TheNegotiator

Imo, there is no such thing as "overconfidence". Confidence is belief in rational understanding of a situation. So overconfidence would fall into the category of the irrational and thereby render it as non-existent. What I see is confidence and arrogance. Rational and irrational. I believe this helps in defining when you may be about to come off the rails so to speak, in that it is easier to define rational and irrational than whether the degree of confidence you have in something is too much or too little.

Hi Ibiza & LMM, Great to have you guys here. Interesting to see you are both into fx. I'm sure we'll have some great discussions given the way the world is going! Also good to see you trade metals and energies LMM. You must get a pretty rounded view of the markets in general (although you probably should start trading equities and bonds too!).

When is Skynet coming though, or is it here already?!

Hi iwshares. I can't remember exactly. I think when I posted that comment, the market was 'noisy' but the profile was very 'normal'. Means that it was moving quickly one way and back but actually was quite balanced. Later on there was a break higher followed by a reversal on failure. I haven't heard of this 3% breakout idea but I believe your observation on the move maybe being over(at least the first push anyway) is pertinent. You'd probably be in most cases filling the orders of the guys who are suggesting you trade off that basis. I think the way to go is to do your research, make a judgement call as early as is reasonable, then watch for signs that the market is in some sort of agreement with you. i.e. manage the trade. The problem is for many who try to wait for 'confirmation' is that by the time they get it, price has changed so as to increase the risk in taking the trade.

Yeah okay phantom. Talk about nitpicking. I meant dealing with your exit by effective trade management. I thought I had made that clear, so I apologise if not! Either way it seems we are agreeing!

nakachalet, What I am trying to illustrate is that many guys who don't know better, are told they should focus on this or focus on that. In actual fact, you need to focus on everything. Because if you don't, a professional who is better prepared than you will take your money. Planning should be done pre-trading as to what you are looking for from the day. Before entering a trade you must assess whether you believe the potential move would make the trade worthwhile given your tolerance level(whilst the market couldn't care less what this is, you have to. fact.). Then when you have identified a favourable entry it's important to judge the market around the area you're looking at. Up to this point, you should have spent more time on your entry. You have prepared for entry, identified risk and are preparing to pull the trigger. If you haven't done any of the above you are asking for a hiding imo. So right now entry is more important. If you haven't paid attention to your entry, you'll probably often see your trade go well under water before you exit and it turns. More than likely you'll get out at the turn or within a price or two. Then the market will rampage in the direction you'd decided was most likely. Once you are in the market though, clearly exits should be the imperative for you. You have to judge how the market is moving, adjust your exit points, trail your stop or whatever you do. If you don't, you'll end up taking smaller winners than your identified potential and thereby skew your risk. Plus you'll probably have trades which get either really well on side or maybe to within a price or two of your target(please notice at this point I have not mentioned fixed targets or anything of the sort, but each to their own), only to see the trade turn around and not only not make you money but lose you money. When you get all of these minor but critical things wrong, it is going then to be a psychological struggle. You think that you're right, so right yet why can you never make money?! Damn the market. It's designed to tease and torment you isn't it! No. Of course not. But people who do fully prepare all parts of their trading are the ones who will likely profit consistently over an extended period of time.

Well I am guessing orders in general are more genuine in stocks than they are in the futures, I would would also say that they are still probably spoofed from time to time and also orders are not executions. So the participants have not committed to the trade, which is why people often use delta(either at price or per bar difference between execution at bids and offers) as a strength indicator. http://www.traderslaboratory.com/forums/technical-analysis/9314-delta-volume-intraday-trading.html If you just want a proxy, could you not just use TICK or TIKI(for Dow)?

Hmm. Do you think it is better to accept trading as a stressful type of activity, have an awareness of it and then de-stress later, or is it better to strive towards a mellow stress-free state while trading? Is there a simple answer or is it something which depends on the individual?

