TheDude

Steve - I notice from your screen shots that you have some important MSFT updates to install. Your computer may be at risk if you fail to keep it up to date.

1. The more 'geniuses' we have, the more instruments of mass destruction will be invented also. You assume all genius is good. Without arguing whether 'good' is a bi-product of true genius, perhaps greed or ego are more powerful than a moral obligation to fellow man? 2. No. You cant get blood out of a stone. Believe me, Ive tried many times in my trading career! 3. Water may be renewable, but it still takes one hell of a lot of resource to irrigate the Nubian Desert. Im sure the Chinese will get round to that when they need to feed their own - like the Arabs have done building golf courses in the UAE, but that money isnt for the good of mankind. How come African kids are dying every day from lack of clean drinking water if its so easily renewable?

This was sent to me from a friend - it was originally sent from the CIBC prime brokerage desk. Are you sometimes trying to put your finger on what just caused that sell off? We think a few large S&P 500 option trades yesterday can help shed some light on delta hedging. If we hypothesize that 4 trades listed below are all related and from the same investor we can likely explain the start of yesterday late morning sell off of the S&P 500. The dealer that facilitated these trades (assuming this is the scenario) would likely need to delta hedge approximately $1.2B in the S&P 500. If your curious the investor collected $28M in premiums on this trade for being net short. Option Trades: Bot 17k Dec 1350 calls Bot 25k Mar 1500 calls Sold 8.4x Mar 1400 calls Sold 60k Dec 1450 calls These trades took place between 11-12 EST yesterday. Im sure we can see the chart for ourselves and note what happened next.... I thought this was interesting for 2 reasons: 1. To show the sort of money that is being made EVERY DAY in the markets. 2. After looking at your charts, ask yourself why these trades were done when they were. Food for thought?...

Really? I'd kind of put clean water for the entire population, and enough food up there before some crank AI project. Population reduction would be a close 2nd. There simply arent enough resources to satisfy demand. Maybe the Chinese had the right idea in limiting couples to 1 kid? Did you know the Earths population has doubled since 1950?

Dont know if it helps, but TT now offers the number of orders making up the size in MD trader as well as EPIQ - so it would seem the exchange publishes this info.

John W - you should read up on Irene Aldridge if you want to learn more about HFT. Personally, I think it's a waste of time unless you really want to use HFT as your strategy. If you're the average retail day trader, your efforts will be better off learning about swing traders or who ever is up on the next time frame. The best opportunities are usually found by taking short term advantage of longer term opportunity. Therefore, looking at a smaller time frame down stream may seem wise and comendable, but I think it's a fools errand (JMO) Of course, some vendors clearly like to jump in and pretend they have figured it all out in order to shill in the next batch of customers. Fear, uncertainty and doubt. These are the shills main tools. What better phantom than those nasty HFT geeks who can surely out smart you and send you to the poor house? The fact that many HFT trade passively as well as aggressively means they also help you get filled. The shills wont tell you that though. You can spot the shill activity as they tell you that HFT is all momentum based stuff. In fact, momentum strategies are the highest risk strategy of all, so the least practised strategy in any HFT. Whats more, HFT firms will have MANY different algorithms/methods employed. Momentum being one (a small one). I'll tell you that for free so you dont have to pay a shill to tell you that!

Dont be. I think they are a valid discussion point when talking about trading in the order book given they account for >50% volume (so were told). If the market is 1500 lots offered and 1000 lots are taken immediately, if the remaining 500 start to disappear or start to refresh - instantly going back to say 1200, you know some algo/person really wants to sell. The rules are the same, it just happens a little quicker. Let them spend gaziilion dollars on FPGA cards etc if they want to be the first in to refresh. I can either pay up a tick or get behind them. If I get behind them, I'm still a loser probably when I get filled, but if I jump in front and hit the bid, making me a tick off automatically, at least Im in and have the 1200 to lean on knowing others are seeing the same thing and probably thinking the same....

