Speculators Are Useless to Society

[Speculators Are Useless to Society]

By attempting to predict the future, speculators provide the valuable service of helping the markets prepare for the future, enabling decisions to be made today that prepare for tomorrow.

 

Take futures markets in oil for example. When prices rise in the present because speculators look at the future and see higher oil prices in it, they are effectively transmitting valuable information from the future to the present where it can be acted upon in preparation for the future. This preparation could take the form of additional investments in new oil exploration, or in investments in alternative energy such as solar, wind, etc. It also signals people in the present that they might want to adopt technologies such as hybrid cars to conserve a resource that is becoming scarce.

 

Futures markets also help maintain price stability. Instead of waiting for a given commodity to actually get short of supply, futures enable producers and users to prepare for the future, which results in less dramatic price swings than we would otherwise see. This is illustrated in this article: CARPE DIEM: What Can Onions Teach Us About Oil Prices? which compares the price of onions (which don't have a futures market) to other commodities where futures trading is allowed.

 

And as other posters have pointed out the equity markets have a distinct purpose in helping raise and allocate capitol in the most efficient way possible.

 

It is true, though, that in our modern financial system, a great deal of the useful purpose of speculation has been replaced by various forms of rent-seeking, corruption, and manipulation by privileged parties. However the basic purpose of speculation is still a great benefit to society, because it allows people and markets to prepare for the future.

[How Big is Walmart?]

I'm guessing the reason for this is because life insurance benefits are not taxed. It wouldn't make sense otherwise, since no life insurance company is going to sell policies at an overall loss. But if the money saved on taxes is more than the marginal cost of buying the insurance (the overall cost of premiums minus the overall benefits received) it would be a net win for both WalMart and the insurance company.

 

 

How Big is Walmart?

 

18. Wal-Mart and MOST large companies, take out life insurance on it's Employees, without their knowing. If an employee dies, ALL the

Insurance moneys go to the companies. I.e. An employee making $18,000 per year, dies, and the company might make as much as $1 million. Most often these moneys, coming from what is commonly referred to as "Dead Peasant Life Insurance Policies", is paid out to executives as Bonuses. (A common practice, unknown by the common man)

 

^ Does anybody have any more information on that? I've never heard of this but if it's true that's fascinating.

[The Rich Really Get Richer!]

 

Greenspan was a libertarian .

 

I have to quibble with this statement. Greenspan did express some libertarian leanings when he was much younger (including a well-written paper in support of the Gold Standard), but he has long since abandoned libertarianism for centralized control of the economy by a fiat money fractional reserve banking system.

 

Libertarianism and fiat-money-based central planning are pretty much diametrically opposed schools of thought.

[Arbitrage Trading Tool]

Sounds very interesting, especially if it makes profits. Reading the screens of various trading applications is a very cool feature. Must have been somewhat difficult to program. Kudos to you for figuring out how to make that work.

 

Regarding features 5 and 6, those sound quite ambitious and difficult and not necessarily needed in order to be successful with your basic arbitrage concept. Also not as unique (there are other existing trade copier softwares out there already)

 

Feature 7 sounds even more ambitious and difficult than the others, and also not really necessary for your arbitrage concept to work.

 

One thing that would be handy is some sort of interface to calculate and display the profits you're making in arbitraging between the different platforms, including some metrics on slippage and commissions. Also you might need some way to deal with requotes, error messages, etc from various platforms.

 

If you need a beta tester who is already running a number of platforms let me know.

[Order Flow Analytics]

Here's a link to their recent webinar: Trader Kingdom - Order Flow Analysis in the eMini S&P 500

 

He explained that the COT number is not the net delta for the period , but the delta 'since the last temporary exchaustion'

 

Interesting stuff.

 

That was an interesting screenshot of depth ratio indicators davewolfs. Was that a neoticker indicator?

[Order Flow Analytics]

Thanks for the report, its much appreciated.

 

From an entrepreneurial standpoint, I agree with you that their pricing structure could be more attractive to their target audience.

 

The $99 monthly lease would be a very attractive option if it included all a trader needed to get started with them. With an additional $1200 or $1600 one time fee required in addition to the monthly fee, they are raising the barrier to entry quite a bit.

 

I can't help but think they would make a lot more money if they raised their monthly fee to $150 and didn't require any one-time initial fees. A trader who stayed with them for even one year would give them substantially more revenue than the one-time fees generate, and traders who stay with them for longer would be a goldmine for them year after year.

 

EOTpro's business model is a good example. There are no large upfront fees to make it hard for people to join, but their monthly fee is hefty and over time they make way more money than they could possibly make by charging one-time fees.