I find that you really have to have a plan given the phase of the overall short term auction. If you try to trade the open in the same way every day without giving thought to the auction, you'll likely get nailed before the day even starts properly. Today for example in the ES, you might have thought that it'd be a great buy considering the 'strength' over the last couple of days. However, given that it was at the top of short term balance and uncertainties remain, the trade was to sell to value. It's not always as simple as following the stronger type of participant though. Much of the time, you do get two-way action on open and waiting for the first push would get you caught in the move back. So my answer is that it depends on the day. I think trade it if you see some good opportunities if not don't. The other thing is that certain reference prices tend to work better than others depending on the participants present. OTF as longer term participants are referred to sometimes generally don't care too much about price, so if you can spot that type of action early on, going with it is not a bad idea.

Okay mate, I just don't think this is a productive discussion any more. What you might think and what is fact are not necessarily the same thing. I am not going to debate a statement like the above because clearly it's just a crude assumption you are making. If you are comfortable with it, fine. The way in which you choose to heuristically approach trading and anything else is just not my business. I think it's important to get back to the actual topic up for debate. Although the former may be quite apt in this case. Good luck.

I wouldn't bother personally. Any reason why you'd want to trade specifically YM in the Electronic session? You'd probably be better off looking at some Eurex products such as Eurostoxx. Eurex - Blue Chip Does plenty of volume.

Yes Horace, I do understand what you were suggesting. However, the result of a trade without context is meaningless for understanding the efficacy of your system and your ability as a trader.

Perhaps you'd like to elaborate then on what you mean by making money. Unless you are specifically referring to individual trade outcomes, how is it black or white?

Well, I think that it is true that often you see markets "filling in" areas of low volume on a long term profile either MP or VP. Or indeed you see a move originating from a POC/VPOC and hence it will become a low activity area of a defined move. But if you take a look on any profile which includes ALL the data you can get for the instrument you are looking at, if the statement is true then surely you would see a block of volume/TPO's with very similar amount traded/time spent at each price. I would say that you will see areas of low volume and areas of high volume. As for using VPOC/POC prices as a map for your trading, I would suggest you should be careful using this idea. MP/VP are great tools to allow you to better interpret what the markets are doing and why at any particular time and it is true that often you will see markets turning from VPOC/POC prices, but it's also true that you must view everything in context and make a judgement call on each.

Good point zdo! I'd say though maybe they are the same thing entirely though. Self delusion to cope with realities which diverge from what we want or need to be true. Just that they are applied given different circumstances of perceived pattern repetition. Making money or not making money is not always black or white. You trade with a particular strategy and you aren't guaranteed a specific percentage of winners and losers. You might think you are. Perception can be a very misleading thing. Even the most reliable science is either 'best guess' or even variable based on circumstance. Anyway, being that it is more than possible fear and ego are one and the same, I will go for an equal weighting of importance. Like so many things in trading and life, the universe and everything, balance is such an elegant thing.

Hi shooly, I believe it's at no direct cost if you take the standard Direct Live version apart from the differences in round turn cost. I believe the $50 per month is if you want the version where you can write algo's and use their advanced strategy management features etc. I'd speak to your broker about it though. If you don't have a broker for the data feed, I think you do have to purchase it. There may be an option for monthly payments so send them an email.

Trading the E-mini futures intraday doesn't require any particular strength or lack thereof in the stock market as a whole. The only thing in my mind is I need to be aware of longer term correction type activity which can happen pretty aggressively. But monitoring each day closely means we as intraday traders, tend to pick up on the way the markets are behaving at certain areas of importance. I would argue that bar the infamous "flash crash" of 6th May 2010 and what followed, we have not had any sustained move down in value which I personally consider to be a proper correction and not consolidation(even wide consolidation). Over the last 6-12 months I have noticed that when we reach extremities of consolidation, when all the eco data and macro geopolitical news are looking terrible, there is a buyer flying in the face of it all. The selling is there, but there always seems to be strong buying. It is fairly clear if you look at the ES RTH chart I have attached to the post. Sometimes the selling is weakening and strong buying appears, as typified by a strong move down followed by a strong move up. Sometimes it has been a tight consolidation band toward the lower portion of a rotation down(often associated with continuations not reversals) where strong selling and strong buying seem to be present. Take a look on a longer term chart to see if you can identify these areas yourself. Monitoring it intraday it just feels like this strong force comes in when these areas are reached. The market gets there when it is weak and selling continues, until this strong buying appears on numerous occasions but at different levels. Now many might argue that this is just something you should expect in an up trend. But shouldn't we also expect correction in a strong and healthy market? There was some commentary I heard on the Fed and the belief about the Nasdaq I believe leading the US out of several recessions. There is this notion that if the markets as a whole can be artificially supported then the economy as a whole should follow. So first of all, could the observed behaviour be anything to do with this idea? I personally have some doubts about how something like this could realistically be implemented, but no doubts that big Ben would try something like it if he could. The second point is that whether this is some great force in the market or just buyers because the Fed is trying to inflate US debt away, is the manner in which the stock markets are scaling towards the heady heights of 2007 structurally sustainable? Personally, I think not. I do believe that at some point we could easily see a considerably higher stock market given the potential inflation picture, but I also think at some point unless the current market is allowed to naturally correct we could well see a large move to the downside. Perhaps then, when the wheat has been separated from the chaff so to speak and there are truly good opportunities for companies, the economy can start to grow and become more healthy once more. What do you think?

