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Being a "small fish" is actually an advantage since you have less capital you need to put to work and thus can more easily get fills and catch the bigger waves
by ct 17y ago
Being a "small fish" is actually an advantage since you have less capital you need to put to work and thus can more easily get fills and catch the bigger waves generated by the bigger fish institutions like mutual and hedge funds.
The institutions have to hold on for longer periods and can't really "scalp" trades per se given that the bid/ask volume would collapse if they didn't distribute and "average in" slowly overtime to accumulate a position vs. buying or dumping their entire position all at once.
- JimmyL 17y agoBeing a small fish means you get killed by brokerage fees, which don't get cheap until the value of your trades is in the millions.
- ct 17y agoTrue. Each side has their own set of advantages/disadvantages. And so you'd have to adapt and take that into consideration in addition to bid/ask spread. It's not impossible (nothing is impossible), and you'd only get killed by brokerage fees if you're overtrading. If you can find an algorithm that can trade only a few times a day and ride stocks that has a volatility of 1% or more then even at retail commission levels you can still do pretty well as you slowly build up your account to trade strategies that require more churn.