large sophisticated participants. First of all, 5 minutes is a very long period of time in the world of high frequency trading, where machines are executing millions of trades every millisecond. Secondly, the same machines are equipped with AI algorithms for reading real-time news feeds, earnings releases, etc, and reacting very quickly on the news. Thirdly, the amount of money that the machines (and their owners) are trading with dwarfs any impact that individual investors would have on market prices.
    - saosebastiao 8y ago
      > Reacting before “individual investors” and trying to read the news 5 minutes faster than them is not a sufficient edge to consistently beat the market. You have to react faster than the market moves, which means you have to move faster than hedge funds, banks, prop shops, mutual funds, etc. The market moves very fast, and it is dominated by very large sophisticated participants. 5 minutes is plenty of time, well shorter than most successful day traders who are trying to predict on 15 minute or hourly horizons, or swing traders trying to predict on daily horizons. There are plenty of trends that occur on the horizons of minutes, hours, days, even weeks. > First of all, 5 minutes is a very long period of time in the world of high frequency trading, where machines are executing millions of trades every millisecond. Secondly, the same machines are equipped with AI algorithms for reading real-time news feeds, earnings releases, etc, and reacting very quickly on the news. Thirdly, the amount of money that the machines (and their owners) are trading with dwarfs any impact that individual investors would have on market prices. This comment reads like a science fiction fan's made up ideas about how NASA works. You've taken snippets of vague ideas about the truth and mishmashed them into a frankenmonster that would never exist in reality. * Millions of trades every millisecond is an exaggeration several orders of magnitude off from the real world volumes of HFT firms. * HFT algorithms don't use AI. They wouldn't be able to react fast enough if they did. HFT algorithms in practice are rarely more complicated than linear regression. * Those who use AI in their algorithms are doing so with incredibly varied levels of success. They are typically trading on horizons much longer than HFT firms. They are trading volumes orders of magnitude lower than HFT firms, even if those volumes are orders of magnitude higher than individual investors. From what I can tell, outside of text analysis of the potential sentiment generated by news, the finance industry is pretty pessimistic about AI. * There are plenty of traders operating successfully across several time horizons. It is not necessary to be faster than HFT firms to be successful. Most day traders like me actually depend on the liquidity provided by HFT firms in order to be profitable; we couldn't do it without the deep books that they provide. * Likewise, a lot of the predictability of how the market moves comes from the market effects of large actors: when you trade $100M in a day in a single direction, you move the market with you, and that creates a trend pattern that smaller traders can pick up on and take for a ride.

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.
- speedplane 8y ago
  > You're assuming parent is trading on news, information, or fundamentals. A technical trader wouldn't care about anything you've mentioned. I don't believe it's possible to consistently make money ignoring "news, information, or fundamentals". Otherwise you're just fitting curves to noisy data. If it could work consistently, then you would be able to read the future.
  - baq 8y ago
    It's educated guesses. At small scale you're just a speck traveling with the wind. Your job is to guess if direction suits you long enough. If you see someone with a leaf blower, it's just easier.
  - kgwgk 8y ago
    The data may be noisy but as long as it’s not just noise it may be possible to find a signal that can be exploited. By the way, people read the future all the time: it will rain today and it will snow in four months.
  - pasabagi 8y ago
    I've never tried it myself, but I don't think it sounds impossible. Realistically, the greatest single stimulus for traders is the curve itself. So it would stand to reason that there would be patterns to its movement, since people and machines expect there to be patterns.
  - mikestew 8y ago
    I don't believe it's possible to consistently make money ignoring "news, information, or fundamentals". I’m not here to argue if it works, I’m arguing that there are people who trade stocks with no concern for anything that you mentioned. Argue the effectiveness all you like, people still do it.
  - usefulcat 8y ago
    If you haven't heard of arbitrage, you might want to look that up before assuming that all forms of profitable trading require knowledge of the future or inside information.
saosebastiao 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. I can't perfectly read 5 minutes into the future, nor is it necessary. All that is necessary is to have a slight edge. Just like running a casino, a small statistical edge is enough assurance that any individual game outcome doesn't matter because you will have more wins than losses. And a tiny edge is not hard to do. I'm doing fine without news feeds at all. An economic calendar and some basic technical analysis is sufficient enough of an edge to win more than I lose.
