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Aw, I'm still lurking on this forum. But these days I'm either too busy or just trying to enjoy life.
The pandemic has been good on me. Got out of the profession at a good time. Now I have a lot more disposable cash; much more predictable work hours; many new things to do at work; many new things to do while not at work. Hope it has been the same for you all.
There's both a market trend and personal angle to this. The market trend element is probably more interesting. Keep in mind electronic market making is my bread-and-butter:
1. The space has gone through so much consolidation. Most of my friends who actually know what they're doing had tried to spin out or work at a smaller firm, but are now back in the same few firms.
2. There used to be a feeling of intellectual competition in the space. The feeling of 5 good persons dominating a market. Or a 15-150 person firm trading 10%+ ADV of a market. There's a lot less of that now because much of the strategies, signals, technology feel like a solved problem. And 150 person firms are now 1,500+ person firms. It's not fun running the same few models over and over again and eking out a small improvement with more scale; more risk, and a lot more operational effort.
3. There's also less fun because, asymptotically, the industry has become a glorified version of the recruiting industry. As someone at the top, the problem is less of how to build amazing technology or come up with better models, and more of how to incentivize employees and attract talent.
4. And being a glorified recruiter is especially not fun because you now have kids coming out of college with $500k cash compensation in this space.
(a) This has created an air of resent where a lot of kids in the 2016-2020 generation are grandfathered into the same pay as people who joined post-pandemic. I'd say most of the interesting work is done at the "junior PM" and "engineering manager" level, and it's a weird delicate balance to reward this generation who're entering their junior PM phase while attracting new talent.
(b) This, and the big tech layoff, has also created a larger imbalance which attracts the wrong people. During my day, if you had an offer from a prestigious firm, it meant coming out of college with a $150k offer. When you have the choice of joining Google for $100-120k vs joining HRT for $150-200k but an upside lockup, the choices come down more to your actual passion. Now kids have the choice of joining Google for $120k vs joining Citadel/Jane Street for $500k, so there's a lot more perverse incentive to be attracted to the latter. So IMO, there was a much more interesting, eclectic, passionate, and intellectual intake in the 1998-2020 years than the post-2020 generation. Market making used to be a secret profession you did if you were interested in math and had nowhere to go. Now so many of the kids that would've gone into law or med school in the past are in CS and chasing this field for the money.
5. It's a lot less fun being anywhere other than the top 3 firms in any asset class today. The volatility of 2020-2022 has created a significant rift in hiring resources between the top 3 firms and every other firm. So the firms outside of the top 3 are competing by training less talented hires instead. But there's a good chance these firms are just subsidizing the training for the top 3 firms because once these people mature into "junior PMs" or "engineering managers", the top 3 firms will have all the resources to poach them.
6. I remember the echoes of 2007-2008 enough to know to get out while the music is still playing. Maybe market making will have a few more record years, but I don't think I'll regret missing out.
The personal angle is more boring: I got rather lucky that I built up enough to retire and I'm still rather young. There's a significant premium to pay up to make someone exit retirement - meaning I get to be very picky about what I want to do. Neither making another $20M from building a recruiting engine to compete with a top 3 firm nor joining a top 3 firm with a $1.2M~ guaranteed comp excites me any further. On one hand, I want to be good at things beyond low latency hacks, obscure market microstructure, and regression models while my mind is still elastic. On another, I don't want to be Scrooge McDuck and waiting till I'm in my late 40s to have some leisure time (it's not that I have more time now, but I do have less variance in my work hours).
What ever you do, do not trade a computer generated trading program, they all fail.
If you do not call your own trades, forget it.
If you can not practice trade and have six consecutive weeks of day trading, where you are positive for each M-F week before you trade any real money, you probably will trade your account away.
The trend is your friend, news drives the markets.
Large trendy expansion range days are followed by narrow range choppy why trade it days.
It is a zero sum market, there has to be some people making money on a consistent basis.
The people that I know of that consistently make money day trading, call their own trades. But then again I have not looked at a day trading computer generated program for over twenty years, would not bother. If it generates one M-F week where it is negative for the week, I would not watch it any more. A good proficient day trader never has a negative week. For one, the computer generated programs for day trading do not factor in the news.
I think you're wrong on all counts. There are algo traders who are profitable. And news days can be coded out of a program. If you haven't looked at day trading systems for 20 years, you wouldn't be aware of what's out there.
Some people trade the news. I do not care what the news is, just when it comes out. Yes, you may call me old school but I will stay with calling my own trades. If it were that easy to buy software and and now you will become a millionaire, we would all be millionaires.
Also, trading really isn't a zero sum game because the market never goes to zero. The concept was developed by mathematician John von Neuman and is known as game theory. In the market, not every transaction is net zero.
And yes we are talking about day trading U.S. based stock index futures such as the S+P 500, Nasdaq 100 e-mini futures. I do have to admit if there are algo traders, as you call them, consistently making money day trading the S+P 500 e-mini futures market, it is news to me. Whatever you trade, you had better practice trade until you have six consecutive weeks positive trading, each week positive for the week, before you trade any real money. MES is a great market to start trading. I also feel that because the stock index values are up and the volume is up the opportunity to make serious money day trading futures is as great as ever.
