What you are missing is that the greeks are used to understand your exposure to various risks.. in order to hedge the risks away , or not hedge them if that risk is desirable at a certain time. But, someone trading their own money (not client money on a commission) wants to take a managed risk, they don't want to hedge it away or they will make no profit. 'Risk' here is really limiting your maximum loss with a stoploss, so that your strategy can survive long enough for the Law Of Large numbers to kick in and reveal your edge, or not.
yeah this guy is starting to talk too much shit. He's comparing two ver different approach trying to look smart. Altough it's true most of the daytraders are stupid.
Stop-loss orders do not limit loss in cases one continues to pile them up. They make sense mostly an approaches where it it possible to "recover" most of them.
Hi, you need to be aware there are many knowledgeable pro retail traders (scalp, day, momentum, swing trading etc.), making a lot of more % gain (consistent month to month) than institutions and doing it for quite a long time, some of them. You're providing the basics here. Telling people in so many vids that day traders are scam and discrediting them is simply not true, telling them that it takes a lot of learning, pratcice and mental worked out approach is more legit. About the tools, yes they have tools, there are many of them, some of them can build their own etc.
You think they are making profits, most of the time these guys/girls fund their 'lifestyle' with the huge amounts of money in which they make off courses.
A trader can make money in any way, and can manage risk in a way which is feasible. Discrediting people who are not quant developers in my opinion is wrong.
@@markkonka I do I just trade with more confidence than you. Use leverage not a stop loss noob. If you can’t afford to get liquidated or cover your position you’re losing, guaranteed. We hunt stop losses over here. At least enter a short position, no “stop losses” here.
@@markkonka pretty presumptive comment. Plenty of traders make great returns using stops. Maybe even the guy who posted the comment. I trade oil, executing on the 1 min, monitoring on the 5 and 15. Simple execution and I don't always use stops, but I do use them. Make about 0.5% a day most days. Lose some days. Probably 1 in 4. And never greater than 0.5%. I know that my time in the market is limited and eventually guys like this will use tech to shut me out, but I'll adjust when the time comes. The benefit of being a small day trader is that I don't have any rules or limits forced on me and I can use instinct as well as a simple strategy. At the moment, its working well. Try telling your boss at a big firm that you took a trade based on your gut. These are often my best trades and I'll pick up 4 or 5 x R on those trades. You can often see weakness in price movement on the 1 min, but that weakness won't show on the chart as its evident within the movement of the candle so it doesn't show unless you are watching it. I can see the algos working hard in those moments and often get in in anticipation of what I perceive as their influence on price in the moment and what they are trying to achieve, which in many cases, I presume, is hunting stops. I use this to either exit or set up my next trade. Maybe my presumptions aren't based on how algos actually work but I get it right about 70% of the time so wrong or right, it works well for me.
I feel like this guy hates to much on non institutional traders, not every strategy needs complex software to execute, plenty of discretionary non institutional traders make money.
If you asked him to create an account and turn a profit, He couldnt. He doesnt know how to trade, He knows how to code, Which is why hes a Quant coder and not a trader. RU-vid is getting full of these people recently, Watch him release a course in a month or 2 lol
We quant people really do hate youtube channels calling their technical indicators analysis “quant/quantitative”. Of coz all strategies could be profitable, having their own edge and could be simple. What we hate is they’re selling you the wrong concepts. Eventually you would come up with something profitable on your own but have all the wrong ideas on worst case scenario or what risk is. On upside everybody’s happy, but most cannot survive the downside. Simple technical analysis and stop loss “risk management” would never survive long enough. This is not quant, not even close to. So you can say you’re technical system, but not quant trader or risk manager or portfolio manager and disgrace the concepts
@@louisszeto31620000 i mean to your reply your 100% right on what you say and can fully understand why quants hate having their tools ripped. However you could be a Risk manager and a Portfolio manager without even being part of a hedge fund (i know because im a portfolio manager ;) But in complete agreeance with the rest. Whats a shame is the guy that posted the video did not display or exicute the information he was talking about in the same manor of your reply. He just out right called it all rubish. Oh and i dont trade TA i trade Dynamic ranges on williams 14 5m breaks
@@neel743 what in f are u even saying. are u even hearing what u spewed out? selling institutional tools to the public. why in world would he waste the time to give such tools to layman day traders. stay hating w ur broke ass 1k day trading portfolio lmao
If you have a day trader trading options, very plausible, then you get the prop trader. Similarly, if you have a prop trader taking a large position on one asset on which he has conviction, plausibly once in a month during a data release, he cares about the risk reward of that big trade, then you have a day trader. I think a better distinction is that a prop trader leverages the asset base and exchange connectivity provided by the prop firm to provide liquidity while staying within a certain VaR limit. He can do so because of his capital base. His stop loss is so far that it no longer becomes relevant; he will derisk by skews way before his SL is reached. A day trader doesn't have his luxury, will likely become insolvent faster and so pays utmost attention to his risk reward, namely once his trade hits a drawdown, he's out
There's a lot of passive aggressiveness here. I don't know why you couldn't just say, "traders at proprietary firms," instead of "ACTUAL traders who work at proprietary firms."