Indeed - with the exception of market making strategies. Many of the HFT firms will be trading multiples of different trade strategies. They simply take a strategy with a positive sharp ratio, and put the execution of the strategy into the HFT module. The trader sits there, monitors it, turns it on/off accordingly, and gets the developers to tweak it according to changing volatility etc. Stacking the book as soon as a market opens, or as soon as a price 'leaves' is how they get at the front of the queue. For anyone interested in learning more about HFT, what it is, etc, Irene Aldridge has written some good material. I dont know why everyone gets so hung up about HFT. The order book is still an order book. Adapt or die has always been the motto of the trader since Jesus was a boy.

I dont see that scalping is really that different from any other form of discretionary trading. Patience, discipline, understanding,..... you've read it all before. There are some differences of course - like low fees (deepdiscounttrading.com makes this more viable for retail traders) and a good platform. Although I use TT and the EPIQ facility is pretty good, other platforms like CTS T4 are used by loads of scalpers in Chicago and is way cheaper. I sometimes ask why I still use TT....

Has anyone found a profitable trading: Room? Book? System? No, they haven't. Of course not. Why? Because they are all based on the same old rubbish. These 'methods' may last during back testing, possible even for the first few weeks, but after that, the market cycle changes. The idea of having a 'method' that work all the time is totally nonsensical. The only way of making money is through understanding and flexibility. Knowing what needs to be done when the time is right under the current market context. The only other alternative is playing the numbers with a trend following method. However returns will never be extraordinary - maybe 20% PA in a good year. Thats fine if you have an account of $1mm+. Most traders here will need more that I feel. They need to make 100% on their accounts of typically less than $100k (which is very viable - so long as you can trade of course!)

As a whole, I'm not a big fan of regulation in the financial markets. In my professional experience, most regulators dont really understand financial markets. However, recently I've become absolutely flabbergasted with some of the bull-stink that some of these trainers have been coming out with on these very boards! My issue is this: If a fellow wants to learn how to drive a car, ride a horse, learn karate, become a doctor and so on, he will find that all trainers/instructors have some kind of professional qualification, or are a member of some professional recognised body. If a fellow wants to invest his money and he seeks the advise of a professional, then that person too must be qualified to give financial advise. However if a fellow wishes to become a self directed investor or trader, he can approach any tom, dick or sally who will hood wink them in to believing they know what they are on about. the result will be that the poor fellow is likely to pay an extortionate amount of money to the shill, and learn a bunch of rubbish that he could either have found free on the internet and/or (in most cases) is useless anyway. Should these shill's be regulated, or just banned out right? Thoughts please...

sorry, but imo, thats just nuts. so there are only 2 boxes in the world and everything must fit into one of them. if it doesnt fit into fa, it goes in the other box. crazy. so what about neural nets? statistical inference? and many other data mining techniques that are looking at relationships and patterns (not on a chart!!) in the data/between markets. that sure aint ta, and it isnt fa (in my book). maybe theres a 4th box - and a 5th? i hope i havent taken a flippant comment too seriously. that would make me a hypocrite of course :haha:

again, you need to read the posts again as your statement is wrong. for someone who teaches psychology, i would have thought you would have been a little more stoic. something seems to have rattled your cage.

