wsam29

Would someone please explain to me why I keep doing this? I'll notice a TICK and price divergence yet I do nothing to exit my position. I am beating myself at this game right now. I have a 10 tick profit target that I have in mind and when the price does not reach it, I get seriously messed up. Now what does everyone do when they notice a price/tick divergence when they are in an open position? I find that when ever I am in a position I get clouded by my own position and not really acknowledging what is really going on. I seriously need to address that issue. What I really need to do is come up with a plan for this type of situation since it seems I get myself into these all the time.

What I suggest you understand in trader psychology and market psychology, it applies to all markets in the world. I just took a look at an SPI200 chart, its got some nice flow to it on a 5 minute chart, whats the spread like for that contract?

When I day traded stocks, I picked sectors that were nice to look at. The charts were clean and had flow to them. But what ever tickles your fancy. Pick a sector/stock that suites your temperment and personality.

At one point in my trading career I was trading the Nikkei listed on SGX, Nick Leeson got my inspired to trade the market that brought down Barings Bank after seeing a movie made about it "Rouge Trader" Not to mention I was scared of the US markets because of some huge losses I took, but that is a different discussion all together. For one thing, the US market is the only market that I am aware of that has market internals to show the health of the stock market. I also believe the Korea Stock Exchange has market internals as well, but I do not know of any data vendor that supplies that data. There is more liquidity in the US markets compared to other financial markets in the world.

Longs liquidating to book profits, hedgers selling at high prices, late longs getting squeezed, shorts hitting the market. Start preparing for an up cycle since spring is around the corner with these depressed levels. Use Open Interest and volume for clues when the market may turn. I for one do not have the same analyitcal resources as these big funds and players so just follow in their footsteps.

no such thing as slippage, what you are experiancing is called market movement if you are using market orders to enter or exit a trade. if you go to sell a 5 lot of YM at the market and there are only 3 buyers at the best bid, you're pushing the price lower on yourself to the next best bid, which is 1 tick lower. If you want to avoid this "slippage" use limit orders, you may not get filled on your whole order mind you.

3 tick spread so the cost of getting in and out at the market will be $75, much like the SP (pit traded) There is a good chance the best bid will be lower than the YM bid and the offer will be higher than the YM offer. example DD 12000 bid 12003 offer YM 12001 bid 12002 offer The products are fundgible, or something like that so I think you can offset a DD position with YM contracts, but you need 5 YM's to offset the 1 DD when your position is cleared at the end of the trading day. I tried trading the DD when it first came out, just too my cues off the YM but just over coming that 3 tick spread is tough and you need to get out when you see better bid/offer.

open outcry is pit traded When ever the prices diverge beween pit and electronic, arbitrage traders will take care of that, they buy on one platform and sell it on the other. Its a game we cannot play because you need to be in the pit and have access to the electronic traded contract as well. Since they rarely if ever stay diverged, just watch the contract you are trading withou getting too complicated. Its like what I did in my earlier days, I would watch the SP (pit traded) and trade the ES. Did not work to well I would say. (this was when the ES was a fairly new product)

Sounds to me like a COT report related article. I have not read the article but I would say looking at open interest and vloume is far more easier than trying to figure out the COT report which is always 1 week old of data. There are many clues in the open interest and volume indicators for any month. CBOT - Outlook and Opportunities for Grain Spreads This Coming Winter

What types of traders? All kinds, syndicates, floor traders, speculators, hedgers, tip takers, etc. I have no clue what fundamentals moves gold but if you're wrong, you're gonna have to offset your position with an opposite order which adds fuel to the fire of the direction. If you can stomach the moves, gold is a pretty good product to trade intraday or swing. Gold is inversely related to the USD. Gold up USD should be down, etc.

Here's my take on stocks. Mom and dad at the local hang out know their stock inside and out, they have an elaberate analysis system the do, whether it be fundamental, technical, hunches, tips, recommendations, etc. ABC stock makes widgets and gadgets and they can foresee the future as to how society will buy these widgets and gadgets which equates to profits for ABC company and their share holders. Mom and dad can also talk themselves into a buy and hold strategy because widgets and gadgets will always be in demand by society. Mom and dad cannot and will not admit wrong and fall into a false sense of security because all stocks appreiate in time, as long as they are blue chips that is. The thought of acknowledging a loss is painful, even on paper, because that is what it is a "paper" loss because of things come back to break even (in their heads that is) futures...contract between a buyer and seller. Now what would they know about what is causing these two people to trade? What do they know about corn, crude oil, hogs and lumber? Stories of people going bust trading futures and other derivatives adds to the ignorance. There is a lack of education to begin with because futures are not promoted by banks and other companies due to the nature of the product and the associated risks involved with derivatives. That's another thing, all derivatives have an expiration date. So the timing needs to be there as well.

