one of the most important things i tell people over and over again, like a stuck record, is that their trading should look like a useful thing that sucks.

you know that there are extremely sophisticated trading firms out there with ultra-low latency infrastructure and sophisticated modeling techniques. and you might reasonably ask how you, as an individual, could possibly compete with that.

and the answer is that you can’t. but you don’t have to. you shouldn't even try. so, why then, can many small speculators do ok and make money?

by playing totally different games. generally, you have two things in your favour as a small trader: 1. ability to pick spots 2. ability to go after small opportunities.

The basic idea is: 1. do useful things 2. in uncompetitive places but what is "useful" in markets?

stuff like this is useful: 1. taking on risk others don’t want 2. trading with price-insensitive people (people who are forced to trade or have weird objectives other than getting good prices) 3. pushing dislocations back towards equilibrium

but lots of people are trying to do these useful things. doing useful things in markets is still a competitive business by itself.

so you need to find places to do it that kinda suck. - maybe the opportunities don't come along that often - maybe the size of the mispricings is small - maybe it involves risks or operational effort that doesn't scale well or is unacceptable to bigger traders.