TheDude

Thanks buddy. Seems odd they go 0-2-4-6 increments rather than .25, .5, .75... I thought my data feed template needed adjusting or similar. Im not crazy after all!

Hats off to stpips89..... He spotted this at the start of the year. http://www.traderslaboratory.com/forums/f208/what-hot-markets-2011-a-9056.html

[ame= ]http://www.youtube.com/watch?v=ymdssZOAx3Q[/ame] [ame= ]http://www.youtube.com/watch?v=r95ub7GSm5k&feature=related[/ame] (fond memories hehehe) [ame=http://www.youtube.com/watch?v=xzORu1dqEE0]http://www.youtube.com/watch?v=xzORu1dqEE0[/ame]

I wouldnt look at a market based on $ range in a day. A traders first priority should be not to lose money. The greedy look first at how much they can make (thus your FX comment which I agree with). Therefore, you should be looking (imo) to make regular, consistent amounts of money. Then scale up in size. The good thing about ES is that it has less tendency to go careering through levels, only to reverse on a dime like ES, CL, 6E do. It does happen sometimes of course, and indeed these moves are heaven for some anyway - free money if you know whats happening. This means ES can be used as a benchmark to see if the other contract (ER, YM. NQ etc) is real or not. Just some thoughts. Generally, 'the pro's' tend to spread es against something similar - ym, nq, cash, spy, big s&p etc. in fact, the reason es has .25 tics was to create an arb between sp & es. i agree with the original premise. new traders should trade ags or FI IMO.

Thanks DV. The best spreads book imo is by Courtney Smith - Futures Spread Trading. The Joe Ross book is a total waste of time. Of course, if you know the basics, thats all you need, as the devil is in the fundamentals. A Welcome to Moore Research Center subscription is a MUST if into spreads, correlation studies or any sort of quantative approach. I just wish I had the time to put Howes Limit rule in to practice!!!....

Hi Ivan, 1/ I started my trading career as an options trader on the floor, about 15 years ago. I worked for a small team of locals.Thus I never had to go through a learning curve like most do here i guess. I take my hat off to those who make it off their own back. You could say these guys were my mentors. 2/ Therefore, no. When the floor closed, I started trading futures, and did so from an office working with another small team of x-locals. Most went bust pretty quick as they couldnt adapt. Some were nailing down big numbers every day. It took me a few years I admit. 3/ Therefore, yes. 4/ Some basic rules. We've all heard them before, but most still ignore them: a/ Dont lose money. b/ Try and build positions for the longer term than scalp - the maths just wont add up and scalping is really a HFT game now. c/ Your own ideas are the best ideas. You dont have that other guys make up in terms of outlook, pockets, goals, so why are his ideas better than your own? d/ Patience and discipline. e/ dont get greedy. f/ you'll probably never make it unless you are deeply involved in the markets and find them fascinating. If you're in it for just the money, you may as well give it to me now and save your self a whole load of time! Finally, I'd say it isnt so much about set-ups, but more about understanding the context of the market Hope that helps. I'm still learning too BTW. We always should be!

No one trades Ags? disgusting! Easy money!!!! Why does everyone want to trade ES (ok I admit I do sometimes), EuroFX etc? The competition is much fiercer and chances of success thus much lower.

...oh, another reason..... newbies spend far to long reading and posting BS on forums like this - the only place they can pretend to be a success and get away with it, rather than spending the required time in the markets, paper trading, or in sim at the weekends/evenings. The blind leading the blind - especially on ET and worst of all T2W (this place aint so bad IMO)

There have been many studies as to why most people in the retail space lose. Essentially, the reasons are: 1/ Attempting to, and being very bad at forecasting markets (mostly due to lack of emotional control) 2/ Paying higher commissions How these manifest is best served with an example: Say a retail trader has a 65% probability of winning over a series of trades from his back testing.He probably feels pretty confident. When it comes to real trading, some trades may not be taken, some trades may be taken which dont quite match the plan under the heat of the moment. Lets say the junior trader over 20 trades reviews his results. The 2 errors above mean he no longer has a 65% win rate.May be 50% at best. He no longer has an edge. As for the stops, well, they seem to get more slippage than he calculated giving him even worse results than his paper trading and months of back testing indicated. The Futures Game, Who Wins, Who Loses And Why is a book that explains all of this in great detail for those interested in doing the work.

