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Chartsky
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Posts posted by Chartsky
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* * *For instance, most CME futures order books are FIFO, so there is no mechanism whereby HFTs can guarantee that they are ahead of you in the queue - they can't queue jump.
* * * (Comment Edited)
BlueHorseshoe
This is an interetsing conversation. I haven't read all 9-10 pages of this thread yet, but had a few thoughts.
First, I think that scalping is alive and well and has just morphed into being done by HFT computers instead of locals in the pits. It used to be the locals could get better fills and were in-and-out with a few ticks before we could call-in to our broker, have him call the pit, place our orders and get confirmation numbers. Even if you did a lot of volume and had a dedicated phone line you were still slower that the locals. When markets went electronic, everyone effectively had the same shorter-time advantage and pit scalpers died out. Now electronic traders have to give way to HFT computer scalpers . . . who give way to those with faster computers . . . who give way to those with faster computers closer to the Exchange, etc.
Second, "scalping" is a relative term. Going for 1-2 ticks is scalping but so too is going for 5-10 ticks in a fast market like CL (Crude Oil) or GC (Gold). All I've done is raise my level of scalping above the noise generated by the HFT computers' whip in those markets. I can't compete with the HFT computers for 1-2 ticks, or even 5-10, but can take out 10-15 -- which I still believe is scalping.
But I disagree that the CME is still FIFO. At least without question. That's what was said for a long time before the existence of dark pools became known -- whereby HFT computers were allowed (for a price the Exchange didn't want to talk about) to "jump" the queue and get filled ahead of a limit order that had been sitting there a lot longer waiting for its fill.
I've traded CL for years and have a system to pick turning points in advance (sometimes). I've had my limit orders sitting there and can see the DOM as it comes into them and there is a total of, say, 5 at my level. Part of that is me. Price has way too often come into that level, hit it exactly and turned and I didn't get filled. I know I should have been #1 or #2 in the queue and can only guess I was "jumped" by a HFT computer. I can't prove it though.
Good Luck!
Chartsky
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LOL!
I was still on November CL yesterday morning too. The volume had not dropped-off enough and you could have traded either month (November or December) in the morning. Monday folks will see a big difference in volume.
Yes, the markets are "broken" and will stay broken as long as the FED keeps printing monopoly money and handing it to Goldman-Sachs and J.P. Morgan and the other insiders to gamble with, interest free.
Wouldn't it be nice to have a "free" trading account that you could gamble with every day? Taking 100 lots in whatever market you wanted and, if you won big you kept the cash but if you lost the account would be magically funded again the next day . . . That's what our U.S. politicians are allowing right now.
There's no other reason the stock market keeps rising with such a badly damaged U.S. economy. Bonds are up because the U.S. will not "default" in the near future.
Good Luck!
Chartsky
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As a full-time trader I find trading requires 100% concentration and the discipline to stick with the markets everyday. Any time I take a break from trading, it takes me several sessions to get back in the game.Like an athlete, missing several training sessions can get you off the game. Similar in trading, I find it necessary to be involved in it everyday. This allows me to be in sync with market action and understand the complete language of the markets.
By being involved everyday, I am able to recognize and memorize all key price levels and the bigger picture of market action. Clues and small pieces of market information are so important in making daily trading decisions. I find it very hard to take any breaks or a vacation. Even when I am not trading, I need to go over market action and go through my charts.
Does anyone else feel the same way?
This formerly described me. When I would take a week off and travel (before I started taking a laptop) I needed at least a day to get back in rhythm.
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I have been trying to take more days off lately. I have especially limited myself from trading on Fridays. I might trade the opening hour but I hardly ever trade the afternoon sessions.Thank you TraderGav
Now I'm more like Soultrader . . . and if it weren't for my Trading Room, I'd trade 1-2 days a week and that's all. But I disagree with the time of day . . . I'd skip all the hysteria and whip in the mornings and only trade the Afternoon Session in Crude Oil and ES because you can make tons more money then (IMO). But you can also make money in the Morning Session, be done and play golf too. Just saying if I could pick only one time of day, it'd be the mid-afternoon
Anyway, what helped me years ago was a pre-trading routine.
Just like warm-ups for an athlete, I developed a routine that I stuck to every day I traded and still "practiced" a little on days I didn't. That way it didn't take me any time to get back in rhythm because I never gout out of rhythm
Chartsky
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@GlassOnion . . . I agree completely.
To be successful in the long-term, a trader must remove as much emotion as he/she can from their trading.
However, it's easier to understand the concept than it is to actually do it. I've traded full-time since 1999 and still, to this day, find myself allowing some emotion to creep-in at times. Mostly frustration with all the computer whip these days -- but that's still an emotion and it can cause me to take an entry I might not have taken without it.