This guy finally cracked the code for me. I had been reading chart tea leaf patterns in my palm when all along I could have been buying and selling myriad instruments in a portfolio of hundreds of thousands of options and futures.
you are contradicting yourself here. in one video you said price is based on future discount what not and that the past does not predict the future. Now you saying you back test using which data? it means you still incorporate the past price movement because theres no way you are using price that hasnt appeared on a chart
Might not be a useful asnwer 2 years in the future, but will try In prop environment backtesting is not so much of a research tool or a validator tool. Backtest is used to simulate the parameters that influence trading (e.g what if the spread is 2x the normal, what if the latency is worse, etc.). It is rather the simulations of boundaries on the execution side. Realistically speaking (unless HFT), you can't answer if you will be profitable with the backtest because you don't have enough data. To comfortably say that strategy x has a sharpe 2.0 within 0.1 me and 95% confidence interval, you need 1154 years of data.
Exactly! I have been all over the prop space in my 20 or so years, so many ways to skin a cat. As I watched, I kept thinking to myself in a few years this creator will really understand the quote "Smart enough to know, how little I actually know"
No, you are wrong. Coding Jesus uses an extremely complex and sophisticated process that no lowly day trading could begin to comprehend. Therefore, this IS the only way to make money in the market.
Yeah… let’s make fancy risk parameters models but with wack base assumptions, and let’s see our overfitted machine learning strategy blow up as soon as there a black swan event…. Like so many hedge funds
Lol wrong a prop desk has to manage their risk differently because they’re trading tens of millions if not hundreds of millions. Daytraders can manage their risk as well as a prop firm on any single trade if not better due to liquidity issues if a prop firm has to exit a big position quickly, that will change the price. Taking the Greeks into account makes sense if you’re trading a lot of money or options. A trader with a winning strategy can divide their account into 100 parts and use simple dollar risk per trade easily, granted their position isn’t too large.
You can use options to help with probabilities, although I prefer backtesting. My point is exactly that. You can too, you don’t need to work for a prop firm to win.
Ah of course you want to turn $50 into $1 million. By day trading, people like you just don't want to accept the fact that you can only make lots of money with trading if you already have lots of money. But the people at the top just want you to believe you can so you keep you keep losing money and create more liquidity in the market. To help the rich get richer
This is one of the only channels on YT that gives us reliable insight into the algos we're competing against- thank you. I don't mind that you think day traders are simple: most of us aren't managing enough money to justify complexity.
SIR, Which support is more likely to hold-- A) one with fractal support Or B) one without fractal support? Which support is more likely to hold A) fresh recent support--not tested before Or B) Support which has proved successful being tested many times before? Which support is more likely to hold A) where price spent little time before being repelled away successfully Or where price spent a lot of time before moving away?And I Seek your wisdom on these life & death questions.
You are talking about two different things. Apple vs oranges I.e. portfolio vs non-portfolio. If you buying one stock only your risk will be different from managing a portfolio.
Hey Coding Jesus, I know you may think of us retail traders like a lot of the guys on Wall Street as “apes” but I thought this was an excellent video and it’s honestly refreshing to hear a completely different side of the trading world through you and I know now more than ever that I know nothing. Please make a comeback your videos are great. Best Regards, Ape retail trader ❤
For systems trading a portfolio of stocks, the ideal stop is something like 20% below the current price. Day traders seem to either have stops that are super close and keep getting stopped out or have no stop and keep wishing for the stock to go back up.
"Quant traders lose $$$ from making a small profit, retail traders/investors lose $$$ from stupid stock picks that went down" - Some quant from Wall Street
I am a very open minded person. I fully listened to all of your videos and opinion, but now I can't help myself but to comment. I myself have built many automated trading strategies using machine learning, and using no stop loss simply doesn't work for me. Maybe there is some theoretical truth to that if you are doing complex options strategy. I would agree to you only if you are talking about strategies that include options selling instead of trading actual stocks themselves. However, I don't think that makes sense to not use a stop loss if you are simply long on a stock for example.
in simple terms, stop losses are used in speculative trading. As quant traders and strategic option traders we don't use speculation therefore stop losses are of no use to us.
