You need to be a little bit delusional to be an individual day-trader, paying substantial sums for information, technology, and trading spreads every day and yet somehow reckoning that by zooming in and out of highly-levered ETFs you can not so much beat as utterly obliterate broader market returns. All day-traders think they’re above-average; they have to, otherwise they wouldn’t have the hubris necessary to do it in the first place.
Ouch that hurts.
3 comments:
What is this guy talking about?
"Paying substantial sums of money for yada yada yada?"
What ... $250/mo for E-Signal? (And there are cheaper options). If you are with a so-called "prop firm" another $200/mo for the "remote access fee?"
If the trader he thinks he is talking about is actually treating this as a real business - $500/mo fixed cost is nothing compared to other "real world" options. I think it costs more per month to rent out a kiosk or stand at the neighborhood mall. BTW - what is the fixed monthly overhead for an auto repair shop these days? ... More than $500/mo. ... Like "a substantial sum of money" more than $500/mo.
"trading spreads everyday ... in highly leveraged ETFs ... ?"
That's all we do? That's it? As Amy Poeller used to say on SNL ... "Really???" ...
"utterly obliterate broad market returns"
These returns, IMO, are based on portfolios that are at least $250 mln and larger.
A prop trader who has $50k with a prop house and is able to make $100K or $200K successfully trading primarily IBM and MRK (or whatever ... highly leveraged ETFs ... ) has no illusions that this is replicable at the $500 mln AUM level.
The hubris is all Mr. Salmon's. Too "smart" to bother and pick a phone and ask a sample of traders what they actually do. As you know for sure, the actual range of different approaches would probably completely stun him.
SSK
Here is an example of another somewhat prominent financial market writer who needs to make a few phone calls before writing ....
http://www.businessinsider.com/john-carney-matt-taibbi-falls-for-naked-short-selling-hoax-2009-10
Anon1: agreed. Day trading is by no means an easy endeavor (then again neither are many other professional paths) but F.S. makes it sound like only idiots would even try it and absolutely nobody would be successful at it.
Anon2: funny stuff.
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