Five star thread, thanks for all the replies from the old pros. In my twisted mind, I guess I see it this way: There always have to be suckers at the table for the game to work. The suckers have been mostly wiped out and are afraid of the casino now. This may be why US FED has taken over as Chief Sucker for the last 5 years (and to bail out their shareholders, of course). When you buy a breakout there has to be new money coming in after you get in. When you buy the bottom of the range there have to be price chasers to push it back up, and someone before you had to capitulate in failure. Sell vol and someone has to buy insurance that decays to zero, BTFD and FED has to keep monetizing UST's. We are entering a world with no more losers.
Goldman Sachs to sell designated market-maker unit http://news.yahoo.com/goldman-sachs-sell-designated-market-maker-unit-imc-021323202--sector.html yeah..adapt or die..if GS can't adapt,well..good luck for the rest of you
There are less traders now because volatility has dropped, and that has nothing to do with HFTs or technology, central bank intervention is the reason for the crash in volatility. I think it will remain this way until we get a serious bout of inflation that forces central banks to turn off that spigot.
That is not surprising at all. 59% of all Americans have problems spelling 4,000 elementary vocabulary in their own mother language, can not preform basic algebra and can not find Mexico on a map. The damage of decades of misallocation of resources in education and family policy will take decades to be reversed.
that is definitely true, but equally true is the fact that this nation could be 100% self-sustainable if the borders were closed, all non-residents permanently ejected and no imports/exports allowed. life as we know it here today? Hell no, not even close... but all of the fuel, food, land and raw materials need to live comfortably exist in abundance. The same cannot be said for many other places on earth, particularly Asia where pollution left unchecked will destroy their most vital resource: fresh water. the U.S. has followed same path as all other societies that rose to greatness thru history... now in the bloated, complacent, decline phase. How it unfolds in time remains to be seen, but is shtf like so many doomsayers are prepping for, the U.S. needs nothing from anyone else to exist perfectly fine.
I traded thru the years of Vol bottom 2004 - 2006 with VIX at 10-12 and stock market ranges contracted as they are today. But... intraday crude oil ranges were not collapsed. FX intraday ranges were not collapsed. 10-point intraday ranges in the ES did not chop sideways thru the entire stretch. ER2 (remember that?) did not rip thru its dome all over the map leaving vapor trails of 1-lot prints behind. Fed manipulation was equally rampant back then, just heavily denied that the PPT existed. The different now is a profusion of HFT firms allowed to siphon actual fills in a contracting market to the point where it implodes the correlated and semi-correlated markets in domino fashion.
the difference then versus today? Those SOES bandits were a tiny minority while the same HFT-bandits concept are THE MARKET. what a few minority factions accomplished before was easily absorbed by the general market. But when the general market itself became a majority of front-run operations, short-term behavior obviously changed. and for the record I don't trade in my boxer briefs... to quote Brooke Shields decades ago now, nothing comes between me and my charts. nothing
i actually live in holland and attended a debate on HFT organised by a business radio station overhere. one of the main guys there was this big shot from dutch company IMC, who are now taking over that GS unit. he made a pretty strong case for HFT and explained a lot of things quite well, but left a lot of stuff out that wouldn't help their case. I am not really the kind of person to jump out of the stands live on air and correct him though, and I was hoping some of the other main guests would, but unfortunately they seemed to lack the knowledge completely. The IMC-guy even claimed he'd rather have a lot less US exchanges than more, which I find hard to believe. anyway, a lot of other big shots in the room (including a pension fund guy) obviously had no clue what he was talking about at all. all they kept refering back to was: uhmm, yeah, and then I click submit, and then all the liquidity is gone, and that's unfair. it really didn't seem they knew anything about how to route your orders in a way you can make the most out of what is offered, which is also the impression i got from the Michael Lewis-book. while, as i said, there's still room for improvement in regulation, it might also be a good idea for the actual investor to learn about the current trading landscape and don't just press the f*cking submit-button without doing any further research on where you want your order to end up. i thought that was quite shocking.
Very true. 2005 was actually my best year despite the low vix as you mentioned. Whether it was 2005 or the financial crisis of 2007-08, i think most competent traders did just fine trading high and/or low volatility environments. But somehow towards the end of 2009, everything changed as many traders will now know. It's like all of a sudden a deep structural shift occurred and liquidity has been pulled out of the markets. Very strange, who knows what will come next?