And you thought day trading was dead...meet Dylan, the day trader

[PaceAdvantage]

http://articles.washingtonpost.com/2013-05-10/business/39156337_1_graduate-school-card-sharks-amr-capital-trading

[PaceAdvantage]

BTW, in looking at the picture of Dylan again, I note he has bags under his eyes worthy of a man twice his age. Maybe it's genetics...or maybe the stress they talk about in the article is all it's cracked up to be and then some...

[thaskalos]

BTW, in looking at the picture of Dylan again, I note he has bags under his eyes worthy of a man twice his age. Maybe it's genetics...or maybe the stress they talk about in the article is all it's cracked up to be and then some...
The bags under the eyes are because of the sleepless nights.

I speak from experience... :)

[RaceBookJoe]

Good article, thanks for sharing.

[PaceAdvantage]

Experienced traders among us (either professional or not)...after reading that article...do you think what he and they are doing is sustainable? The article itself sort of gives you the distinct impression that it is not...even the players themselves sort of seemed resigned to that fact...

Personally, this seems like a crash and burn just waiting to happen...would like to hear other traders' opinions...

[lamboguy]

Goldman Sachs, Chase, Morgan Stanley all seem to win trading. if by some chance they make a loser, they get bailed out by the government. they can't lose.

[ManU918]

Good article. My only question is: What is so special about him that he deserves a news article written about him in the Washington Post? Is it because of his age?

[pandy]

I was surprised he bought more of that Cameron stock after it took a dive on no news. That was his inexperience showing.

[badcompany]

Goldman Sachs, Chase, Morgan Stanley all seem to win trading.

Poker is an easy game when you can see the other guy's cards.

[RaceBookJoe]

Experienced traders among us (either professional or not)...after reading that article...do you think what he and they are doing is sustainable? The article itself sort of gives you the distinct impression that it is not...even the players themselves sort of seemed resigned to that fact...

Personally, this seems like a crash and burn just waiting to happen...would like to hear other traders' opinions...

Not sure if its sustainable or not, but if that fits his personality..good for him. Personally I don't have the trading personality to trade "penny stocks", lower vol stocks or do I hold overnight..just don't want those bags under my eyes :) The entire time I was reading it I kept thinking of all the daytrading firms that were running during the dotcom era and all the traders that blew out accounts. Got the impression that Dylan didn't have much trading experience overall but I will re-read again to make sure I read it correctly.

[Magister Ludi]

Poker is an easy game when you can see the other guy's cards.

Golden Slacks frontrunning customer orders?! I'm both shocked and chagrined!

[RaceBookJoe]

Today perfect example of trading being pretty boring since the 1st hour, takes lots of patience and discipline to keep from taking marginal to crappy trades just to trade.

[Tape Reader]

Experienced traders among us (either professional or not)...after reading that article...do you think what he and they are doing is sustainable? The article itself sort of gives you the distinct impression that it is not...even the players themselves sort of seemed resigned to that fact...

Personally, this seems like a crash and burn just waiting to happen...would like to hear other traders' opinions...

IMO, "spontaneous" trading is extremely detrimental to profits, and more importantly, to health. It constantly creates anxiety.

At some point in the future there will be conflict between opinion (ego) and fact. Fact usually wins.

System trading/methodology, will let one say "the computer made me do it." Again, IMO, much better in the long run.

[pandy]

High-frequency, high-volume computerized trading now accounts for three-quarters of the volume on U.S. stock markets,


This comment above, taken from the article, indicates computerized trading is 75% of the volume...it shows how absurd the market is. The stock market was created to help companies finance their business and it has morphed into a big casino that is manipulated by the Federal government.

[PaceAdvantage]

High-frequency, high-volume computerized trading now accounts for three-quarters of the volume on U.S. stock markets,


This comment above, taken from the article, indicates computerized trading is 75% of the volume...it shows how absurd the market is.Is it really any different whether 75% of the volume is traded by fast computers programmed by humans, or 75% of the volume is traded by slow humans programmed by humans? It's all human in the end anyway. Sure, the playing field changes a bit...maybe an edge that used to exist is taken away...but others open up...

I don't find that stat one bit discouraging...

[pandy]

Is it really any different whether 75% of the volume is traded by fast computers programmed by humans, or 75% of the volume is traded by slow humans programmed by humans? It's all human in the end anyway. Sure, the playing field changes a bit...maybe an edge that used to exist is taken away...but others open up...

