[steve46]

Minoo

Thanks for your questions

I think that constant volume bars or candles offer a couple of benefits. First, when you look at those, you are not focused on time, but on the movement of price. After all, they move when a certain number of events (trades) take place, not before. This can take seconds, minutes or hours. So what you really see it price independent of time (at least in my opinion). Then depending on the volume number that you choose, they seem to reduce the amount of "noise" that is present in index trading. Finally, when you look at the movement, you see a more "wavelike" action, that reflects the way price really moves. To me it is sort of like the ocean with tides moving in and out.

This is why I like to use them and frame that wavelike action with a couple of moving averages. Using the 200 and 80 period EMAs, I think that I trader is better able to identify the origins of tradeable trends up and down.

Traders should keep in mind that the main idea or concept is to learn to read price accurately. Whatever decision you make about your display, you should ask yourself, "does this help me to read the direction of price more accurately"? If it does not, then you are going in the wrong direction. Also I believe that if a trader is new, or if they are struggling, they should try to keep the screen very simple. As they learn and develop confidence, then they can add things.

I hope this helps.

Steve

[steve46]

Originally Posted by firewalker »

I'm sure it would enlighten all of us if we could get a glimpse of the inside knowledge today, so that we can take the right position before FOMC.

In the spirit of x-mas, I encourage all those who possess outside information to kindly share it with the rest of us humble, ignorant traders.

Thank you.

I do appreciate it whenever I hear a person admit to ignorance and request help...So here is what I know....

Event trading is for people who have or can develop the ability to think independently. People interested in "Event Trading" usually enjoy collecting the information and making a plan to take advantage of the outcome of an event.

If you were that kind of person....a while ago you would have taken a look at the economic calender and said to yourself...Gee...it looks as though we have a Fed Announcement coming on Tuesday December 16th...I am pretty sure the economy isn't going to get much better between now and then...so I am willing to bet that the odds favor a rate decrease.....Now if I look back at what usually happens when the fed decreases short term interest rates, I can see that the S&P usually heads north...also this is the time of year when we have a bullish bias anyway.....So I will try to find a strategy that allows me to position myself long before the announcement and hope to sell into the move up.....

Now this is an example of the way an adult professional would think about this before the fact....Then the question would be....what are my choices?...Do I put on an options position?.....Do I put on an outright long position before the move?.....Do I wait for the day of the move and try to trade it by getting long early, trying to get some breathing room and holding until the announcement?....Finally a person interested in doing this would ask, "what is the risk reward associated with each strategy, and how capable am I of managing the risks and making it happen?....

My own preference is to put on an options position a week or two before the event, and trade around it on the day of the event. In the example given, a good trader might look for places to get long in order to maximize his profits. If I were wrong, I might look for places to get short to hedge my options trade. The advantage is that by doing this a trader reduces the volatility of the event making it more manageable. The downside is you have to have more capital and knowledge of options to pull it off.

I hope this helps, and I apologize for the late post. I didn't read your question until late in the day.

Best Regards
Steve

[steve46]

Lets talk a little bit more about the nature of "inside knowledge"

As regards the financial markets, and events that take place, there are people who "know things" before everyone else. If they disseminate that knowledge to outsiders for the purpose of realizing monetary gain, they are acting illegally...they are breaking the law....and of course it is very unlikely that any of us will know these particular folks.

After that there are professionals who make it their business to develop an opinion about economic events, including earnings report and other information that might be important. These people usually disseminate their opinions for a fee, or they provide their opinion to clients of their employers (like brokerages, economic advisors or consultants)...and their are people who offer their opinions free of charge..They are news commentators, and interested amateurs and professionals alike who often are trying to develop a business of their own.

Finally there are professionals like myself who have their own opinion based on simple observation and the knowledge they can obtain from other associates (people like themselves).

You can see that what you call "inside knowledge" is often the opinion of a variety of folks, some of whom are knowledgable, and some who are not...and this is why we have what I call a "noisy" market and a divergent opinion as to the outcome of most events.

There are exceptions of course and this Fed Announcement is (in my opinion) one of them...Every professional I know, figured that today the fed would ease rates.....no exceptions in my world.....We did not know how much...but everyone of us would bet big that this would be the outcome...so in terms of "inside knowledge" there was not much to be had this time....

And this gets back to Brownsfan's recent comment. It may be that "Event Trading" isn't appropriate for newbies or struggling traders. It may depend on how much experience they have, and whether or not they are willing to take the time to learn how to do it.

If one DID want to learn, I would suggest reading the literature, and developing a method of getting information. One resource that traders use to develop information about events is the blog, and another is the RSS news feed. Here are some examples of good news feeds that will allow the interested trader to integrate several sources of information.

http://www.theinternationalforecaster.com/

http://www.marketnewsflow.com/Market...news_flow.html

I hope this adds some value to those who want to pursue the concept of event trading.

Best Regards
Steve

[MRC & Co]

Originally Posted by steve46 »

You can see that what you call "inside knowledge" is often the opinion of a variety of folks, some of whom are knowledgable, and some who are not...and this is why we have what I call a "noisy" market and a divergent opinion as to the outcome of most events.

There are exceptions of course and this Fed Announcement is (in my opinion) one of them...Every professional I know, figured that today the fed would ease rates.....no exceptions in my world.....We did not know how much...but everyone of us would bet big that this would be the outcome...so in terms of "inside knowledge" there was not much to be had this time....