Hi Coding Jesus, absolutely love your videos! At 1:35 you mentioned that you were going to make a video on how trading firms are structured but I can't find it in your list of videos. Could you (or anyone reading this comment) link to the video if it is available? Thanks!
what you are saying about quants applies to day traders too. It depends on the trader I would say. You actually look like someone who tried trading and failed. Listen profitable daytraders know they dont have to just draw lines and execute trades and then make money because the market dont care about our lines. Understanding that, in the framework of all things that makes up a successful trade, execution is just 5%. I Love Videos tho
Yeah you should just trade without a stop loss and rely on correlations, that way you can have a day where you blow up your trading account in spectacular fashion.
Summary : Day traders aren't real traders but the prop traders are. Prop guys place 100k trades while day traders use stop losses. Day trading is simple while prop trading is complex.
More often then not, the Stop Loss will trigger, and after. the price will go back up. in my experience trading stop losses just limit you're Profit more than losses. heck, it will make trades that would have been Green, Red.
Then your stop losses are too tight, cut size and widen them. Place them in an area where it would be hard for the market to reach, and if it does, it indicates that the trend has genuinely changed, instead of getting stopped out by noise. Good luck!
Set your stop loss to just below the previous high low (or vise versa), an upward market shouldn't often drop below the previous high low, and when it creates a new high low you can even edge your stop loss up to just below this and make a profit even if you "lose" the trade.
Nice, an 8 minute commercial. You don't need to buy special tools or hire specialists to be successful, people. Start small and slow, and practice a lot.
For a day trader, RR is the edge. And to survive in the market and to let the law of large numbers kick in, small, retail day traders need a specific SL. Unless you are running multi legged strategies like iron fly, condor, jade, etc. Still, there also, SL is important. You cannot risk 200 to earn 100.
Exactly!!! Atleast there is someone who talks about the business... Stop loss is not something that stood there till the trade ends! There are diff risk parameters that should be done! So called social media guru traders don't even know what real professional traders do! They made money just by selling their courses! Real world is really scarry 😅
Completely disagree. Stop loss allows you to step away from the computer and if you are wrong lose what you are comfortable losing. No stress. If you know your entries and exits, then it’s very valuable. If you don’t know where to get stopped out, then you have a good chance of getting stopped out bc your charting is bad. Then it might seem like a scam
if you talking about options maybe stops are not really needed, but for stocks and equity I think stops are important if you trading low to medium frequency
I feel like there's so much to learn in the world of finance/trading, and the process of determining the order of learning things is overwhelming. What books do you recommend I read? Are there any courses you've done as well?
Comparing risk management in an options portfolio to a single directional futures position does not make much sense in my opinion. Also why would a stop loss on a delta position be bad money management?
This is definitely worth paying for. Your channel truly suits to those who have reached a learning “plateau”, so to speak. However I do have a question; does buying this basket of options actually eliminate directional bias, or are they actually trading directional but keeping a very tight leash on risk? I was surprised to see that a common strategy is to be long Vega, I always thought prop funds were net sellers.
What does your company think of you making all these videos? Are you giving edge to the competition? Do they care? What is your goal with these videos?
great vid! I wonder why there is not more info on how a retail trader can be more savvy about risk management beyond stop loss, which is notoriously hazardous in itself.
@@druntopronto7598 I know how to trade, clown. Most traders talk about risk merely as your stop loss level, position size, that's about it as far as measuring risk, otherwise you can plot trade probability wrt previous incidents.
yeah knowing my greeks is nice anf such but i am happy to know that my maximum loss can not exceed 2% per trade. what you do is programming the marketing for hedge funds, not the money making.
I just started learning programming from scratch and choose c++ for my first language (self thaught) and found your channel, hope you gonna upload more, Greetings from Poland my Christian Friend!
If instead of using a "trailing stop loss" I program a "trailing stop gap" (a trailing stop that follows the price , but when going forward again it waits to overcome the initial gap difference in pips between the initial stop and price, so it keep the channel when followin a random trend).. It will be improving my risk of getting closed? Do you use these kind of things?
This guys talks a bunch of garbage at a time. He is addicted to algos and trying to sell them too. No matter any strategy you use you mus hit a loss a one point or the other. Great traders like Richard Denis, Warren Buffet, all used Stop Loss because trades will not always go your way. The key thing in trading is your Reward compared to Risk. No body can always outsmart the market with zero loss. No even your fucking quant Analysis.
