TheDude

What sort of things are you looking for to base a trade on?

I disagree. Trading against a single counter party is inviting that counter party to fleece you. The tax free argument is null and void as it will be so much harder to make a profit in the first place with such high spreads and a counter party whos interested in your loss only.

1/ Read the excellent post by Phill In Texas. Self examination will allow you to make huge progress. Some trading software will let you 'pause' the chart when in playback mode/sim. This will allow you to stop the chart, jot down your thoughts and how you feel about the trade, then start the chart again and see how it progresses. Ensign Software offers this facility. When you go over your journal after a series of trades you'll soon notice thought patterns that occur for winning and bad trades. e.g. you may notice you have a tendency to rush into a trade and develop a bias rather than being objective to support your reasoning after a losing trade, causing another losing trade. i.e. emotional trades. Likewise, winners may occur with a strong sense of confidence, but also difficulty as the trade seems to fly in the face of common sense. Learning to focus in on these thoughts and 'trade your feelings' may sound a bit zen like, but it's simply forcing conscious awareness in a shorter time frame that would otherwise take much longer. 2/ Sweet! Try and learn something every day! We only learn by screwing up, so dont be scared!

Steve - in short, there are no right or wrong answers. It's simply a matter of ignoring 'popular' theory and finding what works for you and your personality. ZDO shows this in his answers. e.g. you could find a thread on this site that covers several pages about whether it's best to hold a position until the end of the move, or to set a fixed target. One chap comes up with an Excel sheet of back tested results that show targets are better, another shows some sim account as proof holding is best. The truth is that for one person they feel uneasy with a target as they sometimes feel they are leaving money on the table if the move goes into a trend. The target orientated person kicks himself when a trend reverses and he wishes he used his old target based method. Either way, if they trade a method they are not at 'one' with, they are unlikely to be successful.

Why dont you ask you're buddy who you allows you to sit with? After all, as you say, he's far better than anyone on this thread. Besides, I've already told you what to do and how it is done. You seem to be wanting an instruction manual. If that were possible, trading would be easy, and any dumb-ass would be able to make a mint - including you.

evroom1 - for someone who knows very little, you have one hell of an attitude towards people who are trying to help you. If you get so upset with people because they can't answer your unclear questions, I'd hate to see the temper you get in to when you actually start trading. If I were you, I'd buy about 10 monitors, 20 mice, and a few chairs for your office because you'll probably get through them quite quickly. Here's a tip for your trading plan: don't keep any crockery near your computer! Now for some more advise: stop trying to get short cuts. The type of trading you are trying to get a grip on is scalping. To do this you MUST be in a professional environment as you NEED low costs, ie not a retail broker. It's very intuitive, so not something you can read in a book or watch a video on. You may get a few pointers, but knowing you, you will p!ss anyone off who does try and help. Screen time and effort will be your (only) friends. Good luck - you'll need it!

Tams - I doubt it. If I visit a porn site, I always cover up and wrap both my router and monitor with giant condoms. Kiwi - Its an old(er) PC so probably does need upgrading, but the issue has only started a few weeks ago. It comes & goes. Has technology demand changed so much in the last few weeks? Trendup - XP (still). Thanks for the link - that seems to describe the problem. CPU usage remains low though. PF Usage does rise however. Thanks

Hi, my PC has a habit of being very slow recently, especially browsing. It almost grinds to a halt and I have to physically restart it using the button rather than through windows. Looking in the Task Manager it seems the problem could be with the SVCHOST process which seems to take up vastly more (10x) mem usage than any other process. Can I do anything to speed it up, or is it time to get a new PC? I've tried CC Cleaner, registry cleaner and deleting temp files etc. No good. Any help welcome.... Thanks

I like the way even Bob Marley is laughing at him over his shoulder!!

LOL!! Obviously a typical EliteTrader.com kinda guy! Always makes me laugh when I hear of people losing and listening to music in the back ground. Clearly not really focused (or trying) is he? Nice one Macdfx.

LOL Chase 1 Plazza Place NYC! I think half the worlds trading accounts are in that place.

You're wrong! You say you're hypothetical argument has flaws. It doesn't at all. It is spot on and well made. This is what REAL money management is about, and exactly how professionals view the situation. brokerage accounts dont pay out interest, so why should anyone want to leave anymore than necessary to manage positions? this is why funds will deposit interest bearing paper as margin with their clearing firm/broker so they are earning interest on their margin as well. The risk concept which you intelligently put forward is another facet of shrewd risk management and money management. Afterall, when you deposit your money with a broker, does anyone really think he keeps it nice and safe under lock and key? Nope. It goes straight into the overnight or bond market to earn the broker free money. This is where a lot of brokers make a good % of their income.

As for a more personal, but not so insightful analysis, here's my 2 pence worth: Long term MP (yearly/monthly) suggests up to me. There seems strong support. On a daily time frame, it just seems too odd that back in March-April time, the market (ES) was still creeping up on unhealthy volume. It did a similar thing before the last sizeable drop pre Lehman down trend. The sort of conditions that make everyone think a big break is coming. Apart from the flash crash, were still holding. It aint natural for the market to behave this way, especially when the USA IS bankrupt and China holds it by the short n curlies.(hey lets base this decision on funny-mentals as well as technical stuff as on the long term, the dog does wag the tail still! Talk abounds regarding the PPT coming back into the market. Make no mistake. Once the yellow peril has finished selling it's green backed assets, this baby's gunna puke big! There simply is NO other way. They're just holding it up in the interests of self preservation. Similar to the way Livermore manipulated Wheat to ditch his corn position. Same game, same tricks, global scale. Everyone knows big long term money is going into Gold in a big way. Thats one economic whether forecast you dont want to see if you're bullish equities. SHUCKS! You know what? I'm so bearish long term, I'm gunna buy me some long dated calls cos I'm usually badly wrong and only just scrapped a pass at Economics at school!!!.

