keymoo

Depends on how much money you want to make and whether you are scalping, swing or position trading. A friend of mine moved from the Russell to the S&P 500 because of liquidity problems. You can expect anywhere from 20-100 contracts on the bid/ask on the Russell at any time and something like 1000-3000 on the S&P. These are very rough numbers. The vol on your exchange does sound very low to me. It depends on how many contracts you want to trade and what style of trading you want to use.

I trade the US markets and the DAX which is connected to Eurex and it's no problem to me. However I don't mind a 150ms delay which is about the average from UK. Not sure what the delay would be from Denmark, no more than 200ms, however you might want to test it if you need sub-second response times.

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Just because you live in Denmark doesn't mean you can't use US brokers. I live in UK and have my trading funds in a US Dollar brokerage because the UK brokers charge too much.

Great post Knytt. I am inclined to agree with you, but for a total newb to the markets I think a period of time in a paper account would be wise so that they can get used to the platforms, the charts, learn the setups. After that period of time, then trade 1 contract or 100 shares.

Beware of spread betting companies and forex houses. They are a bit like the bucket shops of the early 20th century. They generally (but not always) take the other side of your trade so it is in their interest to make you fail. They have various unscrupulous techniques to do this. The futures market and the stock exchange are heavily regulated and is my preferred approach. I chose futures because of the leverage, liquidity and it suitable my personality. To trade 1 contract in the futures market you would need no less than $10k.

Zashuska, I am new to trading myself, I only started in September of 2006. I already wiped one account and 50% of the next one. Trading is not easy. I was a database designer/developer for financial organisations for ten years. I was very successful and recognised in my field and even published a book. I was very well paid. I'd like to address some of your questions because I myself was lured to trading with the idea of financial independence, no boss, no commuting to work, not tied down to one physical location. With my old job I was tied to London, UK because that is where the money and the good work is. With trading I can live on a mountain in Switzerland or a village in England, an island in the Carribean, wherever I choose as long as I have internet. I would personally recommend you paper trade for a few months and get profitable in that account. Once profitable in your paper account (demo account). Trade 1 contract if you like futures and be profitable with that for a few months. Don't increase your size. Learn all you can about money management and risk - this will wipe your account if you don't. I'm telling you from experience. This is very important. New traders to the markets are fresh blood for the pros to feed on. Where do you think their profits come from? New traders like you and me. Don't underestimate how good the pros are in the markets. They are very good - you better be prepared and have done your home work before trading your first contract. This site is a great one for learning. I also like tradethemarkets.com and there are lots of book recommendations here on this site. day trading for me so far has been heartache, stress, adrenaline, frustration, elation, joy, depression and anger. It is a mixed bag of emotions, you better get prepared for an emotional roller coaster when putting your hard earned cash into some other trader's pocket. I've been doing this six months and I still am next to clueless. You do not need to be exceptionally intelligent. The biggest things you need are iron discipline, a methodical approach, controlled emotions and lots of cash. It may take you say 1-2 years to master the trade, I'd say but it can very enormously from one individual to the next. It may take you 2 months, I've heard some people say it didn't really "click" with them for ten years. I'm not consistently profitable yet and I've been at this six months. I wish you the best of luck. Decide if this is what you really want to do and then throw your heart and soul into it for a year. I'm sure you will then be able to make as much money as you want as long as you can keep control of your emotions. I, myself work 10-12 hours a day, sometimes more, doing my statistics, studying charts, back testing, looking for new setups, reading books, articles, web sites, trading videos, etc. I do love it though, and who knows, one of these days I may be able to breakeven, and then I can take the next step and start to become profitable.

Nice video. You raise a good question there which I don't think anyone knows the answer. The next week or so should be interesting. As you say we have low volume for the last 5 days but high volume when compared to the "norm".

It's easier to get this straight in your head if you look at the pit. At any time in the pit there will always be a bid and an offer. The bid is a buy-limit order and the offer is a sell-limit. These prices will be the best bid price and the best offer price and the difference between them is called the spread. So, let's take the SP as an example. If the best bid in the pit (the highest someone is willing to pay) is 1410.00, the best offer price would likely be 1410.50. Because there is a difference in the prices, people on the bid and on the offer never trade with each other. So, limit orders never get matched because an agreement on price has not been reached - there's 0.50 difference in price. OK. Now a trade is executed only when someone who needs to buy or sell NOW comes to the market and wants to place his order. So let's say we have a keen buyer who needs to buy urgently. He won't place a bid (limit-order) to buy because he may not get filled - it's just a bid. He was to wait for someone to sell to him to get filled. Instead, as a keen buyer he will buy at the best offer price in the market at the time which is 1410.50. The 1410.50 appears on the DOM as an ask. When the transaction takes place and our buyer hits the offer and agrees to buy at the price the other guy is offering, the transaction shows up on the tape as a BUY, because he bought it at the market. The tape can show bids and offers if you switch that option on in tradestation, however these are not trades, they are just bids and offers. Trades that take place are market orders - people hitting the bid, or hitting the ask - because they are a keener buyer or seller. This, I feel is important to understand when you hit levels of resistance. For instance yesterday on YM we had a lot of resistance at VAH and the pivot. There simply were a lot of people on the offer (people with sell-limit orders) around VAH and the pivot - people that either want to take profit there from their longs, and people wanting to fade the pivot/VAH. To get through this thick layer of offers, buyers have to come in strong and persistent to exhaust all the offers which may take some time as we saw yesterday with price hugging the pivot. There were lots of people buying at the market, and there were lots of offers to absorb all the buying - hence price didn't move up. However, once all the offers have been filled and buyers still come in, price then starts to move up to the next best offer price. I hope that clears things up. I'm not clear on prices that take place between the bid and the ask - if someone knows this I'd love to understand it. In the pit this usually only happens between locals where they trade with themselves, but I'm not sure how this would happen on YM.

