Soultrader

I no longer trade the YM. But I am trading the price movements of the futures.... and do not pay any attention to the stocks. I let the insitutional big guys do that for me.... all I do is follow what they do to take quick short term price swings. Volume is # of contracts... how would you identify the number of traders?

Why You Win or Lose - The Psychology of Speculation by Fred C. Kelly - 1930 Excerpt from chapter 3. "Next to vanity, I suppose the worst foe to good judgement that a person in the market must guard against, is old Uncle Greed. If I had only sold every stock I ever had at the price I expected to receive at the time I bought it, I should be far better off. Many a time I have placed a selling order on the same day I bought, and then - when the stock had reached my price, cancelled the order - because I decided that a few undred dollar profit wasn't nearly enough. And without a single exception, every time I have thus cancelled a selling order placed before my greed got to working on me, the stock later went down and I sold it below the figure I had first planned to take. Sad words are these - oh, if I had only sold when - ! But we all use them. Because we all have our human share of greed, it is always harder to make up one's mind to sell than to guy." "Maybe one reason why brokers market letters favor buying twice as often as they do selling is not merely because brokers are by nature optimistic, and often wrong, but because customers want such advice. Their greed makes them eager to be told to buy." "let a stock market forecaster predict an advance that doesn't come and the public will forgive him, but if h turns bearish too soon and warns of a slump long before it comes, his reputation is ruined. Greedy people who sold on his advice before the peak was reached will never forget about the money the think they might have made." "The worst losses in the market come naturally from buying stocks when they are too high-priced. And the surprising fact is that people actually buy stocks knowing full well that they are over-priced - but expecting to re-sell tham at a price even higher to somebody else. That was what happened in Florida. Men who paid $10,000 for swamp land expected to pass it on to victims still more gullible than themselves." "I suppose the stock market is like this: Here I have a dish of ice cream that cost me ten cents. Robert, the waiter, comes in and says the ice cream is all gone and no more is to be had tonight. My ice cream suddenly seems more valuable to you and you offer me, say, twelve cents for it. Then Bill, who had intended to order ice cream, makes you an offer of thirteen cents. You being, Scotch, can't resist taking a profit. Bill brags so much about the ice ream that I decide I was foolish to let it go in the first place and buy it back for fourteen cents. About that time I discover, to my dismay, that the ice cream has melted."

heres another ES trade from today using market correlation, volume and price analysis. FTSE broke passed Previous day high to be rejected. ES lifted on good volume but had no follow through. The second highlighted circle on the ES chart was the confirmation. The FTSE and DAX was the leading indicator here.... I missed a short on the FTSE (did not get an ideal entry point) so I went to the ES instead. I use correlations like this to identify possible setups whether it be reversal or continuation (momentum). Especially more on the Nikkei.

Take a look at the chart. The two highlighted points... would you consider new highs as the markets auctioning higher? But wait... the markets reversed and auctioned lower. Why? You can see how the markets were sold into at these high prices. So who caused price to reach new highs for the day? The dumb money. Who took advantage of high prices and sold their inventory? The smart money. Now.... my definition of auctioning higher can be seen through the chart below. Notice 6/16 is auctioning higher compared to 6/13 in terms of value area.

