Algos ruined day trading

Discussion in 'Trading' started by qlai, Apr 10, 2019.

  1. qlai


  2. Overnight


    "...For example, if the S&P 500 breaks below its 200-day moving average — a key level closely watched by traders — then the algo would sell shares of the SPDR S&P 500 ETF Trust, which tracks the broad index..."

    So the question becomes...Why wouldn't he also sell shares of that trust, or the SP 500 or whatever, when it falls below the 200 MA? What is his true complaint, after making money at it for 30 years?

    He made money on "market inefficiencies"? So he was exploiting the market. Another "honest" man, complaining about a system that is exploiting the market faster than he can, and is crying foul.
    Last edited: Apr 10, 2019
  3. LS1Z28


    When he was a day trader, Davis said, he was able to take advantage of inefficiencies in the market and make money off of them. Now, algos compensate for them almost instantaneously.

    That's the way of the world. You evolve or die.
    d08, xavik, kmiklas and 3 others like this.
  4. 200 day MA has been irrelevant for about 10 years now.
  5. qlai


    Why would averages be irrelevant? I don't think I have ever read a book or TA article which did not have one.
    Peter10 likes this.
  6. schweiz


    Ned Davis started 30 years ago. That was before daytrading existed. When I started daytrading in the early 90's almost nobody daytraded and most people even didn't know what it was.
    Ned Davis traded in an era when trading was easy and profitable for almost everybody. Over the years things changed dramatically and the major part of the "daytraders" were eliminated as they did not have the skills to survive the more and more professional market. Instead of being mediocre you have to be now far beyond average to survive.
    Algos didn't kill anything but caused a natural elimination of the weakest. That happens in any market that matures. These weakest are now crying all the time that algos killed daytrading.
    Last edited: Apr 10, 2019
  7. qlai


    Profitable ones are certainly created by people who understand how markets work, imo. I think the key word is "efficient." I was listening to a podcast with Linda Raschke and she was describing a strategy which slowly (years) went from $85 gain per trade to $5 ... Still working but not worth running.
  8. schweiz


    Standing still is going backwards. She started also in the early 80's, like Ned Davis. Things have changed a lot since then.
  9. qlai


    Yeah, when HFTs can make a profit on buying and selling at the SAME price, inefficiencies are harder to find and even harder to capture.
    #10     Apr 10, 2019