Old Partridge.... Elsewhere in the book (or it could have bee Wyckoffs books) is the answer from none other than J.P. Morgan himself. On asked what the market will do.... "I think it will go up a bit, down a bit, and then fluctuate from there" Sounds like an options trader to me!

Very few exchanges support stops as native orders. Pretty much every front end used by professionals will keep stops server side (eg TT, CQG....) As Ninja Trader (a popular retail front end) has no 'back end' but hooks up to someone elses back end (like TT) via an API it is more than likely that the stops will be held on the client. Same goes for Strategy Runner. A useful topic Brownsfan. Well done for bringing this up as it is often these small differences that make a big difference over time.

LOL. I have a break coming up so I thought I could use some reading material. I looked on Amazon for 141 Wet Jackson. $200 used. No thanks. Google - found it free on pdf in the 2nd-3rd item! Good trade!

Basically, your performance will depend on the brokers IT architecture. It's a bit of a null point though because HFT's will always beat the fastest DMA solution like Ninja or TT. Most well known software providers will have API's. TT's is quite good I hear. Pats is utter crap - more on them later... So, TT at one broker may be slightly better than anothers. I have no experience of Ninja, but many here like it - that cant be bad. Now for Patsystems. DO NOT, UNDER ANY CIRCUMSTANCES TRADE ON PATSYSTEMS. This includes J-Trader, Pro-Mark, or their API. It also includes Strategy Runner & Ninja Trader IF the broker is connecting the front end (which is all Strategy Runner & NT are) to the PATS back-end. These are some of the scenarios you WILL face if you use Pats: - Wrong PnL - Slow prices - Incorrect contract naming (you trade x, get filled on y) - Random fills - Stops being executed at random times. -The auto spreader is an utter joke. Slow & painful. A friend of mine works for a hedge fund. They clear via one of PATS biggest customers who gave them PATS screens. They lost over $250,000 due to errors caused by the software. The broker refunded them and was going to sue PATS for the money before they paid up and re-reimbursed the FCM. It almost broke PATS. I too have had loads of bad experiences with PATS. I ditched it after 2 months. Do yourself a favour. Go with TT or Ninja. TT isn't the markey leader for nothing! I also hear good things about CQG execution. Good luck

LOL! Spend the money on a good steak and lobster dinner. That book is available free in some places. Try Googling it. At the very least you'll be able to get an e-copy off a Torrent site for the price of a burger & fries. I had a copy on an old computer. I never gave it much time as trading is about more than a bunch of set-ups.

Thanks for the explanation. I see where you are coming from.

Someone hit a raw nerve Urma? (isn't that a girls name?) :crap::doh::helloooo::rofl::rofl:

This doesnt make sense if you think about it - ignoring time. The imbalance in order flow that is motivating price as you put it will exist only for a brief amount of time. Balanced order flow (the norm) is available in a large majority of time. Thus, the 'passage of time' has a massive impact on price and it's availability. Id agree that in this day in age it makes more sense to track LTP's and their size than quotes. Out of interest, if you operate on the microsecond time frame (see, you're talking of time again!!), surely you will get your butt kicked by those in the nanosecond time frame? How about those on the giggliwiggli time frame? (sorry, I made that last one up )

Good point SIUYA. I'm sure many of us remember Paul Rotter aka The Flipper on Eurex. Many were screaming foul play as his orders were there with the intention of fooling others to place orders which he would then fill. Many complained to Eurex. Eurex didn't give a tinkers cuss however because: 1/ His trades alone were something like 20-30% of total Bund volume, so they were making good money from him. 2/ His orders were tradable. Sometimes he did get hit on his 'fake' orders. You don't hear of him any more. I bet he's still trading though......somewhere.....some how.....

Most scalpers I know (ie taking a tick) typically take their tick 25% of the time. the other 75% of trades scratch. The key to this is reading the order book. I've NEVER seen a true scalper use a chart (using the definition above). Key to scalping is very low commissions. That means you are not with a retail broker - because of the high number of scratched. Additional money is often made through exchange rebates (not available to retail traders) on those scratches. Always good to remember gambling theory. Statistics dictate that with a 75% win rate, we have to trade 5 times before being CERTAIN of a win in a worse case scenario (assuming a mechanical type of trade management, not moving a stop etc - for purposes of a simple example). That means if your stop is 2x larger than your target, you're gunna get nailed for sure sooner or later. I'd imagine taking a string of 4 losses would be pretty hard as you'd have to get over 8 straight winners to cover the loss - and then some to cover retail commissions. a string of say 10 wins is pretty tough for most. It would take a long time to dig your self out of that hole, and if you're like most people, you'd probably jack the system in and go back to the drawing board to find another. This is where putting the time in that EL eludes to is vital.

An interesting article. Perhaps you should define 'latency arb' a bit more, otherwise it sounds a bit too star treckie for me. I think money is spent on latency to be the first in the FIFO world, not to do over those who dont have the spend for co-lo & gold connectors between servers etc. If he who is fasted is always the winner, then there would only be one player in the market, and we would no longer have a market. Thus the slower guy has to be able to make money too. Speed is not everything. A solid algorithm would be a better and important asset. I didn't see anywhere in the article about the fees exchanges will charge HFT's for message:fill ratio's that are frequently incurred even with high volume auto-spreading let alone HFT's. This is very common in the derivatives exchanges, but I'm not sure about stock exchanges. Michael S Manley makes an interesting comment near the top of the comments list.

Reminds me of those who think selling naked options is a one way ticket on the gravy train. pinching premium until the inevitable steam roller comes along....