That's not because only few of them make money. It is because they have plenty of money to buy a wig. You don't see they are bold.
Not the leverage is the problem, but how the trader handles it. A skilled trader can take 10 times higher leverage then an idiot who has a 3K account but who thinks he is a trader. And the real risk will still be smaller for the skilled trader.
In order for that to be correct the beta of the concentrated positions would have to be 8 times the beta of the 400 stocks. That is somewhat hard to believe.
strange .... why don't those traders use 32" monitors portrait format like what I am using? or better still, use 40" monitors? small monitors seem rather antique to me. it is more tidy to have bigger monitor and it is more space efficent. obviously your chair has to be special so that you can raise youself higher. technology has changed alot. nowadays resolution of big monitor is fantastic.
No matter how skilled you are there is still a degree of uncertainty in predicting stock moves. That high amount of leverage makes you much more susceptible to the inevitable black swan event that blows you out.
I daytrade the ES futures (emini s&p) over 2 decades. I have a margin of +-$1,500 $ per contract which is more or less leverage 100. I wiped out 1 time more then 20 years ago. So the uncertainty can be very small. All my losing positions are stopped at around 3 points maximum. I also have a very high % of winning trades. But I do on average only 2-3 trades a day. I pick them very, very, very, very carefully. It took me a decade to arrive at this point and big losses in the first years. But only 1 wipe out of a 50K account.
You are right mister. leverage got nothing to do with risk. I like high leverage like 100x or 1000x. only concern is fat finger problem. but then, we can do something to our trading platform to prevent us from over trading. in fact, high leverage is good for general public. you don't have to put in so much money into your trading account. if the broker house goes bankrupt (which happened before), you lose just a little money.
That is not true at all, and your missing a fundamental point where I could buy the 500 S&P 500 underlying stocks and replicate the index while shorting the futures for a hedge and the basis risk is almost zero. If I did this as 20X and then only had a difference of one name that repeated .5% of the portfolio to capture an arbitrage strategy the risk is very minimal. These don't make you rich instantly or cause the blow up your describing. I think important for traders to realize all leverage is not created equal so you need to take an honest look at how spread out that risk is and how it would respond with large moves.
That would be true if these guys were index arbs. They are not according to the videos. The top trader there describes how his latest trade is in TLRY. At 20x leverage that sounds like a recipe for disaster.
Yes I would agree, I was responding to one of the benefits of prop firms is it allows traders the ability to do these types of strategies that are arb based since it provides leverage. People reading these threads should understand the firms exist for a reason but never think they will just teach you everything and sell you the key to riches. Better to go there if you have a strategy already and then keep it a secret too.