- speedplane 8y ago
  Okay, so you need to read 5 minutes into the future with some X% accuracy, where X is large enough to provide a return. You're still trying to read the future, if you could do that well, you could make money betting on coin flips.
  - vlasev 8y ago
    If it's a temporarily biased coin, you can make some money off of it.
    - pbhjpbhj 8y ago
      If it's a fair coin you can make money off it, and convince yourself you can predict the "market" "because the coin is biased" ... but it's just 'luck' (ie statistical anomaly).
      - HeadsUpHigh 8y ago
        It evens out in the long run so this doesn't apply to this person's trading.
        pbhjpbhj 8y ago
neilharbinger 8y ago
"Today, it's extremely difficult to get information 5 minutes sooner than everyone else without insider trading." You'd think so. It turns out that there is plenty of news out there at the right time. Thing is, no-one has the time to continuously check the top 50 or so online news sources to see if their individual interests are being mentioned.
- PeterStuer 8y ago
  This is why text analysis software is used. Humans are far too slow at reading and reacting.
sinstein 8y ago
I am not a trader but in this scenario won't he have to read (news, signal, trigger, etc.) just 5 minutes before everyone reads it? The larger corporations might be on top of things but there will be plenty of individual investors reacting to the news. You just need to react before they do.
- riskneutral 8y ago
  Reacting before “individual investors” and trying to read the news 5 minutes faster than them is not a sufficient edge to consistently beat the market. You have to react faster than the market moves, which means you have to move faster than hedge funds, banks, prop shops, mutual funds, etc. The market moves very fast, and it is dominated by very large sophisticated participants. First of all, 5 minutes is a very long period of time in the world of high frequency trading, where machines are executing millions of trades every millisecond. Secondly, the same machines are equipped with AI algorithms for reading real-time news feeds, earnings releases, etc, and reacting very quickly on the news. Thirdly, the amount of money that the machines (and their owners) are trading with dwarfs any impact that individual investors would have on market prices.
  - saosebastiao 8y ago
    > Reacting before “individual investors” and trying to read the news 5 minutes faster than them is not a sufficient edge to consistently beat the market. You have to react faster than the market moves, which means you have to move faster than hedge funds, banks, prop shops, mutual funds, etc. The market moves very fast, and it is dominated by very large sophisticated participants. 5 minutes is plenty of time, well shorter than most successful day traders who are trying to predict on 15 minute or hourly horizons, or swing traders trying to predict on daily horizons. There are plenty of trends that occur on the horizons of minutes, hours, days, even weeks. > First of all, 5 minutes is a very long period of time in the world of high frequency trading, where machines are executing millions of trades every millisecond. Secondly, the same machines are equipped with AI algorithms for reading real-time news feeds, earnings releases, etc, and reacting very quickly on the news. Thirdly, the amount of money that the machines (and their owners) are trading with dwarfs any impact that individual investors would have on market prices. This comment reads like a science fiction fan's made up ideas about how NASA works. You've taken snippets of vague ideas about the truth and mishmashed them into a frankenmonster that would never exist in reality. * Millions of trades every millisecond is an exaggeration several orders of magnitude off from the real world volumes of HFT firms. * HFT algorithms don't use AI. They wouldn't be able to react fast enough if they did. HFT algorithms in practice are rarely more complicated than linear regression. * Those who use AI in their algorithms are doing so with incredibly varied levels of success. They are typically trading on horizons much longer than HFT firms. They are trading volumes orders of magnitude lower than HFT firms, even if those volumes are orders of magnitude higher than individual investors. From what I can tell, outside of text analysis of the potential sentiment generated by news, the finance industry is pretty pessimistic about AI. * There are plenty of traders operating successfully across several time horizons. It is not necessary to be faster than HFT firms to be successful. Most day traders like me actually depend on the liquidity provided by HFT firms in order to be profitable; we couldn't do it without the deep books that they provide. * Likewise, a lot of the predictability of how the market moves comes from the market effects of large actors: when you trade $100M in a day in a single direction, you move the market with you, and that creates a trend pattern that smaller traders can pick up on and take for a ride.