Hi Folks, Thinking of a soybean spread. I don't understand how the contracts tick though. The contract spec (http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/soybean_contract_specifications.html) says it moves in qtr tics (per cent) at $12.50 a tic - like ES I assume x.25, x.50, x.75, x.00. Looking at quotes however, it seems to tic in 2 cent increments up to 6, so it trades 1.0, 1.2, 1.4, 1.6, 2.0 etc Any answers/suggestions? Its getting late where I am so Im probably just tiered & missing the obvious. :doh: Thanks for any help..... Dude

i think they key point is that if you trade just for money not the love of the job, youll have issues. but there is a difference in use of psychology/recognising mental patterns to improve results when profitable, and overcoming issues that are blocking getting to profitability. Id love to say more on this, but ive got an appointment with my therapist now...

youre on the right track! as for pt 7, you will get losses. if they are that much of a burden, then you either have ego issues (we all do i guess), or your losses are too big for your account size? no one likes a loss of course. they should be considered a business expense. do your research and understand what sort of string of losses youre likely to incur over a series of x trades. if you get more than this amount, something could be wrong so stop until you find and fix whats wrong (probably some area of execution/selection) as you get experience, you will learn what a loser looks like after a fill and get out quickly (you can always get back in) rather than sitting round like a lame-o waiting for the stop to be hit. good luck!

Ensign allows you to select a minute duration for their price (or volume) at price indicator which is as close to MP but without the individual auction letters, just a vertical histogram. Works fine. $40 ish + data pcm I think

Traded with Ameritrade about 8 yrs ago. Fills were always worse off by a few cents because they routed orders to MM's (Knight) ECN who quoted off the best bid/ask of the exchange. Legal and within SFA regs. Sometimes they'd rebate the difference if I pushed on asking why they didnt route to the best price execution point (which in fairness I did have the option to specify). Mostly happened on the open. If you trade FX, look at SEC regs that now specify FX bucket shops have to declare the % of profitable customers. Most come out at 20%, but Oanda come out at 50%, but this is skewed because of other business lines like FX transactions for those who need to take delivery of currency for asset purchase rather than speculate.

Enhancing Trader Performance. A must. Along with Market logic by Peter Stedlymier (how do you spell his name??) which really puts common sense in to perspective against all the other rubbish. Taleb is interesting - clever bloke but wont help you trade (but in fairness its not supposed to) Of course, ROASO by Lafervee/ Livermore and any wyckoff. Dalton also.

Given that no 2 market events are under the same circumstance, is there any point in back testing? its always different. Although, I see where youre coming from - My answer is to make sure the outcomes you test account for the wider background/context. Lets say you test on a x min chart. A set up may work fine in a daily trending market, but will fail on a daily rotating market. What about sentiment etc. Bonds and notes for eg will trade off levels implied by their yields which may not show on a chart. Yet the wise are prepared. Also be aware of other market levels your market is spread against by the big money (who always trade spreads not out rights) Understanding & screen time beats backtesting, but takes years not hours/days.

All, When I was on the floor, lunch time was slow. Waste of time being there, no opportunity. Obviously traders need a break too and we'd take a lunch break like everyone else - thus the markets would slow: No paper, and no locals. But now, all we read and hear and talk about is HFT's, the % of volume they account for (futures, options, stocks, FX, cash FI etc... the algo's are there). Even large paper orders are now executed over time by an algo. But a computer doesnt need a lunch break! Yet we still see a lunch time lull in all markets where RTH spans a typical lunch hour. Surely this shows that market moving order flow is still provided by discretionary/human decision order flow. If HFT's were driving the decision process, there would be no lunch time lull? The only other explanation (actually IMO the reason), is that the algo's still have a human to watch over them, so are turned off during lunch. Therefore, it would imply that the algo isn't making a decision on its own accord, but is infact simply a labour saving device. After all, as some of you will know, most algo's actually trade around/arb fair value which limits price discovery/vol, not encourage it. Why then are the regulators introducing so many mandates regarding automated execution in the fear 'the bots' will go ape sh!t/flash crash x10 causing a global economic doomsday? Your opinion please.... The Duderado

I don't know a single movie star. I know they exist though. Seriously, whats the fuss about? Of course you can make a living trading just ES. Or YM, NQ 6E, US, GE, TY, stocks etc. The only thing that stops people doing it is themselves and poor market understanding from reading the typical drivel like Elder and other 'How to' books. I think people are looking for a step-by step guide for trading - an instruction manual. 'If this, then do that'. Is it any wonder most find it so hard?