You've listed the ones most commonly discussed: fear, greed and hope
I think folks should make a well-considered, written Trading Plan and stick to it. If you see a set-up that's not on your plan, as you review it and your charts each weekend, back-test over a year or so prior charts and, if it's still valid, then add that scenario and trade it from then on. If one stops working in a particular market, take it off. If a trade isn't on your Plan you can't take it. Period. Entries, stops and profit targets, as well as markets traded, Daily Profit Targets and Daily Loss Limits, realistic weekly and monthly goals are all included in the plan. That's one thing I did that helped me turn the corner years ago.
Good Luck!
Chartsky
Traders who cannot control their emotions will rarely make any successful trades and will quickly join the 95% of traders who lose money consistently.The three emotions that traders suffer from are; fear, hope and greed. To be successful you need to suppress these emotions, banish them like demons.
All these emotions are detrimental to making money and being a good trader. Some traders even have all three emotions at some point in time. So how can a trader suppress these emotions?
Firstly, don't take high risks by trading more of your capital than you should. A rule of thumb is to not risk more than 5% of your capital ( MAX ) on any one trade. If you keep to that rule there is no chance to lose all your capital.
Make a plan and stick to it. Make yourself a set of rules and keep to them. For example if you have a rule which says that your risk reward ratio is 1:2 or 1:3 then keep to it. You'd be surprised how many traders reverse their risk reward ratios.
Comments and/or Tips welcome.
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@Predictor . . . I think you're saying the Hedge Fund Guy couldn't make much, or anything, being given $100K and limited by a $500/day loss limit? If so, I agree completely. I think we day traders that can make money consistently on such short-term trades could do it almost as well on a longer time frame . . . but I've found I don't enjoy exposure to these modern computer markets for any longer than necessary. I can also buy-sell-buy-sell-buy multiple scalps while a swing trade has a single leg extension.
Chartsky
* * *In fact, I'd wager that any day trader who's profitable is going to be better at what he does then most traders at big hedge funds. I seen another joker trying to compare day trading with a max daily loss limit to a hedge fund performance. They aren't even comparable because most of the hedge fund profits comes from huge diversification, market neutral trading, strategies that aren't available to retailers such as complex yield curve trades, and time value of money. To be clear, if you gave the average trader who makes 30% per year trading 100k and said okay you risk $500 max per day and day trade it then he wouldn't be profitable. They aren't even comparable because the trader who makes 30% year is typically making a lot of that through diversification, holding through drawdowns, etc.
* * * (Underline added).
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The best time to trade is when your particular market provides sufficient liquidity and opportunity for you to profit. This will be different for different markets and trader skill levels.
For example, trading FDAX futures is best 3:00 a.m. (Eastern) to about 6:00 a.m. But if you tried trading ES during that time you'd have to go for smaller profit targets as it usually doesn't move as well. Now at 9:30 a.m. (Eastern) ES picks up and FDAX becomes computer-dominated and whippy. So you could trade ES over-night or FDAX during the day but you'd have to be on your game and would trade them differently.
Trading currencies would be best from the European Open (3:00 a.m.) through the U.S. Morning Session, but Japanese Yen and Gold often move very well during the early Asian Session (8:00 p.m. Eastern). Of course, Gold moves well during the U.S. Session too almost every day.
Look at some charts of the market(s) you're interested in. Both time-based and volume-based, or time-based with volume as an indicator. That will give you a good idea of where to focus. Years ago I chose to be selective . . . make my money and stop in a couple of hours to enjoy my kids and golf . . . and not be tied to my computer screen 24/5.
Good Luck!
Chartsky
Base on this graph that I have seen somewhere in the internet, what is the best time of the day to trade? Does this one require you a particular time zone? Or does trading in every part of the day will be helpful, I heard that timing means profitability, so how does this two things correlate?
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I agree but think it's not likely that some institution with deep pockets is sitting there trying to manipulate price in order to snatch the rug out 1-5 minutes later. They don't have to. They scale into positions and that may be why you see apparently abnormal price/volume at times. You might be looking at the 1-3-5 minute charts but that institutional trader is looking at days-weeks-months.
As far as the OP's topic (and I haven't read-through 14+ pages either), I find value in watching where a bar/candle closes when I'm scalping as it does sometimes allow me to get in a couple of ticks better and that's a big part of the scalp trade.
Good Luck!
Chartsky
I admit to having NOT read the previous pages.It is my understanding that every time based bar from a 1 minute to a daily bar begin at the first transaction reported by the Exchange . Essentially a day's trading is broken down into whatever time increment the trader desires but if there is 6 hrs of trading, then everyone who is looking at a 1 min chart will see the same 360 bars as everyone else.The local time at your computer does not affect the number of bars or when each bar begins and ends. The start and stop is set by the live data from the exchange.
