TheDude

I agree. I just wanted to know how to interpret the damn data!!!

Steve - Sorry, yes, my earlier comment was in response to you suggesting (new) traders employ a target. I just dont understand why that would be of advantage to anyone - stopping your self out of a profitable trade when there's potentially more money on the table. If they don't have the margin to hold a position 'overnight' then all they need to do is close the position before Globex close, and put the position on again about 30m later when it opens again - thus still only having to put up the typical $500 intraday margin. I dont really get you comment about options - that (if Im not mistaken) sounds like a planned longer term trade. Thats fine, but I was under the impression the scenario in question is when a newbie puts on a trade, assumes it will be a 'day-trade', realises there is real momentum behind the move, so keeps hold of it as long as possible to make the most. Rarely do we know in advance when these moves emerge. If anyone looked back at their trade records of day trades, I bet at least 5% of trades would have gone on to make mega bucks, never to come back to the entry price if they were held longer. Telling a newbie to cut his profit short is a disastrous move. It may give the psychological 'feel good factor' of banking a profit, but as we all know, success lies in doing what at first feels very uncomfortable - going against the grain and against what seems intuitive.

If the market is trending, why would you employ a target? That would be like only fondling one breast when making love to a beautiful woman. If it's trending really hard, and you have good entry from earlier in the day, why limit yourself to a day trade? Why not hold the position 'overnight'? ie through the shut down period which isnt that long at all. Odds are it will carry on to higher prices the next day. Big money is made from big moves. Small moves cover past losses and business costs. Big money makes love to beautiful women, small money doesn't. The Dude abides.

Hi, Does anyone else here subscribe to MRCI? If so, do you understand how to use their correlation analysis tool? Perhaps you can explain it to me? I tried asking MRCI, but just got a link to their web description which doesnt help as I had already read the description. I kind of assume, that it's saying the market is acting as it did in the same month last year with 90% correlation, suggesting the following month should have a high correlation to the same time last year. I've attached a PDF of their correlation chart of the current Euro/USD futures contract to throw some more light on this.... Any help appreciated as I'm sure it's a useful tool to incorporate with for example seasonal analysis or any type of position trade, I'm just not sure how!! The Dude. euc.pdf

Building on this observation, perhaps it's the time frame of the trend that has changed? Perhaps if a 20MA was used for example, we would see a positive equity curve post 2000, but negative pre 2000? One thing that has happened since 2000 is the explosion of the internet and on-line banking across the world. This has enabled mom, pop and uncle joe to take positions, and change those positions every time they read an internet news story on their i-phone. The relative cheapness of technology has also allowed larger investment firms to crunch huge amounts of numbers, performing monte carlo simulations in minutes in what would have taken days or weeks before 2000. This again adds to an increase in sentiment changing more frequently imo. an interesting observation.

its no wonder few people are making money with such abstract ideas. the magical 2% that retail traders seem to use as the magic bullet of risk management was in fact taken from portfolio managers who hold a load of positions across multiple asset classes. so, if you're a day trader focusing on 1 market at a time and using 2% (or 1-3%) then you're using the wrong tool for the wrong job. period. if youre trading a portfolio of stocks or futures on a 'buy and hold', maybe not. for day trading i'd only advocate using such a low multiple when youre not yet consistently profitable. capital preservation is the #1 point after all. 2% will allow you to stay in the game and live through 1000 cuts until you turn the corner. the only other excuse for using fixed % i'd imagine is when using an automated or mechanical approach where you cant differentiate between good and bad opportunity and treat every signal as an independent event. (i dont know too much about deploying such approaches, so feel free to correct me on this) when youre on top of the game and opportunity presents itself, you dont want to be dipping youre toe in with 2% - you want to be all in. good opportunities are rare. its the height of stupidity to treat all opportunity as equal. in fact, its an admission you dont understand what the market is doing. so why would your risk be the same for all opportunity? however, again, thats just for day trading (imo). its easier for me to understand what the market should be doing in 5 minutes than 5 days

