I haven't been day-trading for about a year now, so I can't speak from personal experience, but some of the complaints I've heard aren't just about volatility, but also about intraday volume. Without high volume, you can't really load up on shares as easily; it also becomes a problem when you want to get out of something in a hurry. When you are getting partial/no fills on the easy, profitable trades and only getting complete fills on those orders where price trades through, it makes for a tough trading environment. Plus, the lower intraday volatility makes it very tough for scalping and trading the smaller moves, as you just don't get as many opportunities each day. In '05 and '06, the volatility was low and the rangebound conditions made the OP's suggestion of sizing up more palatable, but with the dark pools and other recent developments, trading bigger size seems like a much tougher proposition today.
My guess is that it all depends on the trading style. I'm sure there are some trading strategies that absolutely kill it on low volatility, just like there are others that do the same with a high vix. No Heat
Traders have been using volatility based position sizing since the dawn of the times (well almost). It's not exactly a rocket science.
I am just a smalltime futures piker. I am assuming most of you guys in this thread trade stocks where even pikers trade at least a thousand shares a pop. There is no low volume in ES to be concerned about if you toss around 100 cars or less a trade. I DO NOT trade even close to1/2 that. Point being: mkts change their stripes now and then. You adjust to the conditions and change tactics or wither on the vine. I am no longer a stock player but see enough toys out there to play with. In days gone by pork bellies were super to trade, now i never even give them a glance except to casually scan the futures prices. Anyone bitching about low volume, low volatility etc needs to admit they are glad they have found a reason to NOT TRADE, that way they have an excuse to not lose any more money. :eek: PS: OK, good news, time to do less posting for 2010. PSS: before i slack off i wanted to remark on the guys that always seem to pop up and say to take the other side of et'ers etc trades. That is one of the most moronic, assinine statements any trader wananbe can make. A sign of a sure loser.
Jesse Livermore complained about the lack of volatility when the Great Depression hit, too. I personally wish there was more vol. It exacerbates signals and increases the profit margin with respect to commissions.