The consequence of this, it is possible in the short term to manipulate price action to give an impression which not what is actually happening.
A large trader knowing exactly when a 1 minute bar will end, could sell into the bid for say 45 seconds and then buy a smaller amount from the offer in the last few seconds. This could create an impression that high volume is entering the market and the bar closes on its high. Most traders will think this is mostly demand hitting the market when in fact it is supply heavy.
Rinse and repeat this process for 5 consecutive minutes and you now have every trader that is using a 1 min, 2 m, 3m, 4m or a 5 min chart with a false impression of what is happening. Do this at times throughout the day and even longer intra day timeframes are also affected. eg, a 30 min bar could close near the high on big volume and have the same false impression created.
I believe it is possible to sometimes see this happening when using a 1min chart and a volume chart simultaneously.
Because all momentum based indicators are lagging, I think it probably has some detrimental affect and creates a false impression there as well, although I dont use any so can not say for sure.
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Agree you should only be in a trade if you are already in profits that might act as cushion. News time is great for trading because all the participants are present. The only problem is the length of time to let the market calm down and a direction emerge before entering. To me it is 30 min generally but at times after ten minutes the direction is set and you can come back.This may be a little off-topic as far as how to read the DOM but I agree that you can hardly beat the ES market after major news, like Non-Farm Payroll or tomorrow's (9/18) FOMC Statement. The big boys (Hedge Funds, Retirement Administrators, etc.) have to adjust their positions many times and they don't just dump 50,000 contracts in at market. You can usually see where they're going as they're averaging in and jump on board with whatever volume you can afford to trade. And I don't usually wait more than 3-5 minutes but everyone knows how he/she does it best. Gold moves dramatically and Crude Oil is often hysterical, but trading 2 ES contracts is $25 per tick, 4 is $50 per tick and so on . . . and you can avoid the head-fakes from the more volatile, hysterical markets.
But also watch the DOM. Volume basically dries-up to 1500 per side (or less) in ES and you can see the institutions coming in as volume on the DOM increases.
Two quick things, first at the news usually the market head fakes. Don't know if the bigboys can intentionally do this or if it is a natural result of all the pressure. If I try (and I do) I'm a one lotter and you can get singed. Usually better to wait. * * *Agreed. The head-fakes are amateurs who guessed (gambled) wrong. The big boys aren't usually interested in head-fakes at major news time. They have to get positions adjusted and buy/sell 50,000 or more contracts at the best prices available. Do they rush? No. They've got deep pockets and time on their side. But they also clearly show where they're going and I've found you can take little bites pretty easily.
Good Luck!
Chartsky
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I've recommended MIRUS quite a few times and have not had anyone complain. They're very competitive on commissions and offer ZenFire and CQG data feeds (at least). I've been with another broker for years but if I ever switch I'll call MIRUS first.
Good Luck!
Chartsky
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@eminifan . . . Trading on the Ninja Simulator (or any simulator) and trading under live market conditions are two completely different things. I've known and helped many folks who were Simulator Millionaires but who lost-lost-lost once the DOM went "live" with real money on the line. Mostly because emotions enter the equation then and change everything about your trading psychology. Also, TF has slippage you usually don't see in Sim but which is very real.
Since you've cleared the first hurdle: consistently profitable on Simulator; the best way is to jump in with a single contract . . . set a realistic daily profit target and a daily loss limit and stop whenever you hit one or the other. Re-evaluate on weekends.
Good Luck!
Chartsky
I've been into trading on and off for around six years now, I've read several books, did my share of virtual trading, read everything I could find online about the subject. I had moderate success with stocks, though it's been a while since I've actually traded, and for the most part everything went as everyone said it should for a newer trader. However, I've recently been turned on to e-mini futures. I've been using ninjatrader to replay days for practice, in all I've replayed over 30 days. My problem is that from what everyone says my profits aren't reasonable, I trade TF with only 2 contacts at a time and on average I make between $300 and $600 a day, with my worst day ever I only made $60, and on my best I made $1100. Are those numbers realistic or am I maybe using the software incorrectly or something? -
:rofl:
I'll be laughing at this one for days!
If the market is trending, why would you employ a target? That would be like only fondling one breast when making love to a beautiful woman.* * *
The Dude abides.
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Yes - I was just making it clear it was only my opinion, I'm not saying I'm right here. I didn't want to come across like an asshole. ;-)No, I didn't take anything you wrote that way at all . . .
