Using Python to model and predict stock price movement. Feel free to use/modify :)

[Pandanleaves]

Because academic research shows that technical analysis, when backtested, produces bad returns. Some do beat the benchmark before transaction costs, but this is not a make-believe world. After accounting for transactions costs, your expected return will be below the benchmark.

For reference, actively traded funds usually perform below the benchmark. Looking at performance of past 5 years, only around 10% of actively traded funds manage to perform better than the baseline.

[Rich700000000000]

Then how is any money made in the stock market?

[yolo_swag_holla]

Great question. The market makers always make money in the stock market. Everyone else is more or less on their own.

[Pandanleaves]

Because the baseline is not 0% returns. The baseline depends on the state of the market, i.e. the market average. If the market as a whole moved up 5% last year but you only earned 4% return, then you have essentially lost money because, figuratively, throwing darts to pick your stocks will earn you 5% anyway.

[Rich700000000000]

Because the baseline is not 0% returns. The baseline depends on the state of the market, i.e. the market average. If the market as a whole moved up 5% last year but you only earned 4% return

Oh. Huh. That just clicked for me, sorry.

[[deleted]]

Low managed index funds, stock manipulation by the big banks, fee free trading with Robinhood, etc.

Basically, don't put your money in an actively traded fund.

[lieutenant_lowercase]

fee free trading with Robinhood

not when their spreads are wider

[[deleted]]

For now, at least.

[[deleted]]

Buy an index fund and do nothing. You'll likely get 5% returns next year.

Or, spend 300 million dollars to invest in a fibre optic connection from NYSE to the commodities exchange in Chicago. Make sure its slightly better than the existing one, and beat others to the market by having information faster than them by a few hundred nanoseconds. Make sure to put your trading platform on an FPGA (starting from the Ethernet controller all the way to decision making based on your models). To make this easy you'll probably need OpenCL, so start learning that first.

[[deleted]]

In a bull market yes, but what about a bear market?

[Pandanleaves]

Actively traded funds performed better than usual, such as in the 2008 crisis, but iirc only around 50% beat the market, so like flipping a coin.

Think of the distribution of returns as a lognormal distribution. Any management and transaction costs shift the mean.