Retail Trading Issues

Discussion in 'Trading' started by milimabuse, Jul 25, 2009.

  1. this is a new thread regarding the problems of intraday trading for retail investors; I wrote this in another thread:

    the truth has always been the same, and retail traders always make the same nonsense mistakes:

    you cannot consistently make money daytrading. it' s not possible because "a good profitable run" will be wiped out by a "bad losing run".

    also: we ran a highly sophisticated backtest a couple of years ago, and guess what:

    daytrading trend systems would be profitable if there was no broker commissions (taking 1$ / 100 shares).

    the same system with that commission is..of course unprofitable.

    also: market makers of course make great money on the backs of retail traders. we ran another interesting backtest: "playing" market maker for a year in stocks like GOOG/BIDU would have gotten us an annual return of >3000%!

    so now you can figure HOW CRASS the disadvantage is to retail traders

    our test briefly explained:
    in terms of daytrading intraday trends without commission backtest, the setup was clear, and as such used by a lot of traders:

    I.we bought in intraday uptrends at the Low (ma, 20)when the price was > MA(20);
    stop loss (-0.5%), profit +0.75% on high ATR stocks where "squeezing" out a 1% gain per day shouldn' t be a problem

    II. the second test was more complex depending on first-hour volume and then doldrums volume, and final hour volume, but in essence we simulated getting filled at the bid(of last) whilst always selling at the ask if it held longer than 2 seconds...