He wouldnt even know the strats they use anyway. He is a Quant working on risk plans and tools they then send to the traders. Its proven (by many prop and hedge funds) that they prefer their traders to use different strats so that when one strat doesnt work on the day, someone elses will. 1 thing they all have in common? The risk system. - What the quant makes. This guy doesnt trade, doesnt day trade, never has. He codes risk algos for the traders to use, thats it. Wait a month or 2 and he will sell a book or course on ''How to trade from a Quant prop trader''
You are a programmer with certain set of instructions to provide information about trade parameters and exposures that will enhance traders decisions or trigger trade adjustments in an Automated system.. Trading is a difficult job that only few have mastered, but you never tried it, so you can't really advise people about it.
Your stop loss will always be hunted... Know this and build your model around it... Never trade without Stop Loss no matter what Jesus or Moses tell you.
Interesting comparison, what is the point of disparaging these day traders? Analyzing the greeks is another level or risk analysis that would be overkill for individual daytraders.
Yeah bro I get it you guys use very complex options spreads but what we should just all get out of the market because we can’t code or build a bot? Who makes a market? We do. Or would you rather the bots trade each other
I would get started with learning the greeks and really!! understand them and how they influence price , for this you dont need a particular youtube channel....
Coding Jesus will 100% sell something in the future in the name of ''Someone that works in the industry'' Easy to spot as his knowledge of trading comes from his experience with Prop firms and not from day trading. So in this whole video he is stating facts in regards to his job (He knows as its his job) Then completely wrong statements regarding day trading as he doesnt day trade and probably never has so he wouldnt know the market. 90% of retail fail 60%+ Of institutinal traders also fail. Prop firms and hedge funds know this which is why they focus on managing risk so much. Some of the Top traders in the world made their money from their own knowledge. Bill Lipschutz is one of them. This guy will say how he knows the market inside out while staying in a tiny apartment and then once he understands the market enough he will sell courses to retail with something like ''the truth about trading from a Prop Quant trader'' boom, makes aload of money talking 50% on something he knows and 50% on something he doesnt and sells it to people that think he MUST be right as he consistently says ''Day traders dont have a clue'' WHEN THE GUY HAS NEVER BEEN A DAY TRADER. Risk is pre determined regardless of 'delta' ect. Their is still a model that defines the outlining amount of CASH you risk PER TRADE. The quant just makes it easier to see for the trader. You are a Quant, not a trader, dont get it mixed up. You also work on the Risk desk, Not the strat. Thats the traders job.
Guys that I know that make a lot of money use stops, the stock can run a lot against you, much more that you can imagine. The guys that bought the “pullback” in NVDA the day it fell 100 dollars and thought they were very smart because it was already 40 points below if they used leverage they were fu$&ed. So use your stops, give it room but don’t be reckless.
I feel you are being very disrespectful to day traders some of these guys amass a fortune without the need for quants Greeks or whatever fancy tool proprietary firms use just for your information
You can think about what factors impact the outcomes of the trade. Exaples are liquidity risks yield risk or specific depencies with your underlying. If you want you can model these dependencies with "copulas". You could also do a scenario generatior with a monte carlo simulation. You can then calculate the value at risk by reverting the probability density function to know at what probability you will loose a certain amount. In the end you can also calculate a risk adjusted capital which you set aside to cover for risk. This is espcially important if you trade with other peoples capital.
Retail traders do need stop loss unless they have a trading strategy with a 100% win rate, otherwise, they will blow up their account sooner or later, it's just simple probability stuff. By the way, I think knowing how to code and how to do some fancy analysis by using someone else's theory/idea or how to use fancy terminologies borrowed from textbooks doesn't mean you are more talented or have a better understanding of how the market works than any other retail traders. It just means you read more and practice more in a certain area related to your 9-TO-5 JOB, bro. Anyone can do the same stuff if they go through the same education as yours. I've been working with people having the same background as yours, but they're more humble. Be really humble, my friend, we're all the same when it comes to the market.
Hi coding jesus, could you talk more about how to transition into tech with an non-technical degree (e.g business). Im currently doing accounting at college and I am wondering how could I get a job in tech. Thanks for your wonderful videos btw :)
You can say whatever you like and put all that jargon in to sound smart, but in the end your greeks represent what you are betting the market will do and if it doesn't you can't endlessly keep making adjustments you need to have a portfolio level stop loss even for proprietary traders
Really appreciate the content! I'm looking for resources to study risk management related to quantitative trading but have no clue where to start. Any tips would be very helpful!
