No one on EliteTrader will beat the market… here is why

OK then, my intuition is wrong about the return of the short traders but my original premise that the average trader will receive an average return can still hold.

Let's imagine a trader who only trades from the short side in the stock market. You are correct that on average he should have negative returns (-10%) because he always takes the opposite side in an upward going market (in the long run). On the other side of that trader you must have a leveraged long trader (because someone must lend and buy the stock from the short trader). He will have a higher return than the market (+20%). The average return of both the long trader and the short trader (-10% + 20%) is still the market return of +10%.

 

No, the flaw in your argument is assuming that the other side of the short trader is a long trader. The other side of the short trader could be a long-term investor not another trader.

Also traders, by definition, aren't fully invested (long or short) in the market 100% of the time - those people are called investors, so traders would never have gains (or losses) equal to the average market return because they are only in the market some percentage of time.

 

FALSE

 

The major flaw in my argument that markets are so competitive that it's not worth playing, I explained here: "A lot of people on EliteTrader will beat the market… here is why". I no longer hold the view that markets are efficient, I only believed in this for a week after five years of beating the market. It happens sometime for a person to question some of his basic beliefs and test the foundation of his knowledge. Of course I feel a little stupid that I engaged the ET community with my doubts but when I strongly believe in something I must try to falsify it, i.e. to test its credibility. In this case I could have done it on my own with some more thinking

 

Yes, I saw your other thread, was not impressed with it either.

 

Well, it received a higher rating than this one

 

Quite correct. We only know what the exchange shows us.
To extrapolate that by virtue of assumption is immature at best or just plain silliness.

If our OP ever leaps into the market with real money, these silly threads will cease immediately to be replaced by an air of reality.
Then and only then does the mind open up and the learning begin.

regards
f9

 

The lesser of two evils, apparently.

 

Livermore and Darvas was right. That's why we have trends. But you need a strategy to win.

 

Here is a chart from yesterday of spy. I would ask the OP where should you have gotten short and why, and what should your stop and target be. You will never really KNOW if markets or life is random. Who cares really?