Depends. Firstly, if skilled enough, it is possible to trade moves with very minimal adverse excursion. Timing and experience are vital. Secondly, although the fact we must take risk to assume a gain (it is so obvious it needs no mention) is true, the first priority ALWAYS has to be capital preservation*. The key is to risk as little as possible to gain as much as possible. Until you realise this, you are unlikely to get to the point where you realise the truth I mention in my first point. I'd kind of agree that if most start 'jamming a stop in at break even' they wont be doing them selves any favours in the short term as their frustration at missing moves will be difficult. However, there's no reason they cant re-enter and eventually learning my first point, and also learning the core skill - WHEN to take the stop to break even in terms of whats happening in terms of order flow and price movement. * I'm not talking about risking a tiny fraction of the account here. I'm talking about understanding structure that allows you to only take highly probable trades. When you're at this place, you're happy to risk 10% or more on a trade if the figure add up. This 2% rule we read so much about is useful to 2 types of traders: newbies who dont understand the markets yet and portfolio managers who are often forced to be trading a vast array of products due to regulatory reasons

adding to this, we can also look at spreads. calendar spreads are probably the best place to start. Take a look at heating oil: (image from Scarr Trading if i can say that - im not affiliated or even subscribe to their service, but this just shows the point graphically) Its usual for the back months to trade at a premium to front months due to insurance and storage charges. This market isnt. Buy the July, sell March contracts? Spreads to trend more than out-rights with less volatility due to the fundamental drivers behind them. You also get margin offsets meaning you can take bigger positions to make up for the lower volatility or trade in a more risk adverse way, risking little. So with BlowFish's idea of looking at other markets, you have 100's in which to find a trend. When you include calendar spreads you have 10,000's. Including inter commodity spreads you have 100,000's of markets. Taking BF's idea of other time frames to all of the above, you have 1000000000000000000000000000000000000000's of different markets. Still say you cant find a trend? :haha:

An interesting idea TW. It makes sense. Perhaps you could post a chart of the up tick/down tick indicator you mention? I sometimes read the electronic local blog and he does a similar thing - switches to lower range bar charts in times of low volatility. He occasionally posts here. Personally, in these markets, I find doing the opposite beneficial - I've switched to longer time frames and position trade off a 30min chart. I just get too bored trading these markets sitting and watching it do noting. Thats when silly trades happen for me. The lack of both volume and volatility suggests the lack of 'other time frame' activity. I think all thats there at the moment is people who 'must trade' and spreaders against the ym or nq. even hft's tend to turn off in low vol. That means I bet we auction down some time soon as trade isnt being facilitated very well at these levels.

WTF!!! you mean she's been two timing me?

interesting, but I dont see what this adds over a normal Ask/Bid volume display which displays traded volume at the Ask(offer) and traded volume on the bid. Ok ticks v volume is one difference, but surely volume is more useful than ticks?

yada yada yada. youre missing the point BIG TIME. Europe is just a smoke screen for the bigger plan that is the failure of the USA, and the downfall of western civilisation. More information can be found by reading: The Creature from Jekyll Island: A Second Look at the Federal Reserve: Amazon.co.uk: G.Edward Griffin: Books Also, look at the architects of the whole system by googling 'timeline of the rothschild family' Maybe I'm a conspiracy nut, or maybe what has been planned is already well under way when you look at the social unrest so prevalent in western civilisations on both sides of the Atlantic. We're heading towards a world government and most of us are just the slaves to the system. Freedom through trading?

Hello again, sorry, i think you've missed the point. Tim R was talking about eliminating price risk quickly, leaving the trader with execution risk only. I didnt read his post as the merits scaling out or not (or am I mistaken??). The quicker a new trader eliminates as much risk as possible, the easier (IMO) he/she will be able to view the market objectively.

