Is day-trading a myth?

Long, short, Bitcoin, forex - Plenty of alternate market disuccsion.
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mikki23
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Joined: Fri Oct 14, 2022 5:03 pm

I know several people who are making a living sports betting, I have pro poker players as friends as well, but none of us knows anyone who is actually a successful day trader trading stocks, forex, futures etc..

Is day-trading a myth? Does anyone of you know anyone personally who is successful long-term?

I believe it is a myth!

Reasons:

- You are up against extremely sophisticated competition. Hedge funds and prop firms invest millions in infrastructure and hire the smartest minds from top universities. To believe you can take money off them from trading at home with your computer and a bit Technical Analyses (TA) seems pretty naive.

- Edges are much more scalable. If you could generate just 1% a day trading forex, you'd be a multi-millionaire/billionaire within a few years, even with a small starting bank. So if there are any edges, they have to be so tiny that you can't recognize them by looking at a chart for example. So all this TA "wisdom" YouTubers preach has to be bs.

I know that crypto markets are less efficient. A few years ago it was still possible to manually arb between exchanges for examples. And trading some altcoins where the market volumes are simply too low for big firms to get involved much might actually be still profitable, not scalable though.
But trading big forex or stock markets, I don't believe you could generate an edge, even with a well-thought-out approach.

I would love to get convinced otherwise!
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frankbet
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You are right.

it must be said, those who earn do not share his ideas. So it is possible that there is someone who earns money by staying at home with their PC. I wouldn't be surprised
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johnsheppard
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Location: Cairns Australia

I don't claim to be in the know...possible counter arguments might be;

Sophistication costs money. Smart brains costs money. Complexity costs money.
Large organisations have inherent efficiency problems that cannot be solved.
Large orgs don't care about scraps...there is no glamor in that
There are regulations and responsibilities large orgs are mandated to adhere to. Not sure if retail traders are held to the same standard?
If it can't be automated...and things change, big guys can't fit it in their policies and procedures?
i.e... There would be a niche somewhere at crossroad that lies between too little for the big guys and just big enough to make a scrap out of. It'd change and be hard to find.

Anecdotally, I know one guy I used to work with who made half an income trading retail last year. He is somewhat paranoid of tax agents and was looking to operate offshore a few years back. :) So maybe that's how one does it. Half an income can be a full income if it's done under the table... Then ... It's not like the stock market had a crash this year or anything though....so he could be delusional...

I would think sports trading would be of the same parallels should the market ever get larger...ie..America's laws change or what not....
Last edited by johnsheppard on Sat Dec 30, 2023 2:35 pm, edited 1 time in total.
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Euler
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HFT killed off a lot of day traders, unless your Greg Secker of course: -

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conduirez
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The only people I know who make a lot of money out of Day Trading, do a lot of investigating and look for, lucrative events, such as the budget dates when a large conglomerate purchases millions in foreign currencies.

Sure, with Day Trading, you can look for resistance lines, and you may get it right but even a small breakout prior to the market going in your direction or a broker spike could activate your stop loss. I have yet to see anyone who can read short term charts using time periods of a minute accurately without outside information. That is why there is a 97% failure rate.

I will not touch Forex again, now I have retired, especially with Biden, Trump, Putin, and Irans intentions in the middle east, and Chinas aggression against Taiwan and also Chinese aggression in the South China Sea. The slightest thing could spook a market.

I used to make quite a lot of money using a selective swing strategy in Forex (not day trading), with an underling platform strategy, which unfortunately stopped with the pandemic because of changes made by Central Banks. You are welcome to have this strategy if you want, as I said I will not be dabbling in Forex again, and will confine myself to sports betting.

Oh, in the UK Forex falls under the guise of spread betting, with some brokers, so there is no tax.
weemac
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I worked in broking/hedge funds/fund management/market making from 1981 to 2005 and once visited a trading room where loads of guys would rent a desk and PC with fast exchange connection for day trading but got the distinct impression that very few lasted more than a couple of years before giving up/going broke. It all looks so easy but it's actually staggeringly difficult, for various reasons.

You see all these Youtube videos hyping the idea of day trading, but most of them talk about trading forex, which for me is the hardest of all instruments to trade. Many of the ideas propagated contain basic inherent flaws which render them useless (or worse). I've commented on a few of these videos trying to warn folk against listening to these charlatans, but to little avail.

You'd need an almost unique type of mindset to make a real go of it; a mindset which I appear not to possess! :lol:
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Hepburn
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That greg bloke is on every advert when i'm on youtube. Especially betangels youtube channel, so annoying.
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Kai
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Hepburn wrote:
Sat Dec 30, 2023 10:33 pm
That greg bloke is on every advert when i'm on youtube. Especially betangels youtube channel, so annoying.
You could use uBlock Origin. Afaik it's basically the only ad blocker left that actively fights Youtube's aggressive ad campaigns. Sometimes needs to be manually updated.