I don't find that stat one bit discouraging...

It proves that buying stocks is betting, not investing. When my dad started his career as a stockbroker back in the early 60's, there was little or no institutional trading. I worked on the floor myself in 1973 so I saw it first hand.

People bought stock in companies that they trusted and wanted to invest in. It was a lot different. Now, maybe it's better the way it is now, I don't know, but it certainly more like a casino than it was before. And with the Fed essentially forcing money into the stock market by keeping interest rates low and buying mortgages, add to that the fact that many corporations are making their money from overseas sales in countries that are not as politically stable as the U.S., this to me makes the stock market more volatile than ever. For anyone who owns a lot of stock, make sure you have either a stop loss strategy or hedges with puts if you have a lot of money in the market. If the market has a monster collapse, which, incidentally, can be triggered by computers, you're better off taking a 10 to 20% hit than losing most of your money.

When there's a bull market as there is now, it creates a false sense of security. But the market is much riskier than it appears. It can fall thousands of points in one hour without any warning or notice, and it most likely will, at some point.

[pandy]

This is one of the pitfalls of putting money into mutual funds in IRA accounts. Every time the market drops sharply, billions of dollars in IRA accounts are lost because there is no stop loss strategy. The savvy investor owns individual stocks and has stop loss or put strategy protection so he automatically gets out and then he can decide when to get back in. Meanwhile the people who have their money in stocks in their IRA accounts watch their life savings disappear.

[PaceAdvantage]

Define betting vs. investing. The stock market has NEVER existed without risk. There is ALWAYS risk involved.

Nobody is guaranteed a return in the stock market. Not now. Not in the past. Not in the future.

Any company always is, always has, and always will be susceptible to a "black swan" event that can change the company's landscape forever. Look at Enron. Look at Kodak. Look at Pan Am. The list is endless through the years. Both past and present. What has really changed?

Some people have always considered the stock market to be a casino. To be gambling. Others scoff at the idea.

There are elements of truth in both definitions.

[thaskalos]

Define betting vs. investing. The stock market has NEVER existed without risk. There is ALWAYS risk involved.

Nobody is guaranteed a return in the stock market. Not now. Not in the past. Not in the future.

Any company always is, always has, and always will be susceptible to a "black swan" event that can change the company's landscape forever. Look at Enron. Look at Kodak. Look at Pan Am. The list is endless through the years. Both past and present. What has really changed?

Some people have always considered the stock market to be a casino. To be gambling. Others scoff at the idea.

There are elements of truth in both definitions.

http://www.amazon.com/Wall-Street-Nicolas-Darvas-author/dp/0979311918/ref=sr_1_1?s=books&ie=UTF8&qid=1370926264&sr=1-1&keywords=the+other+las+vegas

[badcompany]

It proves that buying stocks is betting, not investing. When my dad started his career as a stockbroker back in the early 60's, there was little or no institutional trading. I worked on the floor myself in 1973 so I saw it first hand.

People bought stock in companies that they trusted and wanted to invest in. It was a lot different. Now, maybe it's better the way it is now, I don't know, but it certainly more like a casino than it was before. And with the Fed essentially forcing money into the stock market by keeping interest rates low and buying mortgages, add to that the fact that many corporations are making their money from overseas sales in countries that are not as politically stable as the U.S., this to me makes the stock market more volatile than ever. For anyone who owns a lot of stock, make sure you have either a stop loss strategy or hedges with puts if you have a lot of money in the market. If the market has a monster collapse, which, incidentally, can be triggered by computers, you're better off taking a 10 to 20% hit than losing most of your money.

When there's a bull market as there is now, it creates a false sense of security. But the market is much riskier than it appears. It can fall thousands of points in one hour without any warning or notice, and it most likely will, at some point.

People have a tendency to harken back to Golden Years that never existed. The Stock Market has always been a casino.

This book was published in 1897. On page 9, the author states that 95% of trades are just bets on price quotes.

http://www.tradeguider.com/bestofwyckoff/The_game_in_Wall_Street.pdf

With regard to volatility, nothing has changed, either. Go to Stockcharts.com and look at the historical chart of the dow from 1900-1920. 50% drops from highs were the norm.

[JBmadera]

Doesn't seems to me like it will work out in the long run. Basically they are acting like human algo's/hft's without the financial and technical resources of the large institutional players backing them.

The successful "day traders" I interact with on a daily basis do the exact opposite of these guys: we make just a few trades a day and no single trade makes up even close to 1% of the total portfolio.