LOL. Not quite. If you'd have walked on to the CBOT floor and asked anyone how to trade - even after a few months, the only thing you'd have learnt is that you're considered a mug. You'd have been raped. Trust me. I used to be a local. Just like if you walk into any prop firm today and ask the top traders how to trade you'll probably be told to go where the sun dont shine. Remember its a zero sum game less costs. Thats why no one is going to tell you sh!t unless they have a share in you're p&l. If they did tell you anything for free, you'd be taking a piece of their business/edge.

i 2nd this. spreadbetting is a losing proposition

so what do you do when a local trades a 500 lot through an iceberg trading 1-2 lots? (one reason t&s is so much harder, and imo, one is better off looking at aggregate volume. feel free to flame me.... BYW, OTD - open test drive OTF - other time frame (ie long(er) tf than that traded)

well i guess you're getting ready to pile in now then! recently, the slowly climbing price on vapour volume is a sure sign than the price expansion isnt attracting new business, so weve got to auction down soon. thats the easy/obvious part. the difficulty of course is the when. many will wait for confirmation of course, however the risk/reward will be unfavourable then as opportunity becomes more symmetrical. i guess this will be price reverting to the mean? as im sure you know, this, when it happens will be a 1 way market. every participant will be selling. in such markets i face the same issue as you - when to get in. waiting for the consolidation often means giving up some of the move. we're advised to just get on board, but i seem to crave a logical point where i can say im wrong if the market comes back. using a dollar or point stop seems silly. an example of how good trading means doing something very unintuitive.

LOL OMG! Short Term - you got the other one. shouldnt really post when im in the market

depends. sometimes yes, some times no - like everything else in this gig. Take today - OTD coming out of a ST bracket. thats a fairly high probability it will barry o to the BO. Sometimes you get the BO in the afternoon , sometimes on the open. trade 'em!

Nope, other way round. Buy-side prefer smaller ticks as it allows them to hedge more accurately. HFT/locals prefer bigger ticks as it allows them to make more money on smaller moves. this is one reason the ES took off - the larger spread/tick in es v big S&P allowed arb traders (locals) to take advantage of inefficiencies/difference in the contracts. look at liffe and the euribor as a prime example - they introduced half ticks on demand of the banks and hedge funds. all of a sudden, the locals ran off to trade eurodollar and crude until liffe reintroduced fat ticks

My .... I dont think the activity on the (or any) close may be a bunch of retail traders. Generally, a lot of fund managers and other long only funds trade near the close every day for bench marking purposes. e.g. if a fund is trying to replicate the MSCI Barra World Index (or other index they sell as an investment vehicle) for example, they will be buying the stocks/futs/options/etfs etc on the close to get fills as near to the official index calculation point as possible. then of course, you have the pro day traders at prop firms who generally dont like going home with a position. if theyve been holding all day, they'll ditch on the close right? The close and settlement price is an important indicator to a lot of people. therefore there is a lot of professional money usually traded there.

that got me thinking.... would you really want a psychologist to also be a trader? both areas are so specialised that i doubt anyone could seriously expect to be proficient at both unless they were of such years they had time to truly master 1 skill until it became 2nd nature that they could attempt the other. with the time it takes to go through med school, i think it would be unlikely given the constant change of markets and dedication needed to be a success that one could find the time to master both. my accountant, cleaner, gardener, mechanic all do great jobs for me - none of them have traded either thank God!

Yes - I thought it was a bummer last week. I made a few losing trades expecting the volatility to come back, then I stopped for a few days thinking we were seeing a non trend day. Of course, a dude doesnt hang round on the side lines for long. A dude adapts. I've quadrupled my clip size and looking to scalp a point or 3 ticks here and there. Using MD Trader with the Volume At Price display turned on has made it a whole lot easier. In fact, I'm quite enjoying this market. Sods law I will be trading 4x when the vol comes back and I'll lose the farm.....:doh: A whole load of numbers are out tomorrow so this could be the last of it - unless everyone is still on holls until MLK holiday is over this Monday....

well, you could always look at the CoT report. as Josh says - it's pretty irrelevant. i can tell you as a certainty that some big players are long, and others are short. sure the vendors want to make you think they have the secret sauce - its called salesmanship. they dont.

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