> Making and losing money can’t mean anything or have any emotional impact, one needs to just see numbers, statistics and trust on one’s strategy.

I've known many poker players who end up taking this to the extreme and basically think of every hour of their life in terms of their per hour expected value at the table.

Like, "Is it worth it to go to dinner with friends or should I play for those 2 hours instead?"

There are definitely happy and well adjusted poker pros as well who can shut it off at the end of the day, but that's a learned skill that doesn't come easy to many.

Maybe this is less of an issue with trading because the market has set hours?

Well... I trade futures which are open 24/6, but then again, my strategy mostly trades around specific dates when economic reports are released so, when there are no new economics reports I don't have anything to do... but it certainly varies from person to person and from strategy to strategy.

But you are right, trading certainly makes one A LOT more aware of risk/reward just in general life, which can be good or bad. Also, it is very easy to gamble instead of speculate, that is to trade something one "hopes" would work vs. trading something that has a statistical percentage of working, and the difference between the two is purely emotional, because one can convince oneself of quite literally anything! Come with a bullish bias and everything looks bullish... take a step back and reconsider and see how easy is for one to see what one wants to see.

> my best friend being a consistently profitable trader

He may have discover a relatively unknown niche than he can exploit, or he is plain lucky. The question is: are you confident that you can replicate his success. For most people that I'm aware of the answer is often 'no'. Most people loose money and will rarely talk about it.

I mean, one wouldn’t attempt something unless one had some measure believe in oneself’s chances. If people attempt stuff they know they will fail… Idk how they do that

What I mean is that often people think they have a formula that works, because it appears to pass all tests including back testing. But what I've gleaned generally happens, is that in due course of time ,is that the formula stops working. So it's only in hindsight that they realize that they were not correct.

On to your point - yes of course people will (and should) attempt things that they believe might work. There is no way to have a crystal ball. All I'm trying to say that consistent success appears very rare when it come to the stock market from what I've heard. The only consistent success in the stock market that I'm aware of, when it come to ordinary mortals is through insider trading etc. which is not an option for most of us.

This is a dumb question from someone who just buys and holds, but if you have a strategy, why can't this be instantiated in code and then it just trades for you so you can spend your time doing something else?

Is not dumb, is just way harder than what it seems. Is kind of like, when the price is going “up” it almost never is going up the same way. What happened before? has the market been more volatile? was there a gap in price the night before? how has the week/month been? are there any external factors (upcoming fed announcement, news, tariffs, etc.) is current “going up” a continuation of something? How fast (momentum)? How “hesitant” (volatility vs clearer directional movement)…

When one starts thinking about how to look at all those factors and when one starts thinking about how to measure those factors (what is volatility? What high or low? Compared to what baseline? Does the baseline move?) it becomes clear that the problem is a bit more complicated to measure and implement in code than it is to train oneself and trade discretionary.

With very fast execution (think server collocation on the exchange and direct fiber network access to the exchange server) the possibility of market making opens, I think of the things that Jane Street does, and look how crazy profitable they are. But very few people have access to that.

> doing commodities trading.

Game is rigged for big players. You are gambling.

> best friend being a consistently profitable trader for the last 4 years didn’t help my skeptic case…

Last 4 years have been a boon for day traders. Any idiot with a decent sized portfolio and appetite for risk can make a living. However you are literally staring at graphs all day. Not very fun or rewarding or contributing much to society tbh.

For every winner out there, there are always hundreds of losers. Something something, “survivorship bias”

> one needs to just see numbers, statistics and trust on one’s strategy.

In a vacuum, this makes sense. But the market can remain irrational much longer than you can remain solvent.

Good luck with grinding out there. The current POTUS is a massive grifter, and driven by pseudo scientific neoclassical economic theory. So your day trading days will likely be sustainable for the next 4 years.

I mean you are right… I think somebody said that where you believe you can or you can’t you are right.

This is funny tho

> Game is rigged for big players. You are gambling.

