
Everyone’s a Day Trader Now - prostoalex
https://www.wsj.com/articles/everyones-a-day-trader-now-11595649609
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ratsmack
I'm wondering what's going to happen when the reality sinks in on the real
estate market, especially with all of the restaurants and retail that have
closed shop for good. I think all of the REIT's are in for a world of hurt in
the 3rd quarter.

~~~
foepys
This could indeed become very interesting not only for retail and restaurant
real estate.

If there are considerably less entertainment locations in cities, moving to
the city could potentially become a lot less attractive, especially for young
people. Combined with the current push for remote work by workers and
companies alike this could push real estate prices way down.

~~~
an_opabinia
While it's true that there are more bars and restaurants and opera houses in
huge cities, there are still many bars and restaurants everywhere, it was
never about bars and restaurants. Just because that's somewhere young people
occasionally go and spend some of their income on doesn't mean it's the most
important thing, or even the 10th most important thing.

Obviously the most valuable part of a city is its demographics. Especially
young college educated people, and in really big metropolises, the ones with
the hottest real estate markets, of single college educated people between
20-40.

To keep this focused, the day trading is mostly caused by returns. That's not
saying much. It's pretty crazy how much the retail trader has been outer-
performing some classes of professionals though, especially in the last
quarter. [1] It isn't on like, having a sophisticated market thesis obviously.

It's just this huge, persistent, ugly refutation of the finance professional.
Index investing was the vanguard not the main force; retail trading is the
main force.

[1] [https://www.barrons.com/articles/retail-traders-are-
beating-...](https://www.barrons.com/articles/retail-traders-are-beating-
hedge-funds-here-are-the-stocks-they-picked-51592236292)

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United857
[http://archive.is/Ognsr](http://archive.is/Ognsr)

~~~
zaptrem
I have a WSJ subscription and the website still paywalls me half the time.
After signing in I get " Welcome Back

We noticed you're already a member. Sign in to read The Wall Street Journal. "
And clicking the sign in button links to the same page.

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DisjointedHunt
Is this the WSJ or Barrons newsletter? Ad blockers and general troubleshooting
done?

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meddlepal
This is going to end badly for a lot of people at some point.

It’s all fun and games until the market tanks for an extended period of time
and people that cannot afford to be are over leveraged in stock.

~~~
javitury
Fees and spreads from overtrading will eat up that money first.

If the market tanks for a long time, that's a big problem for everyone
(directly or indirectly).

~~~
sbierwagen
Robinhood doesn't charge commissions. People on WSB lose money the old-
fashioned way: by making stupid trades.

~~~
qeternity
Robinhood don't charge direct commission, but they do charge commission. It's
a bit like traveling and seeing the "no fee" cash exchanges...they don't
charge outright fees, they just make their money in the spread.

Every market has what's called a bid/offer spread. That's the difference
between the price the next buyer will pay, and what the next seller will
accept (if the prices were the same, it would result in a trade, and thus back
to having different prices). Market makers earn this spread by always being
willing to buy low and sell slightly higher. Robinhood traders are largely
unsophisticated and place market orders that cross this spread and thus incur
the implicit cost. Market making has become to automated that these small
spreads (pennies in many cases) are actually extremely lucrative.

So, Robinhood goes out to a market maker and says "you can execute all my
trades for me, but you'll have to pay me for the privilege because I know
you'll make a lot of money off my trades". This is called payment for order
flow, and Robinhood makes a lot of money this way.

~~~
ac29
The bid-ask spread on most stocks is 0.01. You'd need to trade a LOT for this
to actually make any real difference in your returns. Given that the average
size of account at Robinhood is something like $5000, I dont think the average
trader there is really getting fleeced by market makers.

The bid-ask spread on some of the questionable options Robinhood traders are
transacting in is quite a bit higher, though.

~~~
qeternity
You fail to grasp the size of the equities market, as well as tangential
trading opportunities. Also options market making against retail is absurdly
profitable. There’s a reason Citadel is paying tens of millions of the
privilege of executing these trades.

Source: former head of quant trading for multi billion dollar hedge fund

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United857
After a lot of retail day traders lost their shirts in the dot-com crash,
FINRA made a rule restricting pattern day trading to those with over 25K in
their accounts.