1) More aggressive buyers and sellers...ok. Its just more traders on one side expressing their opinion. The bigger the trader, the better the trader. Stack a few of them on one side and you have enough volume to trigger a chain reaction for other would be longs/shorts to enter and those who are losing money to cover/liquidate. Hence, further price movement. Just make sure you are on the same side as the well informed. 2) The S&P moves according to the 500 stocks. So (in its most simple form) we could conclude that if 250 of these stocks were moving up more than the other 250 stocks were moving down...then the S&P 500 index would be moving up...right? I guess so... never paid any attention to the cash. 3) The ES, YM, and ER all move "basically" together because many of the stocks in these indexes are the same? I'm sure many of you experienced traders have watched the ES, YM, and ER at the same time. In fact, many of you watch them when you trade because often one will give you a signal that is slightly delayed from the others. Hence, helping with an entry or exit of a trade. I tend to not look at other indices. I do look at the government bonds dependant on the market I trade. For the Nikkei, I watch the JGB. Just like I watch the big Nikkei for the mini Nikkei or TOPIX for the Nikkei\mini Nikkei. Youre right about one market giving leading signals. Today, I took a long on the JGB based on Nikkei resistance. etc.... Here is an interesting point ! ! !...pull up any day, and compare the ES, YM, and ER. It is quite obvious that they don't move exactly the same, but in general, they move in a similar path. On any given day, there are these sudden spikes in the market...either up or down. Why do ALL these indexes have the same spike? When one of these markets drops radically, they all do. If an auction had anything to do with their movement, this would not be possible. All of them had the same spike... probably because ES caused the spike first. Have Russell dive 5 quick points.. I doubt the ES would catch up to it. Identify the strong leading indexes. Like TOPIX and Nikkei are closely correlated. On the other hand, the Nikkei doesnt give a rats ass about the KOSPI. 4) Your answer to #4 was that the YM and ER also move according to the individual stocks in their index. I personally dont care what stocks move. It doesnt help me trade better. 5) If the S&P is traded in the pit, then how can you say that the S&P moves according to the 500 stocks? It can't be both ways can it? If you want some insight, just observe the big heavy weight stocks. During the sub prime panic, traders were sensitive to financial stocks. I would assume big pit traders also looked at them to determine whether they are likely to short or long. Also, why do a group of stocks seem to move in tangent with the futures? Simple.. basket orders. 6) If the ES, YM and ER are all electronically traded, then what does volume have to do with how these markets move. The ES trades 2.5 million contracts a day, the YM and ER only trade 250 thousand contracts a day. Again, what does volume have to do with the ES, YM and ER moving. It doesn't. The ES, YM and ER are going to move according to what the stocks in these indexes are doing. If there is more up movement in these stocks than down movement, these indexes go up. I have been in an "auction market theory" live trading room in the last month to observe. I will not mention the site. While listening to the mediator explain auction market theory, we were watching the market footprint and volume at price as it was happening live. As he was explaining that the market auctions down when you have more selling than buying...the market started moving up. Let me tell you that there was a LOT more sellers than buyers on the screen, yet the market shot up. Someone in the trading room asked the mediator why this was happening? He would not answer the question. I witnessed this happening regularly. After watching this "price auction at price", it has nothing to do with the market moving up or down. Youre only confusing yourself even deeper. How do you conclude a market auctions down? Lower prices? Lower value? In my opinion, all you need to learn is price patterns (in terms of bundle of bars) and volume. You have selling at a certain level? Price will auction down until the selling is cut off and enough buyers step in to lift prices again. Which is why I can exploit short term price swings.... with longer term trading I have no clue what its going to do. Two new questions for you experts out there: 7) Are commodities, like soybeans, corn, gold, etc...traded by an auction? Everything is. They might as well call the markets > "Finanicial Auction" The only difference is the objective behind the trader. Is one speculating? Hedging? Investing? etc.... Many firms buy futures for actual physical delivery. We all have a different purpose to be involved in the markets. 8) Are any individual stocks in the ES, YM or ER indexes traded by an auction? Everything is an auction. The purpose of the stock market is to sell inventory at a higher price. The only way insiders can do so is to auction it out.... price may auction higher on positive news since the public are naturally greedy. Price may auction lower on negative news since the public plays on small capital leading to weak hands and fear. You take the two examples above... put yourself into the mind of an operator with one objective. Sell stock at a profit. So how do you go about doing this? Sell on rising prices... as higher prices will attract more buying. Its simple human pysch. Demand does not even have to be present... human greed is so easy to exploit, all you have to do is jack prices up high to lure in all the greedy public suckers. Its just how the game is played.

Heres my laptop from Toshiba... actually one model older than this but with 4gb of RAM. http://explore.toshiba.com/laptops/qosmio

Reversals all across Asia today. KOSPI chart below: More impressive here on the TOPIX: Nikkei here:

Hi Paul, Not a big fan of Compaq myself. Owned one before but was it was the worst laptop I ever purchased myself. I actually beat the crap out of it like the printer scene in Office Space. lol This was before HP took over though..

Heres a 3 hour market profile webinar presented by Alex Benjamin: http://www.tradingclinic.com/oneoff/special20080606/special20080606.html

Thanks for the great post bootstrap. :applaud:

Hi pipal, Not many brokers offer KOSPI. IB is probably the easiest but you might want to look into FCM's that cater retail trading. I know a few here in Tokyo that provide this. From your profile, I understand you are based in HK? Samsung Securities might be something to look into as they have a branch in HK. Below are their details: Address: Suite 1610-1613, Jardine House 1 Connaught Place, Central Hong Kong, Hong kong Phone: 852-211-7535 Fax: 852-2114-0290 I looked into other brokerage firms like Daewoo Securities and GoodMorning Shinhan Securities but could never quite communicate with them. I know of only one local broker here in Tokyo that provide a variety of Asian products (no english though)... commissions are no different from IB at approximately $7 RT. Oh btw.. how about MF Global?

flat 22360... not moving. pretty bad trade here

out half 13860 out rest 13840

short big nikkei 13880 stop 13910

short KOSPI 22375 stop 22425

stopped...

long es 135525 stop 400

Futures, just start nibbling in the FTSE. So far not liking as it reminds me of a stock called Marubeni which I used to trade and got my butt whooped. I trade better in thick markets as I can read the DOM and tape better. Didnt realize how thin the futures was... also the DOM moves like the YM but double the tick value.

very choppy trading across global markets. im looking for rangebound OR US markets actually taking the lead for global markets tomorrow. It just seemed like global markets were waiting for the US to open... good trading all.

out half at 58615 rest stopped at 58535

long ftse 58570 stop 58525

Absolutely true. Screen time for the markets you trade enables one to become familiar with the price movements and characteristics of the instrument. Given enough experience and screen time, one will be able to recognize patterns hinting weakness/strength, breakout patterns, reversal patterns, etc... Reading volume for the market you trade is critical in my opinion... which does take some time to learn. The only indication I ever use in my trading is whether is it being accumulated or distributed. The indicator I use for this? Volume and the relationship between high/low/close/open per bar. Heres an example of the indicator I use on the ES from yesterday.

A hobby costs money. Treat speculation like a game or hobby, you will lose. The only way to beat speculation is to treat it like a business.

flat 1361.25