That’s the whole point of the thing, I’m not playing their game! Look at, say, wheat… a report comes out with adjusted supply/demands (USDA releases those), then if players need to buy/sell a few million bushels of wheat… well, you don’t buy/sell a couple million bushels of wheat without paying on slippage…

I’ve made money exactly that way from “big players”. We are not playing the same game at all!

The game is not rigged towards big players either.

A single person can trade limit orders with almost no transaction cost with enormously deep markets. The modern world has made the markets incredibly inefficient, prone to massive overreactions on basically everything.

What platform do you use for trading, and which commodities do you trade?

I have to confess that I have a platform addiction ¯\_(ツ)_/¯

But I finally stuck with MotiveWave, so much so that I actually paid for a full license even though there are a bunch of great free platforms. Main thing, works on Linux and macOS, where as many other platforms are exclusive Windows.

Also, the SDK is quite nice too!

As for commodities, I've found some success in agricultural commodities but I also dabble in currencies and indexes. Agricultural though have some interesting characteristics given than they have an actual physical thing behind them as opposed to how stocks move... which varies depending on which side of the bed the CEO of the company woke up!

Cool, thanks for the info. What do you actually trade? Do you buy ETFs, CFDs, or do you actually buy the futures contracts themselves?

Future contracts short term. Future brokers often have good margins of intraday hold. And with micro contracts one does need to take huge risks.

Futures are leveraged tho, so it’s kinda like a table saw, you can be very efficient with it but it can also remove your thumb as efficiently

I work for a commodities data analytics company. curious to connect!

email on profile ;-)

what success numbers you think are achievable for reasonably good algo-trader?

I mean... algo trading is a huge field. The thing with algo trading is that software people think is as a programming problem. I thought that too... is not at all! I think that one needs to learn to trade in order to then be able to observe the markets with some understanding and then start seeing patterns and behaviors and forming ideas.

I also started with the idea of doing algo trading, my tests results looked amazing! then I learned about slippage, commission, over fitting my stuff to my test data... trading is not a computer problem, is a market problem and once one understands those building an algo makes more sense. I use some tools I coded myself but I still have no idea how to quantify what I see on a chart, why one "signal" I'm fine trading, and another is a no inspite of being the same signal (think stuff like SMA crossing)

Good luck!

> about slippage, commission, over fitting my stuff to my test data

this all kinda solvable, you add slippage, commissions to the profit calculations, and use separate eval data split(or 1, 2, 3, 4) to check how model is overfitting?

Yes, all of it is solvable. I think my point is that is my impression (at least from the algo trading subreddit) that many approach it as a computer problem, which it is if one is doing what Jane Street is doing and has that kind of execution in the ns scale… but for retail traders I think one needs to learn what trading actually is, what market inefficiencies are there, usual behaviors of markets, money managements, psychology of trading, etc. in order to do algo trading well.

Props to whoever can work that out by themselves.

There’s a guy that supposedly has a couple of live trading bots trading live money on YouTube. I’ve watched his stuff and don’t really have reason to not believe him since I can look at the charts myself and see that they are indeed live. His tutorial of mql5 is also very interesting. Algo bot programming is kind of just event programming. When a bar closes or on a tick… buy? sell? do thing? That’s all it is! The trick is in when to buy/sell/do nothing.

https://www.youtube.com/live/QfDysU5eyM4?si=mvjN8dj6IHMlODR6

My hope is that I have good enough skills to build machine/deep learning model which will be able to recognize patterns base on historical data.

I am more wondering how big is opportunity for solo trader and if I should try to do this or work on some other ideas.

I think a way that you can think about it is from a risk perspective. One rule passed down among traders is to not risk more than 2% you account size in any single trade. For a $50k account that would be $1k. Now let’s say that your system gives you 2 times your risk (2R) with a 60% win rate, and let’s say that in average you make 10 trades a month… you can run those numbers and see if they make sense for you.

There’s usually an inverse correlation between win-rate and accuracy. If you increase your risk you can be right more often but your rewards are smaller. Alternatively you can be more “selective” with tighter stops and thus lower risk and is likely that you’ll be wrong more often but that the winner will be bigger…

I believe that you can have the skills to build a system that can detect patterns from historical data, but notice how, for example, from the previous calculations the problem of trading is less of a “technical” problem and more of a market, risk management, money management, statistical kind of problem.

