Trading, the future and increased trading participation

[JTrader]

Hello

Another hypothetical what if post!....................I've got this friend......................no just kidding........

I amagine that as more people become aware of the technologies now available at our disposal - and the accessibility of being able to make a living through trading - to some extent, more and more people will turn to trading for mmaking a living.

I am just wondering what effect increased participation is likely to have. Are there any reasons why it should make it any more difficult or more easy to make a living from trading?

Imagine that as from tomorrow, the population of traders like ourselves, doubled, tripled or even quadrupled across every market, and the new clone population/s were of an equal ability to today (or Yesterday's?) population. ......What effect do you think this may have on the markets in general, your particular market and the means by which you trade it inparticular, and our ability to successfully prosper from the markets through trading?

Many thanks

jtrader

 

[neil]

Increasing the herd

Ratio of losers to profitable traders would alter little I imagine.
Just a bigger herd of losers charging about.

 

[MartinD]

Just have a look at a mini index like the Russel 2000 - its volume average has doubled and tripled nearly every six months since its introduction two years ago. More liquidity in any market can only be a good thing

 

[TheBramble]

Ratio of losers to profitable traders would alter little I imagine.

Ditto.

Bring 'em on.

 

[TWI]

Futures volume currently growing at 20-30%/year, lot of this is paper as well as locals. Easier access leads to better understanding and wider user group of investors. This is very good for people like ourselves. More liquidity and volatility leads to more opportunities.

 

[Sahil]

High Volumes (witness Eurex Bunds) can greatly reduce volatility. Made my life as an intra-day trader a big pain in the ass. However, must be great for 'paper'. They can hits 1000s of lots at one price. This was not possible up to 18 months or so ago - when barrel scapers like myself enjoyed the swings. Guess it comes down to strategy - not goog for intra-day!

 

[JTrader]

Hi Sahil

what do you mean by 'paper'?

I too do not foresee higher volumes necessarily equating to increased volatility. A good example of this would be a stock like Voadafone, massive volume, but a fairly small intraday range in comparison to other FTSE100 stocks.

A proportion of my opening post was meant also to address the ease of access the markets through brokers, spreadbetters etc. if number of individual day traders were to increase by up to say four fold.

Perhaps such increases in market participation/traffic may make it more difficult for brokers to cope?

I suppose it also depends on what and how you are trading, DMA or through dealers own derivatives such as spreadbet or spot forex.

I do not know what effect increased numbers of day traders would have, that is why I asked!

Cheers

jtrader.

 

[jmreeve]

I suspect a significant portion of the increase in volume is due to program trading.
I think this is a trend that is likely to continue.

If the bulk of the volume ends up being computer generated then the markets may ultimately become truly efficient as the emotional element of trading is removed.

 

[sidinuk]

The volume for ES has certainly increased enormously over the last year or so. It's not uncommon to now have 3000 contracts on the bid/ask. I can't remember the last time I had any slippage on a stop order!

 

[Sahil]

people who need to hold positions (not speculators) i.e. investment banks, corporates, etc.

I would say, being all electronic will not really be a burden for brokers or exchanges. Their set-ups are scalable and I'm sure they're expecting increased volumes for the foreseeable future. One of the biggest 'pros' of going electronic was the massively potential untapped investor base.

 

[JTrader]

Technical Analysis tools and life cycles

I have on several occasions come across the theory/assumption that TA indicators etc. can go through a life cycle - from being effective to being much less effective, popular or even fashionable. For example, indicator X was effective during the 1990's but has since become less effective. I am aware that different indicators have varying levels of effectiveness during trending and ranging market periods, but to what extent is this correct and do you have any examples of Technical Analysis that are less, or even more effective than they used to be in the past.

Many thanks

jtrader.

 

[goldfish]

I guess the moral of the story is that the markets are always changing dynamic one way or another, more and more of the general public will ‘jump on the bandwagon’ as easy access increases.

I suppose you have always got to just keep plugging away at the success rate of your system by back testing new things.

 

[jmreeve]

Rise of the machines:

http://www.appliederivatives.com/co...2&IssueID=0B6540E0-0C9B-4163-A0FBEED33D6B7827

http://www.appliederivatives.com/co...2&IssueID=17359181-2798-4CC2-A269D40FF45FF003

http://www.appliederivatives.com/co...D&IssueID=9CD63FAC-BDB7-4A52-B254133010F37EE0

 

[mr_cassandra]

just an opinion......

There's no question everyone would like to do that, and that computers/internet makes it easier. But like everything else in life, it takes hard work, study and stick-to-itiveness Regreattably, that statement just ruled out 3/4 of all wannabe's.

Then you have to have patience, capital and dogged, long term determination which rules out even more.

So imo there will be more traders, but you will not be pushed aside or overrun with them.

www.angelfire.com/ma4/mr_cassandra/MainPage.html (four years of work)

Hello

Another hypothetical what if post!....................I've got this friend......................no just kidding........

I amagine that as more people become aware of the technologies now available at our disposal - and the accessibility of being able to make a living through trading - to some extent, more and more people will turn to trading for mmaking a living.

I am just wondering what effect increased participation is likely to have. Are there any reasons why it should make it any more difficult or more easy to make a living from trading?

Imagine that as from tomorrow, the population of traders like ourselves, doubled, tripled or even quadrupled across every market, and the new clone population/s were of an equal ability to today (or Yesterday's?) population. ......What effect do you think this may have on the markets in general, your particular market and the means by which you trade it inparticular, and our ability to successfully prosper from the markets through trading?

Many thanks

jtrader

 

[JTrader]

Thanks jmreeve

some interesting articles there.

 

[stevet]

there will be more people trying to become traders - but it takes a few years of full time - day in day out experience - to even stand a chance

but liquidity in markets attracts liquidity and there are plenty of professional traders/trading companies ready to jump in with size where liquidity starts to get tradeable

 

[TRADERguy]

Just have a look at a mini index like the Russel 2000 - its volume average has doubled and tripled nearly every six months since its introduction two years ago. More liquidity in any market can only be a good thing

I guess it depends on your perspective. I know a guy that accounts for an obscene portion of the volume increase in the Russel in the last 5 months and I don't think that I would want to trade against him. :cheesy:

and no..it's not me. I may be dumb but I'm not stupid!

 

[JTrader]

Just have a look at a mini index like the Russel 2000 - its volume average has doubled and tripled nearly every six months since its introduction two years ago. More liquidity in any market can only be a good thing.

But does/has this increased volume brought about an increased level of price movement/daily range?

Thanks

jtrader

 

[CityTrader]

I suspect a significant portion of the increase in volume is due to program trading.
I think this is a trend that is likely to continue.

If the bulk of the volume ends up being computer generated then the markets may ultimately become truly efficient as the emotional element of trading is removed.

Program ( portfolio) trades aren't necessarily computer generated. in fact I'd say quite the opposite- they tend to be a basket of stocks, that a PM may be re-weighting, with a handful of dogs thrown in..

I agree with The Bramble... bring on the lambs....