There seem to be permasceptics and permatrolls that just attack anybody with good advice. They skew the view of daytrading because they all seem very convinced of the correctness of their views. I wouldn't pass judgement on who can't daytrade unless I examined their methods. Daytrading and trying to compete with the machines has got to be difficult, probably the days for that are over. I never tried super fast trading, not my thing at all. The days when a computer can do what a skilled trend trader can do are approaching maybe but I've never found, in 15 years of studying charts, a squiggly line that replaces the knowledge of a skilled person. Somebody is going to have to write an expert system that replicates what they do exactly.. and I'm guessing that is not happening on a large scale and might not for a long time. The main reason is that knowing something and getting a computer to "know" it is a huge undertaking. It seems easy but defining very clearly what one does during the trading day might bring one to the brink of despair. More questions come up during that process and it can go on for years... I recommend that people try that, most likely their trading will become very specifically defined if nothing else.. If there is a window for automated trading from home it's between the speed of the hedge fund algos and the trend trader, not micro, nor macro as in catching the big moves of the day but in between..
Interesting, but if the program is written correctly: Not based on Charts Based on Execution Algorithms Utilizes Rule-Induction Data-Mining for back-testing purposes There is no way any person can learn in 100 years what a computer can learn in minutes. I developed my platform on TRADE EXECUTION ALGORITHMS, not charts or technical analysis. All algorithms are fully adjustable so that if I find a system that works, I can easily try to BREAK it. I am also able to reverse any algorithm, so finding a very unprofitable system is just as valuable as finding a profitable system. I developed it so that excluding high frequency, almost any type of intra-day price based system could be created and tested.
After studying many charts and traders, I would have never in my life assumed, guessed, or imagined that for the past 8 years, I could have traded the exact same rules on the exact same stocks, every single day and been profitable. While there would have been draw downs, overall the methods were profitable over time. Without the help of the computer, I thought I would have to trade after specific patterns, but the computer tells me this is not true. I doubt that there are any 'so-called' professionals that would tell me that would even be possible. I trust my computer much more than I trust anyone's opinion. However, after my program taught me that it took a bit more time for the information to actually sink in, as I did not think that would even be remotely possible.
I just picked this from the article: "Stocks that once moved rather smoothly from point A to point B now move in a more jagged and less predictable manner. " I trade for 25 years and I never remember of a time when anything, any market, traded smoothly from point A to point B. This means that this article is making up premises in order to set up a straw man argument. Daytrading is dead for those that use models that cannot compete in current environment. Trading in general never worked out well for the majority of traders anyway.
Its as simple as this...those who can do and those who cant moan and groan and bitch that it cannot be done.....way too much negativity on this website. Trading is not that hard but so many people try to analyze it to death they defeat themselves before they even get started.
shit, I just quit my job and started trading. Now you tell me day trading is dead. You should have posted it two weeks earlier! I would have kept my job.
Great article. A very good read. A lot of what the author described is very true. Speed Trading - This is not so great anymore. There are very few opportunities for these kinds of trades these days. When they are there, they're usually very very good....still very rare. Order Flow Traders - This has been gone for quite some time IMHO. I got started in this business 5 years ago and this was essentially on the way out. There was still opportunity, to make easy money off of specialists....but that opportunity then changed significantly and has changed much more significantly and dwindled considerably over the past 2-3 years and I cannot explain more b/c from time-to-time opportunity is there. Just one of those things, that if you don't know, you don't know...by the time you do know, it probably won't matter at all anymore. That said, the money to be made here is mostly gone for various reasons (market structure, order fragmentation, HFT, etc...) Sector Relative Strength/Weakness - I never really got into this style of trading back then. I know guys that did, but I can't really say that I ever made money doing anything like this ever...therefore I can't speak on this. What the writer said in his article makes sense. Intermarket Price Discrepancies - I also never really got much into arbitrage of any sort. I have a friend that used to do this. I followed him a few times in it back in the day -- it worked sometimes and sometimes it didn't. I guess that's trading. Either way, he doesn't much do it at all anymore that I know of. Technical Analysis - I think it's funny that this guy said TA worked particularly well in 2007-2009, as if it didn't work well many other years over several decades. He did say that "technical analysis continues to be relevant in some contexts, it is far more suited as a tool in a trader's arsenal than a stand-alone trading strategy." I can't disagree with that statement. Computers definitely play games at intraday levels. I'm sure 10 years ago, people were a little less informed, computers were a bit less sophisticated, and breaks of key levels were just flat out cleaner (less false moves etc...). I agree with the idea that traders looking to hold moves requires us to step up our timeframes, but I disagree that one has to go from a 1-min to a 5-min, or a 5-min to a 15-min to succeed...I had a recent epiphany with a new student that I'm mentoring and I believe this to be false. The crux of what I believe to be true is that moving from a 5-min to a 15-min, or a 3-min to a 10-min, or a 1-min to a 3-min or whatever is irrelevant in some respects. At the end of the day, the data is the same. The chart is the same. A 40-period SMA on a 5-min chart is still a 200-period SMA on a 1-min chart. Same shit. A lot of trading just comes down to managing yourself and adapting to different conditions. The chart itself isn't causing you to exit the trade prematurely, it's more than likely you and/or the proxies that you employ that are doing something wrong. Especially if you step up to a daily chart, your risk-to-reward definitely increases on both sides. No different than any other time IMO, you have to know what you're doing and manage your risk appropriately or you're gone. Is daytrading dead. No. Has it changed? Yes. Is this the first time articles like this have been written? No. Is this the last time an article like this will be written? No. Is it highly likely that you will see an article in the future that touts "The Return of the Daytrader"? IMO, it's an emphatic yes. Life is a circle. Markets are a circle. Traders adapt. Some don't. Things are always changing. Believe it or not, there are guys making money intraday and overnight right now. Figure it out or fuck off.
A computer outperforming a human is different than a computer trying to perform like a human. Thus, a computer can outperform a discretionary trader but that doesn't imply that the computer can replicate or duplicate the thinking of a discretionary trader. Further, when markets change (it always changes)...both the computer and a discretionary trader must be able to adapt to remain profitable. As to day trading being dead...that's impossible considering if you're trading something that's not producing...switch to something else that is producing because there's no law that states you must continue trading something that's dead. Those that don't adapt via switching trading instruments when their markets are are dead or their edge in a particular market is no longer performing...they deserve to dry up and blow away in the wind. With that said, I have two friends that are futures brokers (one in Europe and one in US)...both say they've seen a decline in the number of new clients and the size of the average trading capital per client. In addition, I've seen LESS trade discussions along with LESS veteran traders at your active online forums. Simply, I think scalping / day trading / swing trading / position trading or any other type of trading is on the decline regardless if its due to competition with computers or the global economic crisis...most likely due to both.