I wouldn't be surprised to see a similar rule for options trading come out of
this.

~~~
cactus2093
It seems ridiculously patronizing to try to lock people that aren’t already
rich out of legitimate investment opportunities while other types of gambling
like lotteries remain perfectly legal.

~~~
xmprt
I'm not a fan of lotteries either but when someone plays a lottery, they have
fair odds of winning. With trading, most of the time, they will lose and
someone with millions in the bank will win.

~~~
cactus2093
What? You have a much higher chance of making money buying a stock than you do
of winning the lottery.

If you’re talking about “Most of the time”, most of the time you will lose the
lottery, but make money on buying a stock, on average at the overall rate of
return of the market as a whole.

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imtringued
You don't get a market return from day trading. The only way you can make
money off of day trading is by providing liquidity and the amount of liquidity
needed in a market is limited by volume. It's easy for commercial investors to
push out retail traders because they can provide more liquidity.

Retail investors (aka people buying stocks as investment) are unaffected by
that limit.

~~~
qeternity
> You don't get a market return from day trading. The only way you can make
> money off of day trading is by providing liquidity and the amount of
> liquidity needed in a market is limited by volume.

This isn't true in the slightest. Market makes might favor liquidity providing
strategies but the vast majority of day traders do not. Retail day traders are
trading lower volumes and do not move markets. They are much more advantaged
in this respect (although they typically lack the informational edge of pros).

> It's easy for commercial investors to push out retail traders because they
> can provide more liquidity.

This just also isn't true at all. Everything has a price, including liquidity
and as a perfectly fungible good, it doesn't matter who the seller is.
Exchanges operate on price-time priority so if you provide liquidity at a
better price, or before someone else, then it doesn't matter how big you are
or how much you provide (within the context of vanilla ETPs relevant to day
trading).

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akyu
I understand the instinctual cynicism that many have when they view the recent
surge in retail trading. But I genuinely believe this is not only a good
shift, but a needed one.

Will some people get burnt with YOLO options trades? Absolutely. But guess
what, holding onto cash in a savings account is getting you burnt right now
too, its just happening too slow for most to realize.

In reality, we are all traders and virtually every financial action we take
(or don't take) is a trade. Doing nothing with your money is a trade. Buying a
house is a trade. Investing in a 401k is a trade. Buying pokemon cards is a
trade.

The fact that the current generation of high schoolers/college kids think
investing and trading is cool is actually a really good thing. The world is
becoming increasingly financialized and they need to understand this. The
financial gatekeepers have had their fun for long enough.

~~~
asplake
Money lost trading is lost forever. The slow decline of the value of cash is
hardly comparable. Not that I like the metaphor, but if doing nothing is a
trade, it’s holding an option that costs little to maintain.

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dehrmann
> She mostly buys blocks of stocks that trade for less than $5 a share and
> sells many of them within a day or two...The potential for big
> gains—increases of mere pennies per share in some cases—outweighs the risks,
> she said.

Citadel must be making a killing on market making, right now.

~~~
loopz
It takes 100% to gain back -50%.

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spir
Ethereum-based options trading is going to enable these consumer experiences
to be global, private, decentralized, and self-sovereign within a few years.
It works already, but has many sharp edges.

When that happens, retail investors in Utah or Uganda will be able to short
TSLA on a web app; no regulators involved, thank you very much. The
implications are exciting and concerning.

~~~
jayd16
Just because you do it on a block chain doesn't mean you're "self-sovereign."
That's just tax fraud.

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spir
Pardon me, I wasn't clear. I am not advocating for tax fraud or illegality :)

Self-sovereignty is a technical characteristic of blockchains where nobody can
prove you own a asset or did a transaction. That makes it hard to prove tax
compliance or non-compliance.

To those who think Ethereum on-chain activity is merely pseudonymous and not
private, you're correct, but only temporarily, because zero knowledge
platforms are arriving and will enable many common financial activities to be
performed in a truly private context.

~~~
jayd16
If it happened and you don't report it, that's fraud. It doesn't matter how
easy it is to not report it. This would apply to any other regulation as well,
not just taxes.

