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12423gsd | 11 years ago
If there is some method to turn $1 into $2 then there is a whole sea of people who are better and smarter than me who will keep doing it till that method no longer works.
12423gsd | 11 years ago
If there is some method to turn $1 into $2 then there is a whole sea of people who are better and smarter than me who will keep doing it till that method no longer works.
Mikeb85|11 years ago
They may have better tools, but small investors have the advantage of being nimble.
If you're trading say, 10K per trade on large-cap stocks, you can have your entire trade executed within 10 seconds without moving the stock price (thanks to HFT, but that's another story). This makes trading on swings much easier for the small investor.
And there are plenty of tools available for the small investor, most brokers will give you access to them when you sign up for an account. Sure, you may not get streaming L2 quotes on a basic account, but you'll get all the company information you need and access to basic real-time quotes. If you want to get a little more sophisticated, you can use something like R to automate some of the information-gathering process, run models against historic data, or simply use it for very fancy charts (with every technical indicator known to mankind).
And, as has been mentioned, hedge funds, mutual funds, etc..., have different motives for trading. Sometimes they are hedging, sometimes diversifying, often they're very long term, etc... They're not always trading. Even HFT is mostly arbitrage. There's still plenty of room for small to medium traders to make money.
snowwrestler|11 years ago
Even for non-index managed funds there are often objectives or restrictions like cap size, geographical location, industry, time horizon, etc.
So while they might have better tools, they're not necessarily competing with you directly.