Thanks Chad. Is it the same guy who used to post on Elite Trader?

Who/what is FuturesTrader71?

Nice blog post EL. So you are human after all!! I see what you mean about focusing on the positive, however I'd rather learn from someone elses mistakes than make them myself (wink) As you say, the important thing is to admit when you're on the wrong side and get out ASAP keeping the loss small - as your old broker chum advised. Thats the difference between a bad trade being a cost of doing business, and a problem - to me anyway. Thanks for all the effort you've put into the blog.

Well, perhaps the DVD's explain all!! Personally, I think there is merit in using the range bars, and I can see how they would help in timing when combined with his other tools. I can see why he does it, and the advantage of them, but for me, I just cant work with them. I've been using time bars for so long now, it would take a long time to get used to range bars until they are 2nd nature. Thats a sign of 'owning' something. I own time bars, he owns range bars. Lets not forget either, he's been doing this for a very long time. ********** I agree with your later points about losing trades. Why they were entered and what, if anything was overlooked that could have suggested a loser was on the way. Of course, some trades just lose plain and simple. We've all had them. Everything looks fine, except we oversaw Mr Yikamoota in Tokyo decided to sell 20000 lots just as we were going long - as is his tradition after eating a fried cat sandwich for lunch (with extra wasabi)

I think you're missing the point a bit here. EL states quite clearly about roulette THERE IS NO REAL EDGE. So, what he does it seems to me is walk away when he's up, come back with a reduced stake. Simple. Again, quoting I PLAY FOR FUN, NOT MONEY. What he seems to be doing is taking his profit in a trend, then walking away. However in your analogy, you seem to compare the strategy to buying and holding in a never ending market fluctuating/roulette in a casino that never closes. Would you agree? I'd suggest that if you are suspicious of someone's success, then you probably have doubts about your own ability and get a bit twisted seeing others do it. Here's the secret: Hard work, more hard work, and then some more hard work. Easy when you know how!

Sorry Kiwi, perhaps you can help me a bit and point out where these examples cover market orders being matched against market orders? There was only one example I could see in the Six-Swiss example, but that was to do with a pre-open session where there were no limit orders in the book, so a reference price was used instead, based around the previous close/settle I imagine - which kind of demonstrates that a market order needs a price to execute against. Submit a market order in a market with an empty order book (ie doesnt trade) like 2year Gilts and see if you get a fill.... Any help appreciated.

Yes, thats pretty much it. If you join the offer with a limit order, you are being passive. If you hit the bid with either a sell market or sell limit (at bid price), you are being aggressive. This is because in the first scenario, if you were to exit immediately after your fill, you would 'scratch' (ie get out at the same price you got in at assuming the market hasnt moved). In the second scenario, it you had to cover your position immediately, you would be down a tick, as you would have to cover your short position at the offer, when you got filled at the bid. Therefore, the aggressive order takers need to be a lot more sure what they are doing as a high probability as they are 'in the whole' (taking a paper loss) as soon as they are filled. As for tape reading, personally I don't think it's a good idea to trade one market from the Time & Sales from another, apparently related market (such as 'spot' FX traded from T&S from a futures market of the same pair). Time & Sales is becoming increasingly difficult in liquid markets due to algo's, iceberg orders etc. If you want to learn T&S today, I would look to trade a 5year or 10 year bond or note future in a country where volumes aren't as massive as on say CME or Eurex - try Montreal Exchange, Brazil or MexDer exchanges for example. There is less liquidity in these markets meaning you get more price innefficiency thus a lot more opportunity. Too many people want to trade FX, ES, Bunds etc 'because the big players' do. If you had just learnt to play poker last week, would you immediately want to sit at the same table as world champions?