Then there’s the emotional part of, you still have the power to stop your system… if it has had 4 or 6 losses in a row… are you still keeping it up? Loosing is inevitable in trading, but how much loosing can you handle? Have the market conditions changed? How do you measure that?

Good luck!

> but notice how, for example, from the previous calculations the problem of trading is less of a “technical” problem and more of a market, risk management, money management, statistical kind of problem.

I agree. It just happened I built such system already which models strategy over significant period of time, and accounts statistical/risks indicators, transaction price, sleepage, etc. I built it for forex eur/usd pair (probably hardest market to beat), while results were positive, I decided that they are not strong enough, and I keep wondering since then if predicting patterns in commodity futures is easier, and I should try to relaunch my effort..

If you have done the work, why not put it live?

I’m probably biased but I prefer futures, even for forex, just because is only one market vs all the extra markets a big spreads in forex, 6E for euro dollar or M6E for even smaller positions/capital/risk.

There also the element that there are a lot of things you don’t learn until you run a system live

I run it on test account, if I subtract commissions and potential sleapage, it looked like gambling with odds slightly in my favor, in short, my deep learning pattern recognitions were not strong enough on that market.

Ok

Lost money is 500 error. Profit is 200 success. Just debug.

Kinda! Emotions often get in the way tho! If I was able to lose money as dispassionately as I look at a 500 error it would be a lot easier!!

Congrats on your trading venture! Not sure you will see this but one of my all-time favorite HN comments is by a trader named fiaz about trading and failing.

https://news.ycombinator.com/item?id=121413

fiaz on Feb 22, 2008 | parent | context | favorite | on: Ask News.YC: How to re-motivate yourself?

APOLOGIES for making this post so annoyingly long, but I really hope you find value in the words below.

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I'm going to first share a personal experience from my early trading days to illustrate where I'm coming from. I used to wake up at 4:30 am everyday in the Chicago suburbs to beat rush hour traffic and make it into downtown Chicago at 6:30 am. In order to wake up so early, I fell into a habit of sleeping at 9:00 pm and like a robot waking up at 4:30 am. This simple routine was indirectly helpful when things seemed darkest.

For the first six months, I lost money and was ridiculed constantly by other traders who were more successful than me (which was about 20 other guys CONSTANTLY using me as a punching/whipping bag). The only thing that kept me going was the fact that some of the very same traders that would be making wise cracks at me for losing money were some of the most successful people I knew at the time. For better or worse, if I needed a trader to model myself after, it was the same people that were telling me how bad a trader I was - and although I was not open to really hear what they were saying, they were right about my skills in every way (but their feedback was always packaged in some sort of insult) ...

Wow, thanks for sharing this!! I have experience a bit of the same, although I don't have a group of traders making fun of me, the challenge sometimes comes from having to believe in myself, and also from how family sees it, i.e. going from a high salary "secure" tech job to attempting to accomplish something by myself...

I also find curious the human part of wishing to be believed. The numbers in trading are completely ridiculous given that the ceiling is very high for a skilled trader, and thus most people bundle it together with Vegas the hundreds of thousands of dollars in a gambling game or horse race.

I keep forgetting my own complete unbelief until I experienced a trade with triple digit returns... that makes no sense but I did it (the trick is to not return that to the market and to know that those are exceptions and slow and steady wins the race!).

The irony is that many people here in HN (this is y combinator after all) attempting entrepreneurial pursuits with the hope of making a living and a big payout on acquisition and whatnot... in spite of knowing the statistics of how rare it is for that to happen.

At any rate, thanks a ton for sharing that, it is very encouraging! I've seen people do it, that post is one example, and I have the wild believe that I can do it too! I'm expecting nothing but blood, sweat, and tears, but it's worth it for me :-)

I’m glad you read it! Maybe print it out and post it somewhere you see regularly. Good luck!