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The Wicked Problem of Trading (matthewscheffel.com)

submitted 1 year ago* (last edited 1 year ago) by [email protected] to c/[email protected]

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I wrote a farewell to the thousand plus hours I spent on trading

I traded futures in my personal account, worked for a small trading firm, and have always been into a rational, scientific look at evidence.

I gave it as good of a try as any retail trader can, and learned a lot. Mostly that it's a waste of time, because trading is a wicked problem.

This is a plea to others that might get sucked in to run away and touch grass instead.

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[–] [email protected] 3 points 1 year ago

A Random Walk Down Wall Street is a great book and one I think every day trader should read. At the heart of it is the Efficient Market Hypothesis, which basically says that asset prices reflect all known information and thus it is impossible for a trader to beat the market over the long term (on a risk-adjusted basis).

The strongest (and most controversial) form of the hypothesis is that even professional traders cannot consistently beat the market. Even if you don't agree with that, it seems clear to me that professional traders will always be able to obtain, and analyse, new information before "hobbyist" traders, and therefore by the time a hobbyist trader gets relevant information it will already be priced in.

That book convinced me that the best way to invest is just to dump money into low-fee, highly diversified ETFs and forget about it. I'm not saying others would necessarily have the same reaction, but at the very least I think an aspiring day trader should read it and be able to justify why they don't think the points made in the book apply to them.