So then who is the fish in the $25k min buyin equities trading game?

In addition to TS's answer, it's just identifying what you believe (subjective) is an extreme price/volatility. Also, many market participants are price-takers, e.g. hedgers. Even I'll act as a price-taker if my position is too big and need to write options against it. But again, people have different approach to it, as someone mentioned, they trade momentum.

And markets are more "human" than you might think. There are times of fear and irrationality, which you can take advantage.

Personally I don't see how people daytrade (everyday) successfully, kudos to them but I don't know where they find those stable edges.*

I trade specific situations with StatArb at occaional intervals (monthly, quatery, yearly) where I spot RTM to prevail as firms start taking profits and unloading their inventory (statArb pretty much shows where fundamental divergence occurs and crappy firms like to hold on their crappy positions until forced to unload f.e. January);

So I know there is a long term stable edge there, even if the co-integrating relationship is pretty week most of the time (noise component is petty small vs the "rand" component so you can't make money day in day out).

Even then it took some finesse to spot stability in relationship that I didn't find at SSRN, and I make sure to read SSRN every week to keep on point.



In general for a stable edge you need to cover these points:

1. Identify specific market situations where inefficiency is driving prices from fundamentals (Why inefficiency exist?)

2. Identify what the smartest market participants in those situations is doing? Wtf Getco? (Why it isn't arbed out by RenTech?)


f.e.

1. Why inefficiency exist? - losers hold on to their losses to long making it easy to spot and they predictably close it when they are forced to do so.
2. Why it isn't arbed out by RenTech? - they can't invest in this type of strategy as it comes only sporadically.

(Practically they can't go to an investor and say: "You know, we are holding onto your money until we spot an opportunity, Maybe. And then invest just for the market to go against us, and then patiently wait for it to go back in green. Not for this particular trade - statistically speaking, you know.")

*I'm sure those daytrading tastytrade strategies really pan out...

Back in the good old days of pit trading the edge was as simple as buying on the bid and selling on the offer. Those days are gone For me edge is calculable by extensive back testing of setups. You assign a risk reward profile to the setup and then test it out. Even setups that "work" with the assigned r/r profile they still often carry large variances. The highest variance would be trade to trade then day to day, then week to week etc. and the further out you look with more data the less the variance becomes. I believe higher variance strategies are where more edge can be found because fewer are willing to do them.

Unsure if this edit was intended for me, but I do watch tastytrade out of entertainment and I am borrowing his "price extreme" language. As for trading like they do, no, I don't trade like them, e.g. write strangles blind to direction or whatever they mean by x standard deviation "scalper range."


Sent from my SAMSUNG-SM-G925A using Tapatalk

I think most people majorly overtrade. I'm sure there are some guys pushing super thin edges successfully every day, but they're rare and could get by doing far less. If you have the intelligence and discipline to push tiny edges, you should be able to find better spots.

The large edge stuff that I trade happens a few times a month. It dwarfs everything else I do, both because I can take size and because the edge is so large. I trade nearly every day, but it's mostly churn/keeping my head in the game. I could cut it to a few times/month and my return wouldn't go down much.

To elaborate a little more on this, two traders can have the same thesis on the market, yet trade against each other, e.g. one may buy a married put (not that I would) while another could take the other side and write a naked put. Both are bullish. Likewise, instead of the naked put, the second trader could sell a vertical spreads while a third trader is writing a naked put on the second trader's long leg.

My point is this: there is enough activity/noise and liquidity in the markets where you don't have to think like a poker player, i.e. "who's taking the other side and what's my edge against him?!" In fact, it's usually going to be a market maker who's taking the other side, and they're not in the business of speculating on direction or volatility - that's your job.

Sent from my SAMSUNG-SM-G925A using Tapatalk

Yeah, you can't worry about who is on the other side or that you are trading against the biggest and the best. Differing strategies and time frames mean that both sides can make (or lose) on the same trade. A traders biggest opponent is himself. Trading leaks can be plentiful and must be avoided. It's why I used the example earlier of the turtles because they all had the same exact game plan, approach and parameters yet had wildly differing results. The leaky traders lost and the disciplined ones were successful. Didn't matter who was on the other side.

+1

My number is 100k and no debt and I'm out of the corporate scene for good. 500k is absurd

I agree I trade daily maybe a little just to fill that urge to get in the action.
thru trial and error have come up with a game plan that meets my goals.
Is it the best,, NO, but it works for me.
Everyone is correct ; its not easy and not for everyone.
the warning here are the same as the warning on the I want to be a poker pro threads.
Lots try, Few succeed!


There are many different ways to trade and make money as well as trade and lose money.
I have a what I label my retirement account where my plays are long term for future growth and yes some is in mutual funds , Blue chip, Etc...

my account I started after black Friday is my day trade account.
my goals today are different than when I started but the end game is the same. TO MAKE A YEARLY INCOME FOR A ROOF, FOOD, CLOTHES, CAR, AND POCKET CASH.
is every trade a winner no.
if I held out another hour could I have made another 2-3 hundred yes.
if I held overnight could I have made another 1k yes.
is my system perfect; NO.
But it works for me
It balances my goals, risks, bankroll, and time.
JUST LIKE POKER you might make the right play and still lose!
Its your overall total that counts.

My area is day trading Equities.
Folks on here are far more versed in options than I am and it is also a way to go without 500k capital.


for those not versed in the lingo of trading
ALL Those Algebra equations you hated in math class
come in real handy in the market.

$100k is a very reasonable go at trading. Will allow you to focus full time without worrying about needing to make money.

Don't burn those corporate bridges though, just in case

Ya definitely never want to burn bridges. Have a great relationship with my boss at current job and won't leave on bad note. If I don't hit my 100k goal within the next 12-18 months I plan on getting my MBA from a top 15 program and going back to corporate world to build the egg faster because I'll be making pretty much at least double what I make now by getting into M&A.

