I agree, wait until volatility comes back. I love these bull markets, it sucks in everyone and anyone and everybody thinks they can trade. Then the bear market comes and the cycle repeats. There's too many hedge funds these days anyway, and most are subpar. Everyone in college wants to be a hedge fund manager. We'll see.
I don't think you understand how traders trade. Professional traders put on position with edge. If you cannot define an edge mathematically, then you don't have one. Once defined, there is nothing to stop the execution of that edge from happeing by an ATS instead of a mouse click by a human hand. The only thing that a computer can't do 100% is trade pit traded contracts. Even there, computers (models running on computers) play a decisive role in aiding human beings make trading decisions. This site terribly warps what trading is. People on this site think that professional traders base their trading decisions by interpreting charts or indicators on those charts. Maybe 1 in a 100 traders makes money that way. The rest are providing liquidity (sometimes taking liquidity on information flow) with an mathematical edge on their fill price. MACD, RSI, etc etc is not an edge, even though they are mathematically defined. nitro
That's so true. But then why is so much of the information/advice on this site based on technical analysis?
while i agree with it all boiling down to an edge, the fact that is commonly overlooked is that discretionary trading has an advantage over mechanical trading in that you can cherry pick trades. if i make an ATS, im supposed to let it do its thing and follow every single. if i trade discretionary I can just take the best trades with the highest chances of succeeding. ie. I can trade long a setup when the overall market and sector is strong, etc. there may be a lot more systems in the market now, but discretionary is still king.
nitro, your posts are intelligent and add value IMO, thanks regarding edgetradings question, there are lots of retail/non-pro traders here that as a group gravitate to technical analysis pseudoscience. I'd say its due to naivete and laziness. Some TA can be objectively (mathematically) defined and tested and that's fine but most of it is subjective curve fitted financial astrology. See the recent book "Evidence Based Technical Analysis" by Aronson for a good explanation of the difference between these. A seasoned quant trader I know who has overseen other traders for many years told me that the quants are killing the discretionary traders in P&L and consistency, especially over the past couple of years.
nitro could you further explain by what you mean as a mathematical edge. How can you mathematically gauge certain events and fundamental changes in a market? How can you mathematically gauge a certain feel in the market? Also when you talk about TA I completely agree with you unless you are including watching price action on the charts. While I don't believe in any kind of indicator I do heavly believe in the study of price action on a chart along with fundamentals but maybe I am missing something
Doesn't it depend on the market circumstances. We have only seen a month or two when quant strategies go bad. And these are very market friendly conditions.