[pandy]

Define betting vs. investing. The stock market has NEVER existed without risk. There is ALWAYS risk involved.

Nobody is guaranteed a return in the stock market. Not now. Not in the past. Not in the future.

Any company always is, always has, and always will be susceptible to a "black swan" event that can change the company's landscape forever. Look at Enron. Look at Kodak. Look at Pan Am. The list is endless through the years. Both past and present. What has really changed?

Some people have always considered the stock market to be a casino. To be gambling. Others scoff at the idea.

There are elements of truth in both definitions.

I definitely agree that it's always been a gamble, no question about it.

But, years ago the government did not try to artificially boost markets the way it does now. The real estate bubble is a good comparison. Real Estate was substantially influenced by Fed. policies (low interest rates, fannie/freddie, community reinvestment act). These Fed policies made the real estate market much riskier. But most people who buy a home are not looking to make a score, they just want a home. But thousands of unsuspecting home buyers got caught in the bubble and lost either equity or money.

Government meddling makes the market riskier. Another thing that's very different, when I worked on Wall. St., U.S. companies made their money from U.S. sales. So if we had a recession, the market dropped. Now, we have a recession and the market went up because of emerging economies overseas.

With tech and real estate bubbles in this country,we've seen that even our economy and government in general is not as stable as it should be. But, these foreign economies, like China, South America, India, have even less economic and governmental stability. Past history has shown us that emerging foreign economies are shaky, as we saw with Japan, which had a big explosion of economic growth followed by a long recession. When countries first start growing it is a volatile situation. We had the roaring twenties followed by the Great Depression. These emerging economies could suffer similar growing pains, which is almost inevitable, and when the bottom falls out many U.S. corporations will take a big hit.

I probably sound like a Bear, but I'm just pointing out the reality that the modern day stock market may be a lot riskier than it looks. The bottom line: if you're under the age of 50, invest in stocks. Once you hit 55 or so, most people should start to move their money into safer territory, or take their money out of mutual funds and buy stocks with stop loss protection. It makes no sense to save money your whole life and then when you're 65 the market collapses and you lose half (or more) of all of the money in your IRA because you had it all in mutual funds or stocks with no stop loss protection.

Another thing is the large computer-based trading and large institutional trading (hedge funds and such). This didn't exist in the 60's and 70's. It makes the market more volatile because computers can trigger a selling spree and the market can drop thousands of points in minutes.

[badcompany]

Pandy,

Look at this chart. The markets have ALWAYS been an extremely risky place, and are no more volatile now than they were 100 years ago.

http://stockcharts.com/freecharts/historical/djia19001920.html

[pandy]

You're probably right but there have been some decades of lower volatility. My point is, with the government so involved and corporations making their profits overseas, this is a particularly dangerous combination.

[Robert Goren]

What is dangerous is Enron wrote the book on how to make a failing company look profitable. Everybody has read that book now. You just don't know what is fact or fiction.
I had a night manager working for me that day traded. As I understood what he was trying to do was bet trends on a few stocks he thought he knew well. He bought on dips and sold when stock went up. He might buy and sell the same stock 4 or 5 times in a day. Then some guys ran a couple planes into the WTC and everything fell apart for him. The last I knew he was still trying to get a new bank roll by working a hundred hours a week. There are lot things that can go wrong in a hurry for me to think it is a good idea.

[pandy]

That's another part of the risk, fraud. When you play poker or craps at your local casino it is 100% above board and regulated more carefully and accurately than the various markets.

[lamboguy]

just yesterday, the CEO for the company Lululemon announced her retirement. who do you think sold 392,000 shares 10 days before the news? that was the CFO of the company. he saved himself $5.4 million in 10 days. the guy is already on of the richest guys around.

[pandy]

With tech and real estate bubbles in this country,we've seen that even our economy and government in general is not as stable as it should be. But, these foreign economies, like China, South America, India, have even less economic and governmental stability. Past history has shown us that emerging foreign economies are shaky, as we saw with Japan, which had a big explosion of economic growth followed by a long recession. When countries first start growing it is a volatile situation. We had the roaring twenties followed by the Great Depression. These emerging economies could suffer similar growing pains, which is almost inevitable, and when the bottom falls out many U.S. corporations will take a big hit.



They were talking about a potential equity problem in China on CNBC this morning. This is the kind of thing I was referring to in a prior post on this thread.