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suby
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Posts posted by suby
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Oil Stocks
in Stocks
To mean to be the bad guy but these are all "obvious" qualitative factors that dosn;t require much thinking.
oil = scarce
China and India = growing like crazy
However, theres more than those 2 things that determine the true price of oil, therefore it is very niave to load up on oil stocks on your premise
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You gave the answer in the question:Reason is news in Europe
(in this case it just meant no bad news from Italy or Cyprus.)
Uexkuell, interesting!
The question is, where is someone grabbing their news from. I'm guessing that this is purely a discretionary form of trading and would be impossible to model through predictive analytics?
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at an answer - often without any substantial change in news overnight moves might be caused by the thin volumes and a vacuum (so to speak) of orders trying to push an instrument. Often if this push is against the trend in which case a good opportunity for the main trend to reassert itself when it reopens, hence providing good opportunities.
(Often individual stocks that are traded overseas in different markets as ADRs exhibit this - maybe its because some funds only trade in local instruments or their time zone, or because the main flows pushing the trend are suddenly absent - hence the vacuum)
Siuya,
Thank you for the insight. A light bulb seriously just went off in my head reading what you wrote... Essentially one is attempting to front run the market by trading at those hours correct?
When basing a decision on entering a trade like that... Are you going off of the global economic calender and looking for price distortions in a specific market? or are you simply reading bloomberg or the bbc before the european open?
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on my way out the "digital door" so to speak I saw this, and have to offer a commentFirst I am pretty sure I qualify as a skilled person, certainly have plenty of experience with this market. I would find it very difficult to make a living trading one, unless I had a significant amount of capital behind it...say a minimum of 5K
I do however think a disciplined person using a decent system would have a chance if they had a min 2 contracts and (again) at least 5k discretionary capital behind them...in fact I am in the process of proving that to myself right now using a simplified system. The problem is that you have to be willing to wait for the high probability opportunities and in THIS market (S&P Futures) they tend to occur late at night when most of you are asleep...
Seeya
Steve,
Thanks for the input. Why do the high probability set ups occur during the night? I think last night is a perfect example of this when the market began to rally when the european session opened. I don't know why... but I would love to know the cause and the effect of this.
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If you'll post a 1m chart of the NQ for 3/21, I'll show you.having troubles extracting from my think or swim charts...
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It's all part of the picture. You may be working your way toward a trend, a trading range, or a hinge. Each wave is a tell, and at some point, traders will show their hands.DB how long have you been trading for and where did you develop your methodology from?/What other traders do you view as mentors to yourself?
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It really depends on what makes you comfortable.I been watching price action of the ES for nearly 1.3 years. And I have notice that each week a good opportunity arises for big points (5-10 pts). Usually support and resistance trading is easier for me. However, daily I look for a good trade. I think risk vs reward means alot.
I'm not sure if I am making sense here. It depends on the instrument too. I know for ES, it requires patience and you have to wait if trading one contract. Also, trading one contract is tuff work man. I am using two contracts and it does help for patience.
Goodoboy,
How do you define your parameters for support and resistance.
I was wondering if you could provide an example with how you define S/R throughout the week and how you would go about slicing a trade from that
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It depends in part on what one means by "making a living". I, for example, have no debts. Therefore my cost of living is a small fraction of what it would be for most.More than that, however, it is not so much a matter of strangling price and taking quick profits, or losses, nor of hitting it out of the park. Rather it is a matter of understanding price movement, taking off the collar, and letting it do what it wants to do.
The "harmonic rotation" study, for example, arrives at a conclusion, or at least a hypothesis, that is more or less true, but it gets there in a roundabout way, ignoring the dynamics of price movement. Yes, it is true that the "adverse excursions" or reactions in the NQ tend to range from 4 to 9pts. However, this is of little use in real-time trading, unless one is willing to sit helplessly like a deer in headlights and hope feverishly that price won't retrace more than nine points. To do so without understanding what he's looking just increases the likelihood of loss, which increases the fear and frustration that the trader feels, which makes it that much more unlikely that his next trade will be a successful one.
