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Can retail trader consistently make money?

I chanced upon a Youtube video by Anton Kreil titled “Anton Kreil annihilates retail brokers and trading educators“. He is the managing partner of Institute of Trading and Portfolio Management. In the video, he provides his insight about retail brokerage industry and expose the conflict of interest derived from the role of “trading experts” and “trading educators”. The video is slightly more than 2 hours and was a live seminar conducted in the University of Westminister.

What caught my attention is the subject of the seminar, his straight talk and the detailed exposure of brokerage industry. I summarize my key take aways below and I would recommend you to watch it yourself

  1. Vast majority of retail investors lose money because the financial infrastructure has been setup for that reason and profits go into investment banking
  2. Advancement of trading infrastructure, hardware and software does not make retail trading more profitable.
  3. A trader is a slave to volatility. Without volatility, there is no risk or opportunities. Thus no profit in the concerned period. A pro trader knows how to trade in various asset classes because market volatility has decreased significantly compare to past years due to the following
    • QE (post financial crisis) that transfers liquidity to various assets to chase yield
    • Algorithm takes over human judgement which “forms” immediate and infinite willing buyer and seller that will crush volatility.
  4. Pro traders are 80% fundamental and 20% technical. They hold various positions to diversify their risk (vs retail trader’s strategy of long or shorting their favourite cheap stocks)
  5. Brokers have plenty of avenue to make money from retail investors
    • Spread – marking price higher than underlying asset
    • Commission from trade
    • Offering leverage to investors
    • Over the counter (OTC) gain by taking opposite side from investor
  6. “Training educator” and brokers are incentivise to encourage traders to trade big and frequently that will pay them handsome profit from the above mentioned means
  7. Selling Options naked is a very dangerous strategy. You may win 7 out of 9 times but the time you lose, you will end up long or short a stock that you don’t necessary want to have position in.
  8. Some of the common inverse narative (tricks) that “training educator” and broker use to entice retail investors to trade big and more frequently,
    • Posting market predictions and reporting in social media their trade success (e.g. “Key resistance broken, made $20K, off for the day and heading to the beach”)
    • Setup fake websites with fake reviewers to promote their success and to write positive testimonials
    • Show off misleading profit trade graphs that are not audited
    • Promote trading using algorithm managed machine. 90% lose trade.

What do you think of Anton Kreil’s pointers? Share your comment in the section below

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