If day trading works, shouldn't there be successful companies with proven track record?

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peter1a
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If day trading works, shouldn't there be successful companies with proven track record?

Post by peter1a » Sat Dec 24, 2016 8:43 am

From time to time a hear people on radio shows still promoting day trading and youtube has many videos about swing trading, day trading , options trading.

They "look" like they know what they are doing ,claiming 20-40% a year return on your investment, if you do it yourself.

Shouldn't we have by now 100's of companies with proven record that would day trade for you ?
By now we should have at least 10 established reputable companies with 20-30 years of 20% or more of yearly return .

Are there any ?
I know that marketing and ego makes people believe anything,but I have friends who lost thousands trying to do this, also I lost little bit of $ doing it myself 15y ago.

It all sounds very convincing ,looking at a chart and thinking that anybody can do it at home.

Why isn't there more push to challenge these experts to show the verifiable results. It inst as bad as it was in early 2000's regarding day trading and options trading seminars , but it is still bad and many smart people fall for this because of no research and ego . What is worst , that even money TV shows, financial newspaper and financial "reputable" websites take people who claim to do this seriously.

livesoft
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by livesoft » Sat Dec 24, 2016 8:48 am

Day trading used to work because of special data entry terminals and lax rules by stock exchanges and the SEC. Times have changed.

Nowadays, successful companies exist. Once they discover the "secret sauce", they keep it to themselves. Look up Renaissance Technologies and its history. There are others. I can suggest some books to read if you promise to read them. :)
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BogleMelon
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by BogleMelon » Sat Dec 24, 2016 8:56 am

livesoft wrote:Nowadays, successful companies exist. Once they discover the "secret sauce", they keep it to themselves. Look up Renaissance Technologies and its history.

So there are people out there who knows how to beat the market consistently?! I thought Mr.Bogle said that he knows no one who can do that! :confused
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jdilla1107
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by jdilla1107 » Sat Dec 24, 2016 9:24 am

BogleMelon wrote:
livesoft wrote:Nowadays, successful companies exist. Once they discover the "secret sauce", they keep it to themselves. Look up Renaissance Technologies and its history.

So there are people out there who knows how to beat the market consistently?! I thought Mr.Bogle said that he knows no one who can do that! :confused


The companies that "beat the market" are businesses. They don't act like mutual funds or hedge funds, they act like R&D companies which are constantly evolving. They also are volatile and almost always can not scale with more capital.

It's like how Microsoft, Telsa, and Google have "beaten the market". (ie: they grew much faster than the sp500) If you think this example is too much of stretch, then realize many major US companies have trading organizations themselves. Food companies, energy companies, and others have internal trading organizations which "beat the market" year in and year out. When you break down their trading, you realize they have internal edges from their own logistics and business optimizations.

Bogle's comment is about stock picking and the trading organizations that do this are not stock picking.
Last edited by jdilla1107 on Sat Dec 24, 2016 9:30 am, edited 1 time in total.

livesoft
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by livesoft » Sat Dec 24, 2016 9:26 am

One does not have "to beat the market consistently." Neither do successful companies. That's a terribly high standard to meet, so no one meets it.

But consider this, even if one cannot pole vault 20 feet, if one pole vaults 19 ft 10 in, then one would have won an Olympic gold medal in the 2016 game … but only if they had competed in the Olympics in 2016 … and then only if they had not flubbed.
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peter1a
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by peter1a » Sat Dec 24, 2016 9:33 am

Isn't there a higher chance that renesaince returns are just pure luck, that is being justified by technical explanation?

Threre should be more companies doing it successfully,
Every day someone wins a lottery ,

Wagnerjb
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by Wagnerjb » Sat Dec 24, 2016 12:10 pm

peter1a wrote:It all sounds very convincing ,looking at a chart and thinking that anybody can do it at home.


This is how the promoters make money. It is the same game every time, just with a different flavor.

We all know that trading doesn't work - consistently and predictably. We have mountains of data to prove it. And - even if somebody was blessed with enough talent to make money consistently - they would never share their formula with others (lest their formula no longer work due to the flood of copycats).