Is it me or does there seem to be a lack of threads regarding volume??? It took me a while to understand the importance of volume and the meaning of this important indicator. What's everyone's take on volume? besides the text book answer of: price up, volume up = good price up, volume lower = caution etc.

married puts is the same as a covered call, but instead of long stock, you are short stock, long put option for upside protection. long straddle/strangle...that is when you long both puts and calls, but not knowing which way the price will break. The only difference in a straddle are the same strike prices and a stangle are two different prices. If you consider doing this type of play, I suggest going long the spread 2-3 weeks before the expected annoucement because of that old adage, buy the rumor, sell the fact. The reason, the general public does not think about the earnings report until 1 week before to the day before because this is a sure way to make a quick buck, long calls and puts, the secret formula to riches!!! Market markers know that and they will jack up the volatiliy of the spread to the point where it just gets crushed on the day of the report. I'm not an expert at this but have taken some courses for educational purposes, well turned into education.

your net delta is pretty important as well. There is no sense having a position on if your net delta is less than +50 if you are long spread or -50 if you are short spread. For those that do not understand the greeks, just think of delta as how much your options will change in price relative to the stock it derives its price on. example. ABC bull call spread, long at 1.00, delta +30 ABC stock goes up 1.00, your bull call spread would be at 1.30 now because the +30 delta. Mind you the greeks change in value depending on how close to the money they are. Once they get In-The-Money (ITM) your delta changes even faster, but that all depends on the Gamma, which is the rate of change of the Delta. That is why and where people get confused. There are just too many variables that need to be factored in. Not to mention the underlying market conidtions will be a major factor to your spread.

Well according to Mark Douglas, stress is created by the trader himself because there are two conflicting issues, the inner environment and the outer environment. You are perceiving the information one way, yet the market is doing the complete opposite of your analysis. There is a good chance you are finding reasons for your analysis to work out. As long as the two are in direct conflict with each other, there will always be stress. This even applies to everyday life, just think when was the last time you were stressed out over something? I can think of one, the communication problem between males and females, especially if they are in a relationship. Men are from Mars, Women are from Venus. Good read, I suggest it big time. Jesse Livermore's cotton trade that made him go bust because he listened to someone elses analysis and reasoned himself into taking the trade and holding on for dear life. He had all the good reasons to exit the trade but because he had conflicting information caused him to not see straight so to speak. His own analysis was the correct one.

I know how you feel. I have found for myself when I am NOT staring at charts, NOT really wanting to trade is when I do my best.

The markets will move, that is what I see in my crystal ball.

The criteria is make money within 2 months, if you are doing that, they keep you, if not they let you go. Don't ask how some get it in 2 months because if that were the case, I'd be a millionaire by now. Either way, it was not the way I wanted to play the game like bingo, long here, short here, all for what, a 1 tick scalp? Then again, not all prop. trading firms opperate that way, so I can't bad mouth them all.

Here's what I used to do that caused me burnout, after the markets closed, I would still have the charts up, analyzing all by rights and wrongs, mostly wrongs and see if there were any new setups. On the weekends I would go over charts. Like you said, you're learning market profile so deep down inside you want to get it sooner rather than later and by always hammering away at it till you get it is an excellent way to burnout.

Since you asked. The deal with that specific prop. firm was start small trading real money, 100 shares or 1 lot after a 2 day "theory of trading" training session by the manager who has no clue how to trade. Show you can make a profit of $100 per day either by credits or scalping. That is a lot of trading for the course of 1 trading session. What was hand tying was their risk management policy, limit trading loss per trade to 0.02, the ideal loss was 0.01 per share. Once you proved you were a profitable hyper scalper, you were given more capital to trade more size. Your account would always start with what you are given as trading capital. If you hit your loss target, your account would lock up. They had a central system that showed everyone P&L for the day. Now here's the interesting part. At the time I was there, they had this one trader who was either +/-$1000 on any given day and he'd either hit either target within the first 30 minutes of trading. Either way he would stop trading for the day and hang around the office, he pretty much kept to himself. his style of trading...he would find a thinly traded stock and manipulate the price, it would either work or it would not. You need to be very proficient in your hot key order entry since there are many ECN's for you to place your order. Some guys would trade 1 block (10,000 shares) of a highly liquid stock and scalp it for 0.01 Some were credit traders, placing a bid or offer to get filled of a sideways moving stock under $5.00, they would be shaving to get in front of the level 2. Either way it was a room full of traders just like us, but some of them looked like they were trading without the slightest clue about market direction, shorting a strong up trending day and getting steamrolled. It was a video game to them, short 10,000 of ORCL just like that and they would do it over and over again because the cost of trading was fractions of a penny. That is where all the volume comes from those NASDAQ stocks, trading firms like that. There I was trying to practice patience and the way they traded was the complete opposite. I did not respect the manager because here this guy was, teaching others how to trade when he could barely do it himself. I was watching him one day trade. Sitting there, left hand, right hand on the keyboard, placing trade after trade after trade, like a robot without emotion. He'd be losing and he'd still continue. The plus side was I did meet this one trader who said to me "Change your way of thinking." I had no idea what he meant at the time, but now I do. In case you are wondering which prop. firm this is...it's Swift Trade. Don't get me wrong some of their traders make nice money, but you need capital to trade 20,000 shares of anything, even on margin. They do how ever retain their traders because of that. One firm I know does futures, ES, NQ and they lose traders after they realize they can trade with as little as $5000 and keep all the net profits. The way they compensate was in tiers. 70/30 60/40 50/50 The more you make, the more you get to keep. If you were making $1000 every two weeks, you'd get like 30% of net profits. It was not much in the lower bracket so your goal was to be trading size to reap the benefits of the 50/50 spilt. In some ways they were tape reading, but have you seen the speed at which some NASDAQ stocks print??? It was a good experiance none the less.