And this gets back to Brownsfan's recent comment. It may be that "Event Trading" isn't appropriate for newbies or struggling traders. It may depend on how much experience they have, and whether or not they are willing to take the time to learn how to do it.

A lot of talk here about 'professionals' and referring to 'us', like you are one. Not to mention, I've never met a forum with so many people with profitable 'systems'. Especially in this time, where most 'systems traders' are being punished. Trading is a HARD gig, not many make it, especially to be able to do it for a living.

As for the bold parts, ever heard of the bond markets? You check what is factored in and then you trade off it.

Whoever has the fastests news feed and fastest execution, wins the race, IF the news is better or worse than expected. "Experience" will only help to determine the likely outcome, but not help you get your finger on the trigger first which is where the cash is at. And this is why you get HUGE 'squeezes' after news events. Mainly legit prop traders (not the 99% of junk shops), getting in first and then covering within seconds-minutes.

People need to stop talking like they know, when you can see right through them. Not saying there aren't a few legit professionals (i.e. do it for a living) here. I bet there are, but it's easy to spot the difference. And the junk talkers could confuse the new traders, not to mention, shouldn't be confusing themselves.

[Kiwi]

Sorry, I'm a little slow today. Lets check if I understand you.

You're saying:

"Steve, you're not a pro - you're a pretender."
"It's easy, just use the bond markets to resolve those uncertainties."
"I can see right through you, I'm so cool."

Is that a good summary?



Edit: There are so many BS's in the post two down from this that I can't understand him. I am pretty sure he's saying that the way I make my money every day doesn't work. Well, heck.

[Soultrader]

There are systems that automate entries based on economic numbers in which the retail trader does not have a slightest chance against it. For example, check http://www.needtoknownews.com/. Some systems incorporate the numbers as it comes and then executes instantly. On a wide range up bar... the prop traders with access to such systems are the ones entering at the lower end of the bar. The retail traders are most likely entering the the upper range of the bar. The difference? Execution speed and the speed of information that gets passed to these prop or institutional traders.

Also, there are reasons why institutions spend a ton of money on connectivity, server locations, etc... in order to improve latency. A retail trader trading via internet connection is always slower than an institution trading through a dedicated line next to the CME for example.

Regarding inside knowledge, institutions use this all the time. It would be naive to believe that this is illegal so they must not practice it. Trust me.. front running, market manipulation exists all the time. Did you know the CME charges a hefty fee if one modifies orders hundreds of times a day? You can see this on the DOM... bots flashing bids/offers and then disappearing... appearing... disappearing. Pure manipulation.

I stopped trying to figure out the markets a while ago. A good understanding of technicals, price action, and fundamentals... and all you need is basic knowledge of risk management and then a VALID strategy that produces results. A strategy can be a pattern that you can exploit over and over again. Some strategies are geared for insitutions, some for retail traders. There is enough room to make money in the markets... all one needs is to take a tiny piece of the pie to trade for a living.

Through time and experience, one will gain enough wisdom and understanding to develop further strategies. A profitable strategy provides a trader with confidence to wait patiently and execute systematically. I know that once I stopped caring about all the extra moves and focused only on what I was looking for... trading became alot easier and made more sense. Bottom line is make money... no one is going to reward you because you caught the perfect technical setup.

For new traders, I think one of the biggest challenge is to gain enough experience to understand what strategy development is all about. Forget all the textbook setups.... strategies must be developed on your own. However, there is room to gain insights from an unprofitable strategy (or even a strategy that works in a market different from yours). One does not need 10 different strategies as a retail trader. You can trade 1 profitable pattern across several markets, setup alerts to recognize when this pattern is developing, and then execute based on your feel or understanding of market strength/weakness. Fear of execution comes because of the lack of confidence in your strategy. And for those who are too caught up in the tick by tick, bar by bar action.... look at the bigger picture. Look at the overal market formation.... if you dont have a sense of whether the markets are strong or weak today you should be educating yourself and not trading. Like bootstrap mentioned somewhere... it takes tons of screen time.

Stop caring about missing moves. Stop caring about trying to figure out the markets. The markets is what it is... your profits come from the probabilities your strategy gives you. Take the trade, take the profit or loss, and move on.

A profitable strategy will allow one to not care about the losses. Because you know the strategy is valid and you will come out a net winner. (as long you have a solid risk plan!) Now the tricky part is knowing when the strategy stops working all together... this imo comes only from experience.

[MRC & Co]

Originally Posted by Kiwi »

Sorry, I'm a little slow today. Lets check if I understand you.

You're saying:

"Steve, you're not a pro - you're a pretender."
"It's easy, just use the bond markets to resolve those uncertainties."
"I can see right through you, I'm so cool."

Is that a good summary?

IR news is already priced in, YOU DON'T NEED TO PREDICT IT, AND THERE IS NO POINT LOOKING AT WHAT HAPPENS IN THE PAST, IT ALL COMES DOWN TO EXPECTATIONS AND THE ACTUAL FIGURE. Steve makes completely invalid points and tries to pass them off in the light of being a 'professional'.

The complete and utter BS I see on forums non-stop has jaded me. These people couldn't trade their way out of a paper bag!

Anybody who points out the BS is passed off as 'trying to be cool'.

Soultrader makes some good points (the ones I am referring too about execution speed, either through prop traders hitting their buttons or algo traders). BS technical textbook patterns, or those that relate to your given market(s).

[BlowFish]

You don't need execution speed with a break out bracket order resting at the exchange. You don't even need any directional bias. A simple way to exploit the volatility caused by news. You still have to be nimble of course. A quick and easy idea for struggling traders.