As for annoying video recommendations from Youtube's algo, you can tell the algo to stop recommending a channel by clicking on the three dots when you hover over a video.
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The Silk Run
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Location: United Kingdom

Personally, I would say it is a fact rather than a "Myth". Day-Trading died a long time ago .....
Like it or not, Professional gamblers have the edge !!!!
frankiebishop
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Joined: Fri Feb 22, 2019 11:57 am

Ok. I started on LIFFE in 92 and when the screens went electronic in 2000, the difference between trading open outcry and electronic was the difference between driving a car and a boat. Same task - to get from A2B, but in a different manner. It probably took me 2 years to realise that the screens were just a game, u had to find out the kinks. I traded successfully and made proper money from 2004-17 - with 1 problem.

I am rubbish with money!

In my defence, I was stolen from repeatedly by different trading companies. Money was deposited and profits earned, but when it came to withdrawing, more than once I got told 'we have yr money - u gotta try and get it!' 16k, 48k, 27k, 88k and the biggun - 834k. Oh and please don't give it the 'I would have sent around the boys!' I used probably the biggest around and he couldn't get it (he even paid me back what I gave him to go get the money!) The debt is a legal matter. However due to the incompetence, indolence and ineptitude of the FCA, nobody gives a toss.

The game is now the wild west. Also, costs have gone up, up, up as the need for compliance officers (mostly failed traders trying to stay in the game) increases. 5 years ago, JP Morgan's trading staff consisted of 1/3rd legal and compliance and I wouldn't have thought that its got any less!)

The cost increases include

Round trips - up 300% (the cost per lot, plus exchange fee)
Front end - stellar or TT from 500 to around 1500/2k
1 firm even increase rates if your balance falls below a certain level.

This is what I am led to believe and with the sudden increase of IG, city, etc - I can believe it.

The 2 other problems -

Margin rates. The exchanges have smashed them through the roof, to remove the 1 man band. They don't want us locals.
Compliance. I cannot tell u how bad it got towards the end. I was on their radar and they would not leave me alone. I was doing 45-50k lots a month 2/2.5k lots a day and then spent 2 hours responding to those clowns. And they would send stuff from 2 weeks previous 'can u explain the rationale of buying 1 lot of March at 1742 at 15.32'. Seriously. And if u didn't respond within 48 hours, the clearer threatened to close u down.

The compliance factor was particularly jarring because I was a spread trader. Now spreading is an art and when u know what u doing and do it properly, legging in, taking on, building the position, then taking off, it is without doubt (for a maths freak like me) 1 of the most satisfying jobs in the world. Spreading is buying 1 month and selling another to limit the risk. And I was GOOD! But u have to be sharp, clever and aware. Probably the 3 things a compliance officer lacks. 1 story will sum my career up completely.

I was driving back and the phone went. It was the head of compliance (he is now something massive in futures, but truly as thick as mince) shouting down the phone that I had been order splitting. (Order splitting is when there are 1000 lots on the bid and u want to work 100 lots, so instead of putting in 1 clip of 100, u put in 10 clips of 10. That's illegal). What I was doing was every time that I sold some May futures, I would bid that amount in the March. So I explained this to him, but he wasn't having it. He was screaming, I was driving and instead of saying 'put it in writing', I asked him to explain to me on the phone how I could order split in a FIFO market? I should have shut up and get him to put just how much of a cock he was in writing. (For those of u who don't know the difference. FIFO - first in first out. So yr orders are in a queue. Whereas other markets fill a different way - if a market has 1000 lots on the bid and someone sells 100, u should get 10% of what u are bid for). So me splitting orders up in a FIFO is pointless!

Account openings. To open a futures account as an individual with a clearer takes between 4-6 months. It's embarrassing. Compliance and legal should change their department name to business prevention.

Can u make money day trading - yes u can. I did. I have the statements to prove it. But u need to work hard and be prepared for the unexpected. I hope this hasn't been too long winded - it's been quite cathartic for me - and if u need any advice, please message me.

Good luck
tumby
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frankiebishop wrote:
Sun Dec 31, 2023 9:11 am

I was driving back and the phone went. It was the head of compliance (he is now something massive in futures, but truly as thick as mince) shouting down the phone that I had been order splitting. (Order splitting is when there are 1000 lots on the bid and u want to work 100 lots, so instead of putting in 1 clip of 100, u put in 10 clips of 10. That's illegal). What I was doing was every time that I sold some May futures, I would bid that amount in the March. So I explained this to him, but he wasn't having it. He was screaming, I was driving and instead of saying 'put it in writing', I asked him to explain to me on the phone how I could order split in a FIFO market? I should have shut up and get him to put just how much of a cock he was in writing. (For those of u who don't know the difference. FIFO - first in first out. So yr orders are in a queue. Whereas other markets fill a different way - if a market has 1000 lots on the bid and someone sells 100, u should get 10% of what u are bid for). So me splitting orders up in a FIFO is pointless!
I can relate to your anger and frustration with your compliance guys. This was one of the main factors that led me to leave my trading role at a major investment bank after 20+ years of successful trading. The thing I love about sports betting is that I am my own boss, no compliance officer to explain even the most mundane basic things to. The problem is that trading in the financial markets is something I love doing, I think about markets pretty much continuously. So after a few years out of the financial markets I started up again with a former colleague and we are doing well on our own with no compliance officers, it makes life so much easier, however we cannot take external investors money so we lack scale. This means poor margin rates and difficult to stomach broker charges but we are doing well and loving it.