I don't want to sound rude, but there's nothing clear in any of the posts above, anything is to vague.
I'd like to ask my question again adding another one tho.
What are your edge? (I don't want to know exactly what it is, I want to know whether you have a proved long time edge).
Also, do you think your strategy will work forever? If not what are you going to do?

There's a woman on TastyTrade, they called her Karen supertrader (they have a couple video's about her on youtube). She built a fund from peanuts up to a substantial AUM (assets under management) by mainly doing short strangles. The overall strategy of her fund is to do short strangles that are about 2.5 SD's OTM on both sides and they hedge with futures.

One of my theories is that the big money out there is shorting a shetaki ton of options. My theory is that they short the options leading into Friday's expiration and try to pump the market up/down to collect the premiums on which ever side they are more short. Open interest in the options market is a real thing on the index ETF's. (SPY, QQQ, DIA, IWM). I believe that the derivatives market drives the equity market on all Friday's and it's even more powerful on expiration Friday's. I have been watching this now for about 2 years (sitting on trading desks with the market and Bloomberg right in front of me) and it's amazing to see how they get the ETF's to pin places.

It seems like the sell-offs happen when the VIX is lower, there are not as many puts open and there are more calls open (big money short the calls when the sell-offs happen). Like everything in the market, it's not 100% and it doesn't obviously work every time. But what it does mean is you can never put too much weight behind what the market does on Friday's. It's never good to make big decisions on Friday's based off the markets movement for that day IMO.

When I have a big enough portfolio, I will definitely be using credit spreads as one of my strategies to make consistent profits.

There's also "big money" (whatever that really means) that buy options to hedge portfolios.

You literally sound like you started trading like a month ago. The S&P isn't a penny stock...

The VIX doesn't go down because calls are being sold, in fact most of the VIX index is attributed to put prices (the VIX is a weighted sum of SPX option prices). If you been trading for as long as you claim, you'd notice by now that markets become more volatile when sell offs occur, which creates the inverse relationship between the S&P and VIX.

What is "big enough"? First, credit spreads are defined risk trades. Second, if you meant naked options, with >$100k you can get a portfolio margin account. Even <$100k you can trade ES options which use SPAN margin. Regardless of account size, I'd say ES options are preferable as they trade 24/5.

WOW, LOL at these rebuttles, good job... should I even take the time to go further into this waste of time debate?? probably not. Your ignorance to options was clearly exposed in the trading thread....

I think you didn't do a good enough job comprehending what I was writing because I never stated the VIX went down because calls are being sold.

I understand the VIX - it's something I monitor daily (in general long options trading is more lucrative when the VIX is elevated), good try though. Completely done with this thread as well, lol like I said not here to argue but it's comical that people continuously try to make it seem like I don't understand what I'm writing about. If I didn't understand what I was writing about, I wouldn't post it.

The second to last paragraph about the VIX, I was still talking about Friday's only as well.

Seriously dude??? LOL - regarding credit spreads big enough is probably north of 100K to be able to collect a meaningful enough premium using enough margin. A good amount of margin is required to bring in a small premium with credit spreads...

And the first two lines of your rebuttle, I'm just going to disregard for obvious enough reasons...

Lol what? That was random. Link/quote me please.

Very interesting statement coming from a guy who made 11 posts about one (first?) option trade yesterday, which made you the laughing stock of that the thread in case you weren't aware.

Where is the data that open interest is higher when VIX is low? I'm not going to take your undocumented observations seriously, especially when it comes from someone who has cognitive issues and adheres to TA/astrology. Even if open interest were higher during low volatility periods, how do you know "big money" is selling it?

What was I trying?

I and BFI thank you.

Wtf are you smoking? Have you ever even traded a credit spread? As I said, it's defined risk trade, and the margin is the max loss, i.e. difference in strikes.

You're a total clown.

dude, wtf

I never said open interest is higher when the VIX is low. Maybe that last paragraph was a bit vague and it confused you but you are completely misunderstanding what I wrote.

This is what you wrote:

I noticed you deleted your second post, but I was able to quote it and reply anyway:

You obviously don't know what liquidity is. It was once liquid, e.g. when it was ATM/OTM with some time to expiration. You entered when it was ITM with hours to expiration. Liquidity (in this context) is the current and future spread, i.e. being able to both enter and exit the trade without forfeiting much to the spread. According to Tooth, the spread was 10% on entry.

Then you shouldn't be trading options. I gave you practical advice, which was to trade TF. You didn't even know what TF was.

You also shouldn't be trading options if you don't know what time value is.

I'm just going to end this with it's pretty clear to me that our understandings of the market and options are on completely different levels. Go back to the trading thread and read what you were posting in there. I feel bad for people who are unable to think for themselves and follow the herd.....

I'm done with this thread now, so go ahead and have your field day, it should help boost your low self-esteem.

Obviously.

And I asked you to quote/link me.

You think I'm following the herd because everyone thinks you're an idiot? Lol.

A lot of the edge of day traders comes from the fact that they have small positions and can predict/react (using things like charts/L2/T&S/News) what bigger players will do. As a result they will be able to profit when that predictable move that arises from bigger players changing their positions
This is why academic professors are wrong when they say its impossible to make money day trading. Just like any other field (like tennis, golf or chess) some people will be able to read those tools better than others

And while most traders fail, some of them can consistently profit (and earn very good incomes) because they can do that job better than others

Your Edge is the amount of time and effort you are going to commit to educating yourself.
Kind of sounds like your looking for a quick get rich scheme without putting in the work.
Will it work forever, once again (same as poker) your game should always evolve , you need to change and adapt to the conditions. IE MORE HARD WORK.