thanks - i have no issues if folks want to try and take a piece out of the dude. it wont happen anyway As i mentioned earlier - i knew a load of folk would get p1ssed as soon as i mentioned it was a crock. looking at other areas though: statistical arbitrage basis trading long/short equity* dispersion* yield curve plays* spread trading* market making etc etc im sure you can add to the list. these are all professional trading styles - many of which (*) can also be employed by retail tarders. none of them really use TA. most have some sort of hedge built in. they are used by professionals because they have a much lower risk profile. in basis trading for example, risk is really only at the execution level. TA kind of forces people to put all their chips on red or black and pray. i do the same all the time when i scalp or use mp i admit. as wbr trader pointed out - professionls have a risk manager and a whole bunch of other stuff that prevents them from putting it all on black. its just too risky. nothing wrong in that when its your money. however ta approaches have zero evidence to back them up. mp does have a proven statistical edge. scalping doesnt because its very much in the eye of the holder - but as there are fewer inputs, its less subjective (IMO) which in turn reduces risk v ta. the NUMBER ONE priority in any trading endeavour is capital preservation. it comes before making money. saying you have a stop at a ta point (or vol point) just doesnt cut it. the strategy inherently needs to be a low risk approach and ta just doesnt provide that. its too subjective which is why pros dont really use it.

CAN ANYONE POST A LINK TO ANY RESEARCH THAT PROVES, SCIENTIFICALLY, THAT TA HAS ANY USE IN PREDICTING FUTURE PRICES? although i'd say tarding is more about managing probability than prediction, that staement again would suggest ta shouldnt be the core of any strategy

i said they dont use it as the corner stone of their strategy. read the posts again. i made several mentions to the fact almost everyone looks at a chart from time to time. i really dont see that i can be any clearer than saying thats the difference between professional and retail - the extent of the use of ta. that doesnt mean that they dont use it at all. even ive stated i glance at charts from time to time. you really do see the world in black and white dont you.

errr who's 'we'? do you mean the royal 'we'? it wasnt you, it was bluehorseshoe. is that another alias you use maybe? how peculiar that you think youre someone else who probably doesnt have a split personality :doh:

as i said earlier - i dont really have much time, and im not really here to convince anyone, so i'll be damned if i'll go away and research, spell check, or worry about the structure of my paragraphs. this isnt a thesis - just off the cusp. sorry if i give the impression of being a bit arrogant, but ive been around 15+ years, so think ive got some skin in the game and know what works and doesnt. as for electronic local - like i said, never met him. he may be snake oil, but the ethos of his system does seem to ring some bells. i kind of like the logic behind it.

i know beach horizon well. and they're a good example of what im talking about. they may use ta to a point, but the system isnt reliant on it 100%. no way. you may also want to look at ahl and aspect. ahl especially. look at the research labs theyve opened up at oxford university. you going to tell me all that research into silly patterns and indicators/ta? of course not. most of it is correlations, regressions, sd's and the like on inter market basis. im sure some one here will call that ta in some weak excuse. thats up to them.

boy! everyones getting a bit anxious on this one. all ive said is pro's dont use ta. and they dont. they may use the odd chart here and there - who doesnt. it may even be part of the strategy. im just saying it's not 100% like retail traders. and theres the key point. the failure rate is MUCH higher in retail than professional environments. and they key difference is the amount of dependence on TA. that is a FACT that is as clear as the nose on your face. and fyi, there are MANY different ways of looking at market data other than TA or fundamental approaches. of course i dont think that its impossible to make money using just ta. i gave one example of someone who probably is. but they are so thin on the ground, its would seem logical TA is pretty hard disciple to master. oh - and one reason i may seem 'short on hard examples' is that one thing i am short on is time. especially to a vendor, and/or to bunch of anonymous people. dont mean to offend anyone. finally, maybe youre confusing cta with cfa? no, not everyone can become a successful cta.

what happened with volume strips? ive seen the cme seminar but thats it. i read somewhere he stopped developing it. do you know where there is more info? what it looks like? it seemed to me to be similar to volume at price bars available on md trader - and probably other doms.