Exactly Tams! If they keep devaluing the dollar like this oil will be sky high in 18 months. That will not go down well with americans. Maybe if europe gets slaughtered enough first though...

Ha! That's what people always think until it's not! Always the way. These things may have been the trigger, but like the Archduke Franz Ferdinand, they were also not the cause. I'll give you the mishandled interest rates, but oil prices weren't a decider. I'd also point the finger at the government and the public for speculation in housing. I mean, what did they think was going to happen if they said "just tell us what you earn but you don't have to prove it" to people who wanted a mortgage? So many dumb ass things that people were and are doing for short term gain. Dodgy government policies, global economic realignment and so many other things that go on all the time which for the most part people are unaware of until way after the fact. Most you'll never even hear of. Just one last point on the whole oil thing, if the whole move up was purely speculation, why are we now trading around $100 a barrel?

I don't reckon so for now. I think he was just giving markets what they wanted to hear. I really don't think BB wants to pump more stimulus into the US right now(surely?!?). Markets are still susceptible though as lots of things are uncertain. So if he said explicitly "We won't do QE3" there would probably be a bit of panic. Silver looked to be pretty ballistic today btw. It does still look like it's in a bracket though and it should test it very soon. So we'll see whether it's going to start a new and stronger leg up.

12th July 2011. Idea for the day:- Don't get stuffed in what is basically a really balanced trade!!! :crap:

Does it seem slightly suspect to you guys that each nation in Europe with debt issues, which seems to be taking care of its problems gets targeted then hammered into submission by the fact its debt spread widens to intolerable levels? What's really going on here? Is there some guy in a little room just pushing buttons? :missy: "Right, that's Greece. Now who deserves to get it? Ah, Italy...".:hmmmm: What will happen when Italy is forced into massive budget cuts and taking IMF/French-German/US/China and whoever else's money for a bailout? Well, let me take a wild guess. Spain will get it. Or some other Eurozone country. The way this is playing out is surely not just systematic problems propagating due to the last country being bailed out, causing the next to crumble? If it is, the global economy is much more fragile than I thought and we're probably only just seeing the start of the problems. But maybe like much in life, there's more to it than meets the eye.

When I said market orders, I did mean orders that are filled immediately at best price and not limit orders. The guys who stacked up several thousand on the bid/ask as you described were using limit orders. Unless I missed your point?

Unicorn, it's a 5333 volume chart. You may view it this way. However, to me the big guys don't tend to do their business at market. They buy weakness and sell strength. So if the volume delta cumulative or not is showing more activity in one direction and yet price is moving in another, it certainly gets my attention. Especially when it occurs in an area where I am expecting interest to increase. I think there was enough of a trend there. But I am really not too bothered by trend being present as such or not. The market has been moving one way and trading activity was TRENDING down at that point. I'd also like to say that I have never really liked regular divergence as you describe as a reversal signal. To me, it says for example in a move down, a further price move has occurred and required LESS selling volume to trade and so buyers are relenting. Yes that could mean a capitulation move or that the dynamic is shifting, but often you do see more of a price move before trend changes.

I think this was the video:- Mental Preparation in Baseball and Trading