I didn't trade today, I thought it was a difficult day to trade. However on hindsight, looking back it was fairly simple. Isn't hindsight great? A rangebound day between the pivots could have provided 2 or 3 nice opportunities followed by a nice breakout from value. Still learning...

Nice work Tin!

No, as I said I don't use pit noise to enter or exit trades.

Very true, however I like it because it gives confirmation of a lot of my signals. As I said I don't use it to enter or exit trades, just a comfort factor really, and Ben makes me laugh sometimes when he says things like, "Merrill has stuffed these locals BIG TIME here now guys."

I guess what I need is a lot more experience reading the tape. I am still confused though as to how you know whether traders are using limit or market orders? Of course there has to be one of each for every trade. How do you know that guys that get in with a market order of 88 cars will exit with a market order? a 44 lot may not necessarily be the same guy. He may scale out 44,22,22 with limit orders. I want to learn how you observe and interpret these orders in the market as you seem confident in your observations. This may be a good topic for a video - identifying footprints on tape. ;-)

I love the pit noise. If you see prices advancing with rising pit noise then you know that the market most of the time is moving higher. If prices then retrace on low volume pit noise, then you know there's not much new selling coming in, just profit taking. If pit noise then increases in volume on a move up you know fresh buying is coming in. I don't use pit noise at all for signals to enter or exit. It's interesting to note what the banks are doing and the top tenners, and also to observe that the banks do sometimes get it wrong. For example on Feb 27th in the morning, the banks accumulated a huge long position over an hour or so and were then forced to sell out when the market crashed in the afternoon - it was quite something to watch (hear, lol). Some people like pit noise, some hate it, horses for courses, whatever floats your boat. I like it.

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Very interesting soul. I know that Carter looks at this stuff and he also pays a lot of attention to the overnight highs/lows for breakout strategies. He said in his room that present market conditions are great for breakout plays as the ranges are wide and the momentum strong. They tend not to work in quiet markets such as the first two months of this year. I haven't tested it out for myself.

Could you post a reminder on the day in the chat room? Thanks.

I have a question for you on the tape. Let us assume that the guy selling the top of the rally goes in with a market order. This will show up as a red 10 on tape. Got me so far? If he placed his order as an ask then who knows how his sale would appear on tape? I am wondering whether the guy that shorted at the top with his 10 lot at the market would use a market order to cover? I would say that he would most likely scale out with bids at say 5 and 5 or some other combination. It would, in my opinion be highly unlikely you would see a 10 lot as a market order to buy. Therefore it would be very difficult to see the actions of one trader. You see this on ES a lot. You will see an order to buy 1500 ES contracts, but you never see the same lot on the same day to liquidate that purchase because the liquidation would have been done using limit orders at different prices by scaling out. I personally believe a lot of the orders you see on tape are by people that are eager to get out of a position (stop hits). So if you see lots of sell market orders on a decline they are people getting stopped out from buying the high. People taking profit are more likely, in my opinion, to use limit orders. I know this depends on the style of trading and a lot of traders will take profit on a market order, but I am proposing to you that most don't. What are your thoughts on this and how does it affect your thinking (if at all)? Another thing to bear in mind is that people that want to take a large position will often scale in to their position with limit orders and you will find this hard to see on the tape as we all know the tape only shows market orders. You can see this in the pit very often that a bank that wants to take a large position will do so at its leisure by sitting on the bid (or ask) and not going in at the market.

$ADD is not available in tradestation. You need to use the adv/decl ratio.

I look at it to give me a general idea of market direction. I look at the trend of the adv/decl ratio and the 1.0 line serves as a threshold for a bullish or bearish market. If we are above 1.0 and trending up, then we're in a strong market, and vice versa. I haven't studied it hard enough to look for signals, just been looking at it these last few weeks, to see how it reacts to the market.

Have you looked at plotting the adv/decl ratio line? Very similar to adv, but plots it as a ratio. Any time the value goes above 1.0 we have more advancers than decliners, and vice versa. Might be good for you to look at also. You can set it up in TS quite easily. Let me know if you want me to show you how. I have the adv/decl ratio in my TS workspace.

Nice review Tin. I will buy this book once I've read Mind over Markets and digested it. Market Profile takes a while to sink in, and although I am using the VAL and VAH areas as support/resistance levels and seeing how the tape reacts to these areas, I don't yet have a thorough understanding of Market Profile. One to put on my Buy list for sure. Thanks for the review.

Another great video Soul. Thanks for taking the time to do these videos, I much appreciate it.

Yes MrP, I have added that to my cash indices workspace in TradeStation.