a guess that cta's dont use TA? no, its a certainty. they may use some aspects, but all systematic cta's will consider some elements of ta, but also fundamentals and sentiment data. MP isnt TA. Period. I dont care what kiwi thinks (with all due respect to him) TA is the use of ohlc bars in various forms and volume data, and extrapolating other information from that data such as indicators. MP doesnt do that. MP came about as peter wrote, purely because TA is a crock and never helped any trader make money. it was a new paradigm to use instead. as soul trader pointed out in the first post, he has found ta just dont work. professional traders have also found ta just dont work. if it did, they would use ta. I guess this is a hard one to swallow for some people. they have sunk so much time and effort into research and trading, only to find its a crock. most people cant accept the truth and keep following the herds on the internet who use ta, believing it must work otherwise all the others wouldnt use it. so, they typically stop trading indicators, move to patterns, then price/volume only, then volume bars etc - its a never ending circle. the fact is that the majority of the people they follow arent making money either. they just say they are. its the blind leading the blind. seriously. ask yourself. why dont professional traders use TA? how is it only retail traders use TA? how is it all the snakeoil salesmen peddle TA? im sure there are some who do make money. for example, electronic local seems legit. his use of ta is probably one of the most simple approaches ive seen - but its clear he has kind of reverse engineered and reinvented the wheel in to something else. you can tell a LOT of work went into discovering what hes done - work most just couldnt be fagged with. very innovative. still, ive never met him. all im saying here is that out of ALL professional traders ive PERSONALLY MET (i used to work on the floor and am in touch with loads of x colleagues who now work in banks, asset managers, hedge funds, cta's and prop firms trading on a screen), NONE of them trade using TA as the cornerstone of their strategy. Therefore, should you? All im saying is that TA is probably too subjective for many to be of any use. Is that a H&S pattern? in time it develops in to a rectangle or a triangle? Maybe if it breaks down it was indeed a h&s. However if it breaks up, they lable it a triangle. hindsight trading. what a crock !

yeah yeah yeah. take your beloved trend line. the first love of any ta. now change the scale of your chart. take another look at your magic line. WOAH!! the line doesnt fit anymore. what happened. and you based your trading on some figment of your imagination because some lame-brain on the internet or wanna-be-author said it's the biz. why are macd, rsi and the rest of it always giving entry when the move is already confirmed? sure there are some great systematic traders out there. all hft is based on rules of course. im not having a go at tried and tested algo's, but people who trade ta based rule approaches. cta's (who i guess your talking about) may use market info, but it aint trend lines, ma's, rsi and other such bs.

well, i trade several different ways.... mp for some day-position trades across a variety of futures (except es and us). dom on es or us for day trading - i may use a chart for bearings, who doesnt. 95% of it is just the numbers seasonal spreads - i'll use a chart to see how the market is against the seasonal norm, but when im in a trade its just the numbers stocks - long term stuff, i'll just use a chart to make sure it's not in a major down trend thats all. buy & forget. just look at the numbers against my entry once a month or whenever. collect the dividend. so all though i may look at a chart from time to time, i dont use TA. the closest i'd get is mp. as you well know, mp is a whole different idea and perhaps even goes against some ta logic. i dont need 'bills magic moving volume average' to tell me 104 is higher than 38 and im making money if long/losing if short. it aint that difficult is it! patience is the key. i know only too well from staring at md trader too long that that sudden capitulation is often a good time to fade, when poor old db phoenix and his chums are looking at their volume tool and thinking 'more to follow'. 'fraid not son. have you got a stop in the market? good, i'll take that too! i know where it is - it's just above the moving average, or the last high/low isn't it. thats why i have my chart for. lifes a bitch sometimes :haha:

id say around 100+ i get your point. im sure there are 1000's of successful traders who use TA. Odd how most of them are on the internet though and not trading professionally. of course the trading styles are some what different in a professional environment - but then again, that perhaps sheds more light on the use of TA. if TA was of any use, they'd use it and milk it. they dont. Have you noticed Bloomberg and Reuters charts (on the terminals) are pretty basic. Whys that? they say 90% of traders lose. I say 90% of traders are using the wrong tools, and are too busy making sure they trade according to their precious trading plan! Woe and more woe should they break any of the sacred rules of said plan. one of the big problems with TA is that it enforces a rules based approach. this means that. if only....