To anyone considering starting in day trading of financial markets I would strongly warn against it. It is incredibly hard to make a consistent return without suffering major drawdowns. The only people making consistent money are exploiting niches in financial markets that they understand inside out, based upon years of training through bitter experience. If you think Sports betting is tough, it is nothing compared to the financial markets. Never trust anyone talking about trading that doesn't talk as much (if not more) about drawdowns and risk than they do about the opportunity. The only thing certain in trading is that you will have drawdowns, the question is whether you can survive them or not.
Archery1969
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I find forex trading far easier than BF trading by a country mile.

Tend to mostly trade trend reversals which often occur on a certain day of the week.

Monday is normally dead with ranging markets, with Thursday being my main trading day and avoid Fridays especially during US open as high impact news can be an account killer if your on the wrong side.

As a general rule I don’t open trades 1 hour before or 30 minutes after major financial / high impact figures, data and statements.
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firlandsfarm
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I'm with @Archery1969 on this. I bet on sports but trade on Forex. I don't day trade, well I do day trade sometimes but it's not day trading! No, not confused ... I trade open ended. Sometimes I close in an hour or two or sometimes I stay open for a week (but I need a very good reason to stay open over a weekend).

I see day trading as trading with the intention of closing out at the end of each day regardless of profit/loss. I don't do that. I open a trade with a defined close for profit or loss which might take a few hours or a few days or sometimes longer. To me there are far more patterns in Forex pricing than sports markets and the markets are infinite in time giving longer to ID a possible opening and longer for it to play out ... there is no 'off' in forex! And forex markets tend to range more predictably.

I couldn't live off what I do but it's good pocket money without much risk and little time commitment.

So back to pure day trading as I define it ... I wouldn't want to commit the capital levels required to make a living nor the personal commitment to watching price charts all day. I use self designed algorithms to pinch small sums many and often

As for brokers keeping the money ... like most things in life, there are lots of newish boys in town with little or no pedigree, why trust them?
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conduirez
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firlandsfarm wrote:
Mon Jan 01, 2024 10:21 pm
I'm with @Archery1969 on this. I bet on sports but trade on Forex. I don't day trade, well I do day trade sometimes but it's not day trading! No, not confused ... I trade open ended. Sometimes I close in an hour or two or sometimes I stay open for a week (but I need a very good reason to stay open over a weekend).

I see day trading as trading with the intention of closing out at the end of each day regardless of profit/loss. I don't do that. I open a trade with a defined close for profit or loss which might take a few hours or a few days or sometimes longer. To me there are far more patterns in Forex pricing than sports markets and the markets are infinite in time giving longer to ID a possible opening and longer for it to play out ... there is no 'off' in forex! And forex markets tend to range more predictably.

I couldn't live off what I do but it's good pocket money without much risk and little time commitment.

So back to pure day trading as I define it ... I wouldn't want to commit the capital levels required to make a living nor the personal commitment to watching price charts all day. I use self designed algorithms to pinch small sums many and often

As for brokers keeping the money ... like most things in life, there are lots of newish boys in town with little or no pedigree, why trust them?
I never day traded either I could not see how you could make money without outside information, especially your mate from the bank telling you they were about to make a big trade in ten minutes.

A few years ago, I worked out a trading method that worked, I decided following the vast majority of experts at the time, that the long term view back in 2010 was that Sterling was going to weaken over the US dollar and at some stage eventually £1 would equal $1, the other criteria I needed was that if I decided to sell dollars in the GBP/USD market, overnight I would be paid interest which would gradually reduce the amount that was the spread, which selling GBP/USD did.

So I put in my money, converted it all to a US dollars in a USD account as per my long term prediction and then started to look at resistances in the GBP/USD currency pair once I thought I had found a high resistance I would enter the market with a small proportion of my funds with a sell order, and every day at about 17:00 UTC, I would get a little interest paid into my account even if there was a breakout against my position, that interest came in and I would wait until the market dropped to or near the lower resistance level which it always did because of my strategy. I would then wait for the next high resistance level I found and repeat the strategy.

So what stopped me in the end was Covid with the changes made by governments and central banks, you stopped getting paid interest overnight, which brought an end to my strategy, I closed my trades and converted the money back to Sterling, and withdrew all my money which was markedly more than I deposited (which I had no problem getting from my broker).

I will not be going back to forex in this current world climate, so anyone can if the want use the above method on a currency pair, although few pay positive interest.
Archery1969
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Not really sure why people are saying you cant make money out of Forex Trading. There are some things you need to be aware of that move the markets like Tokyo, London, New York openings but its not difficult. Just look for breakouts on any Forex charts at certain times of a 24 hour day.
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