I'm assuming from your view that you trade longer-term? Do you day trade?Yes. I day trade mostly Crude Oil now, but also currency futures. Couldn't sleep holding anything overnight in these times. But I got stuck with a "mentor" that tried teaching me and about a dozen others starting out (NO experience) on a 5-minute ES chart, but quickly moving down to a 1-minute ER2 chart, then an ER2 tick chart. NOBODY ever learned how to trade from him and, as I understand it, everyone else blew-out their accounts and quit. Eventually it became obvious the "mentor" was changing his "time-tested" systems at least every-other week and couldn't trade profitably himself.
So, I looked over detailed notes taken (and now can't believe some of the things he taught) took what I had learned that seemed to work, and went to daily charts. When I was able to make money there, I went back intra-day. Now, a long time later, I'm trading 1-minute and ticks charts in CL.
So I'm speaking from my own experience, but it sounds like you have even more experience working in a proprietary trading firm.
Anyway, maybe this discussion will somehow prove helpful to others trying to learn.
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With respect, going to have to politely disagree with basically everything you said my friend.A common assumption, but I believe 100% false.
Every skill in life requires X number of attempts (opportunities to learn) before someone achieves some type of skill.
Day-trading provides the fastest 'feedback'.
If I trade 10 times a day, every day for a year, I've had more opportunities to learn than someone who trades EOD would have in 10 years.
And I'm going to politely disagree with a lot of what you said too.
There is no X number of trades that equates to becoming a successful trader. Trading is more about what's going on between the trader's ears . . . his or her psychology . . . than anything. If they can learn more slowly, on daily bars, they CAN transfer most of that experience to faster intra-day bars.
According to your analogy, the best way to teach someone to drive would be to put them in a NASCAR race rather than on a wide-open country road. I think most would crash and burn much faster in a NASCAR race than on the country road.
The type of decisions you make intraday are completely different to trading a daily or weekly timeframe. They require different types of personalities, skill-sets.It is also MUCH easier to teach a successfully day-trader to swing trade. It is not that easy to take a successful weekly trader and turn them into a high-frequency trader.
If someone can make decisions under pressured, time-constraint situations (intra day trading), they are likely to be able to make decisions under relaxed, time generous situations (daily / weekly trading). Clearly, this assumption does not work as well in reverse.
I agree, but find the reality is that most newbies cannot successfully day trade. No one would argue that if you can day trade you can probably swing trade. No one would question whether NASCAR drivers can drive on country roads. The difference is in getting to where that person can day trade. Some will NEVER be able to day trade and some seem to be naturals. I'm talking about the others in between.
Let's look at 2 extremes here - two traders who know nothing about trading, never traded before. Two traders who do the same prep, and same analysis of their trades, same effort to learn, same "brain" for this example:Trader A traded once in 2007, Long EURO. Made a stack of money. Analyses his trade. Writes in his journal. Etc.
Trader B traded Euro 100,000 times in 2007. Lost a little / Broke even. Has analysed every trading day. Has entires in journal to account for at least half of those 100,000 trades.
Who is going to do better in 2008? I'd be backing Trader B - Trader A made a guess, and probably thinks he's the next George Soros.
Again, you're starting with someone who is a successful day trader. If you can trade for a year and basically break-even, you will probably succeed. Who wouldn't bet on a successful day trader over a 1-trade newbie? I do not think most could be thrown-in to day trading and break-even though and history showing that 90%+ blow-out their accounts seems to support this. I do think it's easier to take someone who has learned how to trade daily bars in a slower, more relaxed environment and translate their ability to shorter time frames. You think otherwise so we'll just have different opinions.
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Your list provides some good information for thought, but I have maybe a little different perspective.
I think most traders should NOT even attempt day trading until they can consistently make money on short-term position trading (swing trading).
Sure, the lure of all that "easy" money from day trading is very hard to deny, but day trading is the fastest form of trading. I find it counter-intuitive that traders who have not mastered (or even tried) trading daily bars want to start trying 15-minute, 5-minute, 3-minute or 1-minute bars . . . or worse, tick bars.
The principles of trading are pretty much the same regardless of time frame, but day trading requires much faster responses to quickly changing conditions, and the added difficulty of going up against the best professionals in the world who ARE experienced. They will gladly welcome newbies . . . more volume and more money for them. 90%+ of all new day traders wipe-out their accounts and that money is going somewhere.
Trading Mindsets is 80 % of Success
in Trading Psychology
Posted
Most beginning traders make mistakes in real-time due to lack of experience, which translates into lack of patience and discipline, which means emotions are (mostly) driving their trading. Emotional trading = losing.
More experienced traders can experience simple draw-downs as the markets they trade change. Anyone who denies they have draw-downs is fibbing.
I would say more but have been warned by a "super moderator" I might get banned for "advertising" without paying the site for the privilege.