Tourist Trophy, the game has been out for about 1 year now, it is still selling for about the same price when it was initially released. I'm walking through Loblaws (giant Canadian grocery store chain) and there was a copy of TT on sale for $18.98 CAD on their "sales" rack. In behind the glass divider the exact same copy is up for sale for $49.98 CAD. Well that's no brainer move, buy the copy on sale! (I was waiting for TT to reduce in price just like GT4, I never pay full price for a game when its all the hype, have it die down and not the flavour of the month then jump all over it like a fat kid and a Smartie on the ground)

Now my brief stink as proprietary day trader in NSADAQ stocks lasted a whole 1 month if I recall. I did not share the same market trading methology as the manager of the firm but I did have a great learning experiance from it. He wanted his traders to scalp for pennies risking 1:1 and trade all day long. Proprietary trading firms which are part of the ECN network get what are called "credits" if they provide liquidity to any ECN they place their order through. Example about providing liquidity, trader A bids 35.98 for 1000 shares of ABCD stock, his order gets filled, he gets a credit by XYZ ECN of 0.002 cents per share. Trader B sold 1000 shares @ 35.98 of ABCD stock on XYZ ECN, he pays XYZ ECN 0.003 cents per share. Trader B took liquidity out of the market so therefore needs to pay up. That was off topic but the manager wanted us to follow the ES for market direction as a reason to enter a long position or even confirmation that our trade will work out. (He could not trade for a net profit day if his life depended on it) So what I'm trying to get at is everyone is looking at everyone for confirmation in a trade to work out or at least put the probabilities in it working out in our favour. When Louis Borsellino used to trade mainly from the SP pit, new traders were told to watch what he did and just follow in his footsteps. Who's to say that his trade will work out? Collectively we should focus on the net order flow to get a sense of direction and confirmation to our trades.

That being said, The Theory of Poker by David Sklansky stats that a poker player gains an edge each time he plays his hand correctly each and everytime if he knows what hand you hold. Whether that may be betting, raising even folding. Now if you apply that same principle to trading as to what the "pros" are doing, you can see how they have an edge on us smaller players, but if we think like a pro, we too can take advantage of that edge. I am sure we've all had losing trades in our early days. Just think what you we're going through when you went long the break of the high of the day, only too see prices drop like a stone? There is a very good chance that break out was on light volume because there was no "professional" money involved with the push. Now once that pattern has been identified on the "battlefield" in real time, step up and enter your order. Understand and implement the psychological part of trading and the rest should be easy.

oh there are (lock limits) given the right market conditions and how many traders are on the wrong side. if the "globex" session is trading at its upper limit range, once the pit opens and trades at the limit, the market locks up in the RTH and no trades will be executed on both pit or electronic. the limits change from time to time currently they are, but don't hold me to it: corn +/- 20 cents wheat +/- 30 cents beans +/- 50 cents (I think, this was the only market that did not lock limit last week or so) best way to avoid those sleepless night either enter your trade as a spread or just get out before a report if you are scared.

Just be mindful of those days when the WSADE report gets released, then again the charts will speak to you when they are due. I think the WASDE reports are due out on the second week each month. Don't ask me which reports are more important than other, just watch how the tape/market reacts to the reports. Also trading spreads will help minimize the volatility big time in those markets. The CBOT also has great information regarding trading spreads. If you cannot sleep with an open position, close it out, since grains are 24 hours now, you are able to liquidate in the middle of the night to ease that curiosity. Then again, there are other issues regarding having those thoughts that I have experianced.