 

 

Hi All,

I left a message to OFA on their website requesting a phone chat and demo of their software, and they called my home phone within 10 minutes. I spoke with one of their marketing guys who is also a trader. Here are some of the highlights my demo/walkthrough:

--their software bypasses NinjaTrader for volume/delta bid*ask analysis, with a direct API to Rithmic/Zenfire for trade data, and uses the NinjaTrader DOM for order entry. So, their special bar charts with the columns that form on new rotations in price/order flow are not using Ninja charts, rather it's their own charting going direct to Rithmic/Zenfire. Perhaps, this increases data accuracy or reduces latency by a small amount. And, for Ninja 6.5, this will lessen the processor load that Ninja's charts tend to have, as their software isn't engaging Ninja's charting at all. Supposedly, this processor heavy feature of Ninjatrader's charts is completely resolved in version 7.0.

--their bar logic is interesting and forms based on price probes into areas and then when certain changes in order flow happen during a probe, a new bar may form. I went through examples of charts on their website and in youtube videos, where I counted the bid volume and the ask volume of each bar and compared that to the total delta that's listed after each bar forms....interestingly, I was off each time, and this leads me to believe that they have a proprietary way of adding to the bar delta perhaps after certain criteria are met near the high volume node or other criteria. It's not as simple as total delta of the bar imho. They mention phrases like algorithmic trade patterns on their site and have a trading course that is loaded with an auction market pattern section, so I'm assuming that their is an advanced market profile pattern logic in the bar formation and the trade signals.

--their software includes a semi-auto order entry feature which can enter a conditional limit order or several that will only trigger when their bar signal rotation logic criteria are met. The parameters for this semi-auto system can be adjusted in various ways. In the demo, the OFA rep, entered a conditional limit order, and it was interesting to watch price trade through the limit order and not trigger as the rotation/probe pattern criteria weren't met.

--their trading software and education approach are the work of a fellow named DB Vaello, who the rep explained was an exceptional trader and gives a great deal to the OFA students/customers in terms of education and customer service. (DB will be giving a webinar through Mirus Futures this Tuesday 3:30pm CST, registration link:

Trading Education. Order Flow Analysis in the eMini S&P 500. D.B. Vaello, Order Flow Analytics.)

--they offer a few indicators that compliment their probe/rotation bars, these indicators and the NinjaTrader DOM interface for semi-auto trade execution, I believe are all extra cost to the basic software

 

My feelings...as Fulcrumtrader wrote, anytime people are delving deeper into order flow analysis and zeroing in on volume patterns, this gives an edge. In the software demo shown to me via an Omnovia screen sharing room, their stuff seemed very solid and coded very well. For NinjaTrader plug-ins, I'd say they spent a lot of money and time getting the code to be very smooth.

 

I, personally, don't like looking at the bid*ask bars with numbers of contracts filling the bars in the Market Delta charting package or the OFA software; this is a personal preference, and I know many traders that swear by Market Delta. I think many Market Delta users will be very intrigued by the robust trade pattern logic built into OFA's package, and I think many will be attracted to OFA's emphasis on actionable criteria first and not a toolbox of charting possibilities. That said, I prefer to look at range bars (like .75 renko with wicks in InvestorRT) and volume bars...visually the data makes more sense to me that way. When I see the bid*ask numbers on the bars, I get a little overwhelmed. I can see how someone that uses other charting styles as their main charts could use OFA's proprietary bars as an additional signal and complimentary view of data. Kam Dhadwar over at L2st.co.uk has a chart setup like this with Market Delta where he looks over at the bid*ask bars as a sort of signal chart and has several volume bar charts open to look for entries and manage trades.

 

The sales structure of their software and education doesn't appeal to me, but may be great for others. For $99 you get the basic proprietary charting or $1200 for lifetime lease, but for all the cool trade signal and conditional order entry indicators you have to purchase each of those separately, for an additional $1600 total if you purchased all 4. Then, there's the educational packages, which are probably pretty good, especially for trading the liquid futures markets. If a market student decided they wanted to go "all in" software and education with OFA, we're looking at $6000+. What is a nice feature of their "apprentice" package for $3600 is that includes $25/month for life access to their online trading room led by DB.

 

I think that the OFA system will appeal to traders that don't currently have a profitable system and feel the need for foundation education to day trade the ES and liquid futures markets. From my experience, OFA as a company seem to be genuine traders crafting some neat tools and actually trading them everyday. In the age of information/resource sharing that we live in where companies are giving more free services to the public, I feel like OFA's pricing structure would attract more potential customers if they went with a simpler $99/month for software and partial trading room access, $1200 total software+tools lifetime lease, and $1200 for total education package plus $25/month total trading room access. This would put the price point around $2400, which I think would attract more traders that don't yet have a profitable system. This is my personal bias as someone with an entrepreneurial spirit, and I am by no means saying that OFA does not deserve the prices they have set, as they've clearly spent a great deal of time and energy in research and development.

 

Order Flow Analytics is a new company and I'm curious to see how their tools & offerings evolve. I wish them the best.