The way the promoters of these schemes make money is to convince gullible greedy people that they can "beat the market". They tell you several things:

a) The "big boys" are making lots of money, but the promoters know their "secret".

b) It doesn't take intelligence, it doesn't take money, you don't even need a good credit score.

c) Their system is easy and you can do it at home, or in your spare time.

d) Come to my "free" seminar and write me a check (that way I will become rich, and I am pretty sure you won't).

The promoters often find one isolated candidate who took their course and (by luck) did very well. They will hire him to give testimonials to the fact that the system is simple and that ordinary people can make a fortune using it.

The promoters are looking for gullible people, usually people of ordinary means. For this reason, you often hear them say, "you don't need to be super intelligent to use our system", "you don't need any money to use our system", "you can use our system with a low credit score", etc.

Best wishes.
Andy

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alpenglow
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by alpenglow » Sat Dec 24, 2016 12:25 pm

As I've shared here before, I worked for a very successful day trading company around the height of the tech bubble. I usually made 200-500 trades per day that I was 100% responsible for. At one point, I went a full year straight with positive trading days. How was this possible? I took advantage of a variety market inefficiencies that I kept very quiet and had superior execution. There was no luck involved. When my methods stopped working, I "retired" and now I teach science to middle school kids. I'm sure others still have methods that work. Happy holidays!

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jimb_fromATL
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by jimb_fromATL » Sat Dec 24, 2016 12:34 pm

If day trading works ,shouldn't there be successful companies with proven track record?


Yes there should, but it doesn't so there aren't.

Think about it for just a few seconds. If their systems really worked as well as they claim for anything other than flukes akin to winning the lottery, why would they want to share it so others could compete with them and take away their profits?

Why would they not be rich and retired, or at least making their millions at their leisure instead of having to make their living selling newsletters or books or videos or software?

jimb

livesoft
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by livesoft » Sat Dec 24, 2016 12:38 pm

jimb_fromATL wrote:Why would they not be rich and retired, or at least making their millions at their leisure ....

Sorry, but people don't always do things for the money. There are many fabulously wealthy people who still work and look for idiotic jobs like working with the POTUS. What's up with that? :twisted:
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jimb_fromATL
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by jimb_fromATL » Sat Dec 24, 2016 12:42 pm

livesoft wrote:
jimb_fromATL wrote:Why would they not be rich and retired, or at least making their millions at their leisure ....

Sorry, but people don't always do things for the money. There are many fabulously wealthy people who still work and look for idiotic jobs like working with the POTUS. What's up with that? :twisted:


Maybe there's more prestige and feeling of accomplishment (or satisfaction of ego) for being a POTUS than from selling newsletters and magic potions? Or maybe being a public lawmaker or official will be a good investment for making a lot more money later? ... like from charging for lectures and peddling influence?

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FillorKill
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by FillorKill » Sat Dec 24, 2016 12:46 pm

peter1a wrote:Isn't there a higher chance that renesaince returns are just pure luck, that is being justified by technical explanation?

No. This isn't luck.
https://www.bloomberg.com/news/articles ... ackest-box

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David Jay
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by David Jay » Sat Dec 24, 2016 1:23 pm

BogleMelon wrote:
livesoft wrote:Nowadays, successful companies exist. Once they discover the "secret sauce", they keep it to themselves. Look up Renaissance Technologies and its history.

So there are people out there who knows how to beat the market consistently?! I thought Mr.Bogle said that he knows no one who can do that! :confused


That quote refers to market timing (purchasing the broad market before it goes up and selling before it goes down). It is closely related to the quip that some supposed expert has: "Accurately called 12 of the last 5 Bear Markets".

[edit] Here is the full quote fromthr book "Common Sense on Mutual Funds":

“The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently." - John Bogle
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

peter1a
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by peter1a » Sat Dec 24, 2016 1:40 pm

FillorKill wrote:
peter1a wrote:Isn't there a higher chance that renesaince returns are just pure luck, that is being justified by technical explanation?