The extent of the retracement has less to do with statistical study than with the psychology of those who are holding and those who want to get in. This is why a retracement equivalent to or less than 50% suggests strength while a retracement greater than 50% suggests weakness. How far the retracement goes depends on how far the preceding rally or reaction got.
For example, if as on Friday the NQ rallies 8pts, the reaction should not move more than 4pts, which is what it did. If it subsequently rallies 17pts, it should not retrace more than 8.5pts (it retraced 10, finding support at the last swing high, to the tick, depending on one's data feed).
The day before, price opened to 80, fell to 68, and retraced 50%, after which it fell back and tried to rally again, all the way back to 80, where it retraced 50%. It then rallied 7pts, to 81, then retraced much more than 50%, leading to a 20pt decline.
What matters, then, is not the number of points in the retracement but the relationship of the retracement to the immediately preceding move, which is why the point retracements in the ES will be different than those in the NQ.
Rather than "hitting home runs", then, one should focus on letting price do what it's going to do, then step in when it looks like price is going to stop doing it and do something else instead.
DB pheonix thank you for posting this.
Sorry for the tardy reply. I have revisited this thread and am a little confused with one thing. Your addressing 50% reactions/retracements.
In regards to this paragraph:
"The day before, price opened to 80, fell to 68, and retraced 50%, after which it fell back and tried to rally again, all the way back to 80, where it retraced 50%. It then rallied 7pts, to 81, then retraced much more than 50%, leading to a 20pt decline."
how is 80 to 68 a 50% retracement? I apolgozie for being naive...
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Hi Suby,It might be worth searching through some of Jeff Swanson's articles on this site - he has posted useful and well tested ideas for regime switching models incorporating concepts like hysteresis.
If you just want to know whether to be long or short only, then you can do a hell of a lot worse than a simple moving average - the problem is always arriving at a solution that works and is not curve-fitted.
Regards,
BlueHorseshoe
Bluehorseshoe,
I appreciate the advice, i looked through Jeff Swansos articles on the site, smart man. He mainly focuses on individualistic systems towards the indices. Lately i've been throwing in a lot of secondary variables into my trading. I.e. Stocks vs Bonds or Stocks vs the Vix.
Do you ever look at intermarket relations in your trading?
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Some say the success to succesful trading is money management (i.e. as long as your winners beat your losers thats great).
Every trader says you need to find a strategy or system that jives with your personality. Sure, also great
Real money is made from being able to identify regime changes. Theres a reason why the majority of "daytraders" go broke. Why beacause there trading noise.
I want to open up this thread to regime changing.Its in technical analysis since that probably what the majority of people use here to help them identify their trends; however, indicators are secondary variables.
I look forward to hearing back to the community on their inputs about regime changing.
I'm trying to learn more about this. If anyone has any recommended books/resources, i'd love to learn
Suby
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The COT reports the past. It is a delayed report by I think 4 days, remember that when you attempt to give it any significance. I read " The Commitments of Traders Bible" by Briese years ago. A good book , but you might be interested to know that many trading firms have greatly shortened their time frames for holding a trade and this makes the COT report of even less value than it may have been in the past.In other words, the CFTC report is a joke...
I appreciate this
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I'm not sure who takes a look at this data that is published every friday; however, in regards to the index's it always shows a dramatic disconnect between the dealers and asset managers. The dealers always have short positions and the asset managers are always long. Why is this? What kind of information can someone extrapolate from this numbers?
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Small targets,tight stops,frequent trading/more commisions,low starting capital-unable/unwilling to hold overnight-if daytrading the logical solution is smaller size,bigger targets,and stops outside the "the noise" ie not in the place most likely to get hit.This guy has some ideas that could help,he calls it "harmonic rotation"I guess you either keep your stop away from those zones or you aim for them ie enter while others are covering.
futurestrader71 - $NQ_F http://stks.co/2SsS NQ Harmonic rotations study result... | StockTwits
Thanks for this Mitsubishi.
I must admit, I am a tape reader at heart but I really hate staring behind the monitors for the entire session. It creates clouded thinking because of uncertainty. All of my successful trades have come from a considerable amount of backtesting and research
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I see that theres been some discussion here lately about how you should stop being a home run hitter and go for 1 and 2 points...
If you look at the daily range on any of the contracts (indices specifically) why not try to be a home run hitter!?
