why Wall Street traders win and you don't

Discussion in 'Trading' started by garfangle, Dec 20, 2010.

  1. For the self-trader it is tough to make money, yet when they see those who inhabit Wall Street making millions it is tough to reconcile why they are successful and you are not. So, here are some reasons why Wall Street traders (WST) win and the Average Joe trader (AJT) loses (or does not do as well) even if he is has a large account:

    1) WST has access to the best, cheapest and fastest technology platform and execution; AJT uses either a retail broker like Ameritrade or a somewhat advanced platform like IB.

    2) WST receives data from vendors like Bloomberg and analyst research that can cost tens of thousands of dollars; AJT is limited to Yahoo Finance and StockTwits.

    3) WST enjoys a comfortable salary and benefits; AJT is not paid while trading.

    4) WST risks his firm's capital while learning to trade; AJT risks his own capital while learning to trade.

    5) WST risk-reward is skewed to the upside: if successful he can earn millions; if unsuccessful he is fired, but can usually land a respectable job elsewhere; AJT risk-reward is either evenly-split or to the downside: if successful he can earn potentially millions (though more likely in the thousands), but if unsuccessful his life savings are wiped out and no one hires an unsuccessful amateur.

  2. Wall Street has been functioning the same since the 20's. Strategies/risk/reward.

    The reason you won't win is because you don't have an edge. You need to put the odds in your favor somehow. Some on here say that's impossible. Well there's been several posters who have posted their edges on this site. You just have to look around
  3. bigpapi


    I hear this all the time, how doe the Bloomberg give you an edge? I have not used it but did look into it, my conclusion was that it does not have anything that a combination of the Reuters/Dow Jones news feeds plus Esignal cannot give you for a quarter of the price. Does anyone here use it?

  4. the wst edge? Uncle Ben and unlimited supply of Bernanke bucks.

  5. The guy who runs tradingraw.com uses neither bloomberg terminal nor some HFT like platform,just a plain Blackwood platform and he makes money 99% of trading days

  6. LOL.......
  7. Ash1972


    And what happens on the other 1%? :)
  8. TD80


    If we are speaking of being a professional trader, then yes, it isn't fair, and access to capital is the main reason unless you are already independently financed.

    Other than that, unless you a choosing a strategy that requires massive infrastructure, I don't really see a one-sided argument if you assume everyone is playing by the rules (a dangerous assumption for Wall Street, I suppose...). The little guy has some advantages the big guy doesn't, assuming he is well capitalized enough that he isn't concerned about putting food on the table for the next few years.

    In general terms, the bottom line is, people on Wall Street do this for a living. You don't perform, you lose your job. People on Main Street do this as a hobby, gamble, are serious but under-capitalized, or are simply uninformed "investors".

    The media makes it out to seem like everyone is getting a $500K bonus, every trader makes millions a year, and the rest of us who don't work for Goldman are just suckers. Things are not always what they seem, we are an aspirational society who only wants to see the exceptional results (positive or negative)

    I liken this sort of nonsense to the social stereotype that all lawyers and doctors are rich. This is an especially questionable stereotype of attorneys...
  9. what do you think? small loss/breakeven
    #10     Dec 20, 2010