"THE MARKET... consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Alexander Elder

Thursday, April 15, 2010

Daytrading Blues

Old song, new tune.
see: getting it

1 comment:

Charles Longfellow said...

Interesting thread. So why do majority lose? I believe it is because of manipulation. Manipulation of orders. Stop hunting. Internalization, where orders are retained by brokers in traditional bucketshop fashion, and never even reach the "real" market. These are all documented, rarely discussed realities. Should we scratch further, we find front running, partitioning, anything that a computer can do in high speed mode to the trader's disadvantage. The mystery is that any trader is successful. Perhaps these exceptions don't prove the breaking of the rules, but their success can't be attributed to them doing something remarkably different. Either the system is flawed, or we are mostly bad traders. Choose.

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What is a Bucket Shop?

"Bucket Shop is a specifically defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop. [2] Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market."
see: Wikipedia

The SEC believes that "internalization" is somehow different, and this affects ALL of your online trading, no matter what you are trading. Trades that are executed outside of the exchange, never reaching the main market, effectively hide data from technical analysis, and skew pricing.
see: Not a bucket?

"... internalization hurts retail customers and market quality"

see: EconPapers

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