I diverged a bit but I wanted to pretty much open up this thread to people who are making a decent living off of trading a couple contracts a week. Can it be done? Whats your weapon of choice? How do you approach it?
I personally like to trade the NQ and I really can't stand all this talk about going for 1 or 2 points. I don't believe markets are random but I do believe that with the advent of HFT, your really flipping a coin in this dya and age when your scalping - Hence why the average retail trader's edge is not in scalping but in attempting to hit home runs, or swinging for that matter.
I look forward to hearing from the community
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Years ago I had a simple theory that it was not so much that there are more/new buyers for something - sometimes it was simply the lack of real sellers, and then the resulting 'panic' by those wanting to buy it (reverse it for sells) - basically it was a vacuum effect more than a price driver......just an idea that works for the short term.
The long term really should be driven by fundamentals - think about the internet bubble as a great example - the price drivers there was sheer greed and panic of the next big thing, the new economy - the mass hysteria was driving the price, until over the long term, value became the ultimate price driver......but i guess in keeping with short term trading then the focus should be on that for this discussion.
^^ This right there to really be honest with you. I feel redundant with my words but essentially price drivers are based on fundamental factors. Without fundamental factors prices wouldn't move.
Take something like homebuilders... Ultimately someone could start their analysis by analyzing home sales from realtors (both new and used) then determine how much of that is from the new, then look into the amount of lumber needed in the lumber futures, and essentially build signals from that process.
Yes that is more of a long term approach; however, to really break this down, one must understand how ETF rebalance each and every day. I know for a fact that ETF rebalancing gives a lot of information to a trader going into the close or one who is even looking to make a swing trade that will last a few days in the equity markets but theres a lot more moving parts than just seeing which ETF is buying more or selling more of the isolated sector/stock at hand. This is essentially what the goal is to tackle with this thread. To determine the exact order of things for a the short term trader to develop a framework and make trades intra and interday
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Sure, there are many on the Whyckoff forum. If you are really interested in understanding the dynamics of supply and demand, what an auction market is and what it is set to accomplish, I suggest you start with the introduction, and slowly work you way through the forum.The Wyckoff Forum - Traders Laboratory
This will take you time, and you will probably have to read and study parts of the course several times, but in turn, you will understand what markets are all about. After this, you can't start to trade, relying solely on your own judgement, as opposed to obeying the Stochastics or MACDs orders.
Thanks for this,
I just wanted to clarify...
After this you can or can't start to trade on your own judgement as opposed to using indicators?
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one of the key decisions stock portfolio managers have to contend with is regards sector rotation. This is a major price driver of individual stocks - regardless of other ideas of value people might have over them.When and which stocks to rotate into and out of when reweighing and rebalancing. They often tie this in with their views on the cycles of the economy, or their 'risk on' risk off' views (
) It relates to different sectors AS WELL AS the individual stocks in each sector.Their rationale is very different to ours as a trader in that they usually have to be fully invested, and hence if may hold many stocks in a sector, even if they dont like it.
How you profit from this is something I would suggest ColB has the right idea - monitor the correlations between the macro trading instruments. As for individual stocks - well you could do the same thing, or simply trade them on an individual basis - remember these managers track against a bench mark - they might not be too interested in much else.
Siuya,
Funny you should mention sector rotation because that is essentially what started this line of thinking....
When one trades in the index universe of the Nasdaq and the S&P, things really don't move all that much in the short term due to everything more or less being correlated to their corresponding sectors and the overall indices. Ofcourse there is flow of funds from the portfolio managers in and out of one set of stock into others, as well as flow of funds from the retailers who still buy and hold.
I totally agree with colonel on his thought process with macro correlations. The model goes something like this. Monitor the leading macro correlations, i.e. currencies, bonds, and indices.
Determine which leading macro correlations effect different stocks and sectors.
Then trade in accordance to these moves while portfolio managers are still scratching their heads thinking what to do.
