How are people making 750 trades/day profiting from others trading? You're so caught up in your conspiracy theories you're not making any sense. Are there people who shouldn't trade frequently? Yeah. Do brokers like to see those people trade anyway? Yeah. But, you know who else likes it? Day-traders who are profitable. Think about it logically. If I am a losing day-trader, let's say my typical trade loses me $50. About $10 of that goes to my commission and the other $40 goes where? Into the pockets of successful day-traders in a zero-sum game. Is the broker's $10 a higher risk-adjusted return than the other $40 which goes to the trader taking the opposite side of the trade? Maybe, but it certainly isn't the entirety of the unprofitable trader's loss and, depending on my own risk in making that $40 as a profitable day-trader, my risk-adjusted return may be even better than the broker's. You're so focused on the broker's role in facilitating the trades between the winning and losing traders that you are losing sight of the fact that as far as dollar amounts are concerned, the broker's piece is the smallest. The only way your argument could make sense is if the entire loss from losing day-trader's losing trades went to the brokers. Clearly, that's not the case. You know who has the most incentive to keep losing day-traders in the game? Winning day-traders.
...and you are so focused on your distorted reality...you see the broker makes a small % of that money, but it does it with an uncanny CONSISTENCY the daytrader does not. Daytrading is a pipedream http://www.elitetrader.com/vb/showthread.php?s=&threadid=194342
Well, I guess if there is a thread called "Daytrading is a pipedream" that must mean it's true. Seriously? I provide a link to an academic study showing that over half of the traders studied during a window in time were profitable and you link a thread you started calling daytrading a "pipedream". I guess in your world those two statements are equivalent, but in reality they are not. Is the study the end-all be-all argument? No, but it's a datapoint that undercuts the whole premise of this thread and it isn't based on some anecdotal evidence, but hard data. The paper even provides a reason for WHY those traders made money, which is that they took it from losing traders. As far as brokers go, yes, they make money at a more steady pace than traders, but so? Every industry has its low-margin middlemen/distributors who make a slow and steady profit from transaction volumes rather than high value-add. UPS makes money whether they deliver a 1-lb package filled with some plastic junk from China or if they deliver a diamond ring of the same size. If being a broker or middleman is so attractive to you, become one. No one is stopping you. Clearly, you think you've got it all figured out. But, I think you will find that it is a cut-throat business where pricing pressures never stop bearing down on your margins and not the money-printing business model you imagine it to be. The funny thing is, I'm not even a day-trader (I am just fine holding positions overnight). I just think dogmatic conclusions made on the basis of bad data don't help anyone.
ROTFLMAO....you are using the concept of 'common sense' as your ENTIRE argument against daytrading! LOL some more. I've already mentioned this before and David a couple pages back also answered this. Some of us have been DAYTRADING successfully full time for over a decade. Some make it, some find consistent ways of extracting profits from market gyrations daily....where is 'Cheese' when you need him?
To Logic Man: obviously there are some good daytraders so what if I never met one who can make money in a consistent way ? Still the odds are against the daytrader and the title of this post is very appropiate. If someone can daytrade and make a living, all more power to him, however that is not the norm, but it is the exception and most daytraders believe they are the exception...they will be disappointed. Just my opinion.
The assertion by Garcia (OP) is that there are ZERO profitable short term traders in the world and there have never been any. I mean, you really want to side with a guy who lives in such absolutes?
Define "consistently". Trading, on any time-frame, isn't a "consistent" way to make money full stop. The top traders make way way way more money than the top Hollywood actors or popstars. How much did Steve Cohen make last year versus Lady Gaga ($62mil)? Lol Cohen probably made like 20x that. How much did James Simons make last year versus Beyonce ($87mil)? From memory Simons made $2.5billion in 2009 which is more than 28x Beyonce. Johnny Depp. He's set to make $50mil in 2010. There are probably more than a hundred traders that will make more than that this year. Oh but these guys are hedge fund managers, not traders, you'll say. Yeh well that's what the best traders do these days. They run funds. And the short-term guys do it best. I particularly picked SAC and Renaissance as examples because these guys generally have short holding times. As for "nobody knows", of course I don't know Cohen or Simons personally. But I don't personally know Beyonce or Johnny Depp either. http://www.imdb.com/news/ni4251896/
To Fireplace: I'd rather side with someone who is realistic. The OP knows that there must be someone who can daytrade and make money consistently, but he never met such person (neither have I, have you ? ). No one should ever give up his dream and if one wants to daytrade, great. 9 times out of 10 a daytader is going to fail. It is not an "absolute" it's a fact. Woud you rather want to become a daytrader who can make money in a consistent way or an actor trying to brake into the movie industry in Hollywood ?
No, you're DEAD WRONG. Garcia is NOT saying he never met one, he is saying that he knows for a fact that none exist or ever did. Read his posts, don't just guess what his message is. Yes I know several other traders personally who have been daytrading for years and do it full time. I have also know many more who are no longer in the biz. Of COURSE it's a field where most fail, such as almost all other fields where the rewards for success are very high. That's the only way it can be.
Yes, the odds are against the daytrader. The only reason I jumped in to this thread was to post a paper that showed the odds aren't quite so negative as was being said. Personally, I would advise anyone to avoid daytrading, too, for the most part, or, to create a strategy which can be automated so they can work a job while their strategy executes. If that works out, there will be plenty of money to trade with over time.