No. This isn't luck.
https://www.bloomberg.com/news/articles ... ackest-box


Maddof's fund had 10-12% consistent returns in down markets and it was incredibly suspicious. I don't believe in secrecy around their trading either(renesaince). There must be other people who are able to replicate what Renaissance is doing. Not just one company but hundreds.

columbia
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Re: If day trading works, shouldn't there be successful companies with proven track record?

Post by columbia » Sat Dec 24, 2016 2:03 pm

Maybe they just secretly invest in Wellesley Income Fund. ;)

Wakefield1
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Re: If day trading works, shouldn't there be successful companies with proven track record?

Post by Wakefield1 » Sat Dec 24, 2016 2:40 pm

Day trading works
Hedge funds work
Until they blow up
How about front running and insider trading?
The privileged pillagers who got caught investing in Putnam-
are there still privileged pillagers who haven't been caught?
Last edited by Wakefield1 on Sat Dec 24, 2016 2:50 pm, edited 1 time in total.

McGilicutty
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by McGilicutty » Sat Dec 24, 2016 2:42 pm

FillorKill wrote:No. This isn't luck.
https://www.bloomberg.com/news/articles ... ackest-box


So Renaissance supposedly has some magical internal fund that has returned 80% per year but their open-to-some-of-the-public hedge funds are doing less than average? Something doesn't smell right. Maybe they are using the internal fund to front-run their hedge funds? Or maybe the whole thing is bullshit?

Reminds me of Long-Term Capital Management:

https://en.wikipedia.org/wiki/Long-Term_Capital_Management

Edit: Did a little more research on Medallion and they charge a 5% annual fixed fee and a 44% performance fee. Very unBoglehead. They also make their money by front-running, which in my opinion should be made illegal.

http://www.insidermonkey.com/hedge-fund/renaissance+technologies/5/

peter1a
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Re: If day trading works ,,shouldn't there be successful companies with proven track record?

Post by peter1a » Sat Dec 24, 2016 3:00 pm

McGilicutty wrote:
FillorKill wrote:No. This isn't luck.
https://www.bloomberg.com/news/articles ... ackest-box


So Renaissance supposedly has some magical internal fund that has returned 80% per year but their open-to-some-of-the-public hedge funds are doing less than average? Something doesn't smell right. Maybe they are using the internal fund to front-run their hedge funds? Or maybe the whole thing is bullshit?

Reminds me of Long-Term Capital Management:

https://en.wikipedia.org/wiki/Long-Term_Capital_Management


That is exactly what I was thinking. It reminds me of that sportbetting expert, billy walters , who was making huge profits , using all kinds of statistics ,but at the end he was using insider info.

No matter what kind of genius you are , there are people who always catching up to you .We can see it when new intentions are being patented like radio, where 2 independent geniuses worked it out. And maybe 1000 were just 1 year behind.

I dont believe that they have some trading system that could produce that kind of returns.
By now every company in the world would be using it and it would simply stopped working.

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Re: If day trading works, shouldn't there be successful companies with proven track record?

Post by sixtyforty » Sat Dec 24, 2016 3:17 pm

The vast majority of people making money day trading are the one selling the books, newsletters, seminars, trading platforms and the like. Remember the gold rush ? The lure of finding gold brought thousands of prospectors. Ironically, the people that made the real money were the ones selling the tools and the jeans. No different here.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

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Re: If day trading works, shouldn't there be successful companies with proven track record?

Post by Tycoon » Sat Dec 24, 2016 3:19 pm

"If day trading works, shouldn't there be successful companies with proven track record?"


Yes
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Tanelorn
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Re: If day trading works, shouldn't there be successful companies with proven track record?

Post by Tanelorn » Mon Dec 26, 2016 9:46 am

Yes, there are successful day traders and day trading companies. But for the most part, they don't advertise and won't take your money since the opportunities they chase are limited in scale. Of course there are many more unsuccessful day traders and lucky portfolio managers, and it is these who you disproportionately find advertising their questionable wares. A signal-to-noise and adverse selection problem, if you want to think about it that way.

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