The question is.... what moves what in all honesty
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I would argue that it was the simplest but not the easiest. I think the Treasuries are easier. You couple what you have here and tie it in with the ES and then tie that into the Treasuries. Of course its a bit more complicated but not in principle. You are just doing what you are doing but just 4 times as much. However the payoff is 30 bucks a tick. So the payoff isn't 4 times as much however the amount you lose in inefficiency you gain in flexibility. Instead of looking and only limiting yourself to trading 1 market you now have access to 4-5 markets. I have no less then 4 DOMs open at any given time. I have access and the ability to trade all 4 however in reality I only trade 1 or 2.It will be interesting to see a good discussion on correlated markets.
Colonel,
I'd argue that your the resident correlation trader on TL which is a great thing. Interesting to hear that you don't think that the NQ is the easiest to trade... but even more interesting to hear your opinion on how the ES and Treasuries effect the NQ.
For the record I don't trade only the NQ, I trade everything thing; however, after realizing how everything is correlated in order to be succesful in this game its important for one to be systematic.
A large portion of my models are based on volatility correlation to indices but I take it your line of thinking for one to trade the nasdaq would follow NQ <->ES <-> Treasuries. Would you argue that the begining of a move that would filter through into the NQ would essential start in the Treasuries?
In today's markets how fast do participants essentially react to moves in one market that would create a domino effect in the other?
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Only two: Supply and Demand.Personally I never look at correlations.
Tupapa,
Why do you never look at correlations?
Could you please provide an example of how you look at Supply and Demand when you are analyzing a trade in a stock/futures/currency ?
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Given that this is the technical analysis section of TL and arguably the most visited section of the entire forum, I thought it would only make sense to start a thread pertaining to Price Drivers, specifically in regards to stocks.
It doesn't take a genius to realize that everything is correlated to each other in one way or another; however, the real question lies in lead lag relationship. Lead lag relationships is essentially the key to all the dineros.
Given how this is going to be directed towards stocks, I look forward in hearing back your opinions and analysis.
I will kick start the thread by displaying some thought in regards to the Nasdaq.
For anyone who trades the NQ... Apple is the key indicator as well as the 9 other largest weightings in the composite. If one was to analyze NQ's chart and AAPLs chart one would ponder why the NQ never followed... However, the answer lyes in the fact that the flow of funds went from AAPL to other large weightings in the Nasdaq which in turn balanced the index and prevented the index from diving when apple dove.
I'd argue that the Nasdaq is considerable easier to trade to do its vulnerability to apple and other 9 leading weightings which in turn kind of makes the NQ a great place for any beginner to start trading indexes.
I look forward to hearing back from the community on your intelligent responses and analysis pertaining to Price Drivers
Suby
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You may want to checkout the live commentary done by Lawrence Chan of Neoticker on this site - Daytradingbias.comThanks for this, i'll take a look at his blog!
is he pretty on point?
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Just curious what everyone's opinion is on this subject.I've gotten to the point where I've grown tired of trading individual stocks at a time. I commonly found myself in a situation where'll I find 3-4 stocks thru my scan for the next trading day, have the market direction pegged, and then end up in the 1 stock that decides not to participate. In the last two days I've passed up what would've been an average of +110 ticks or so if I took positions in all of them. Instead I chose the bad apple and stopped out for losses.
BTW, yes I do have a methodology and setup that I trade every single time. However, just because one setup looks like a previous one I had success on, that does not guarantee success. Beyond the impact of market direction, all these stocks have different behaviors, betas, etc.
What's been successful for you guys?
I wouldn't trade a stock in isolation, period. All things are correlated to one another. The real money is in determining leads and lags. How would you determine leads and lags for your chosen basket... By performing a backtest.
Could you share with us what stocks are currently in your basket?
Happy to see your looking into this!
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Best way is to trade a large folio of ETFs and use the cointegrations for hedging.Rare to see someone say "Cointegration" on this board. Happy to see it
How do you calculate Cointegration Tommaso ?
or do you just trade the spreads according to the ETF as the peg?
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I was wondering if anyone here can snipe algorithmic patterns in the markets either from a discretionary standpoint or from a mechanical one (i.e. through data mining and other techniques...)
I would love to hear from anyone who has any experience or opinion with this!
Suby
Equity Index Futures Spreads
in Futures
Posted
Just saw this
Lets take the Nasdaq and the largest 10 weights for example
When your talking about the spreads, are you talking about when the weightings get out of line from the index?