SIUYA

hi Steve as that other thread has too many pages as well, do you know roughly where you posted them as part of an explanation of the auto bots trading as you see it. I cant get much out of the picture you posted and thought I might go look your explanation up. thanks.

hence the heading of the thread Steve I dont think many of the bot operators do either....which is why they keep evolving. Why dont you enlighten everyone, given you think that everyone elses experience is wrong. Enlighten everyone that does not understand, or who does not have your professional experience, or strangely enough might just have lucked on something.

yes costs have certainly come down, and why it is important to keep an eye on those. They might creep back up with more regulation, and more insurance as a result of MFG,PFG but I think the low fees are here to stay. When we were equity option market making it was amazing to hear the costs involved, and this was on low fees, and hence looking at it in terms of percentages makes sense. Our clearer at the time also cleared many others The clearer one Christmas party told us they measured their clients based on how much as a ratio costs were to the exchange, brokers, clearers, for every dollar profit....we were at the low end of the range, slightly less than 23c/$1, after dropping it all as high turn over traders we maintained the profitability but dropped to 2c/$1. the average was 45c/$1. That was eye watering. (remember this was Oz, one central equity exchange not multiple ones - and we also were one (if not the first) world exchange to become fully electronic. Makes me double take sometimes when reading about how slow the amalgamation of many US exchanges was , and the spreads people had to put up with - Oz had an open market, 1c spreads, the depth freely available, one market - no wonder everyone wanted to beat Wall st. I will recommended again the book Dark Pools - Scott Patterson - enjoying its history as a read as well.)

Just reading an article in the paper. But wait, there's more: why it's good to procrastinate It is basically about a book "Wait", Frank Partnoy I have not read it but I will as I like this stuff and imagine it is particularly relevant to maintaining consistency and improving trading results. (I might add this should not be seen as an encouragement to wait until the time has passed....chasing trades will more likely do more damage to the account than waiting.)

you need something to start the selection process, so why not use the 'fact' that a candidate might have some brains to start with. As a lot of finance and particularly trading is conceptual I think it does help to have the ability to show you can mentally grasp certain concepts, and have shown an ability to be able to apply them. Larger companies also do a lot more personality type grading as well - more to ensure people fit into teams or roles - does that mean that many traders are potentially funneled into sales or risk? A study I remember reading ( though the study was not in trading but I still think it applicable ) - then shows that motivation and perseverance plays a further and perhaps more important role to success..... Personally I dont think being too academic necessarily helps - there is a certain amount of art involved, but you need someone who has a fair amount of self intelligence rather that pure academic abilities maybe. (Steve and other teachers may offer more insight here) (If I was applying for a job now I would certainly not get in the door - only one degree, not enough mathematics)

finally a solution to plumbers crack http://www.traderslaboratory.com/forums/attachment.php?attachmentid=30069&stc=1&d=1343026217

it came in various forms, depending of definitions.... futures floor - people would front run orders as they were signaled into the pit, or people would be able to trade on their own accounts while operating client orders. They would then purchase 20 contracts - ideally at the bid- prior to or while purchasing the clients 1000 contracts.....immediately going on the offer for their 20 knowing there is the bid of 1000....if their bid starts getting hit, they save themselves the last 20 and get out for BE. Traders would also market make as such, being on the bid and offer all the time, revolving and keeping a tally of their inventory....Also this works really well in those instruments that did not have large ranges, and so the bid and offer might have swapped but not much more. market making options - slightly different but much the same (a simplified version)....your edge was in building a book of options and underlying instruments whereby the edge was the spread around the theoretical value of the options. eg; client A bids, 20c for an option worth 19, client B offers a different option (Put or call, or different strike, series etc;) at 43c which is theoretically worth 45. The market maker trade both, hedge it with the underlying if needed and do this continually. (so long as major moves in vol, IR etc dont destroy the theoretical too much) they have made 3 cents. Alternatively in the more liquid option series, they might sit on the bid at 19, offer at 21 for an option worth 20c. or they might spread things against other instruments - pairs trading.... They also might be part of an overall book, that is hedged against a portfolio. jobbing /scalping in my world was basically buying and selling quickly just looking to take lots of small clips. To me and a friend at the time we often discussed that this was going to become more computerised and fast and IT dominated. Speed would play a part and we thought there was more value in learning to trade longer term bigger picture stuff. There was also more value in building portfolios for what we were doing at the time. While we still took advantage of scalping opportunities that was not the main focus. The signs were the fact when it went electronic, you would not even see orders appear, just the trades and volume. Also you still competed against people front running, and over the phone orders (on the floor you could always get involved on a "first best voice")

adding to what Steve and fast say.....you are looking for patterns in your own behaviour that are both good and bad.... there are at least three mental aspects that are worth recording. 1...pre trade. what were you thinking. did you want to follow the rules, break them, go against the trend, or just go with it. Were you feeling bluuih, bearish, was their something in the back of the mind worrying you, did you feel the need to rush in...etc. 2...during trade did you feel comfortable, did you feel like taking profits, getting out earlier, adding to the position, cutting and reversing, when it did not go for you straight away did you start moving stops, TP etc.... 3...post trade. should you have left it alone and followed your rule, or did you do better breaking them? did you feel you did a good job of it, did you suddenly feel more comfortable exiting the position, did you suddenly feel I can master this and that I control the markets (a bad sign) did you immediately look for the next trade, want to reverse get back in again, walk away, feel flat/uplifted etc. Any thing works and everyone is different the point is the same....work out what works for you, and do more of that and less of what does not work. example - sometimes I feel like exiting when i have a position going for me immediately after a string of losses just prior to it. When it gets to BE (for the string of trades) I often feel i want to exit. Time and experience has shown me, to let the profitable one ride, as that BE more often continues well into profit. The reason being, the X losses before hand finally saw the trade work...why stop now. Exiting - all it does is get you to BE to make you feel good that "you were right", - whereas, the losses have already occurred.They are history....this is now and the trade is working.

either... "What do you mean the NFA/SEC/FSA are investigating the accounts?".... or from the customers point of view "I cant f...n beleive it. I only opend the account with MFG/PFG/Lehman/Bear Sterns last week"

I thought about trying to use something like a range bar that modified it self based on some volatility element.....something similar maybe. (beyond my pay grade) and use a visual best fit model. maybe you just have to continually optimise on the last X days and modify using that? However, isnt the point about using a ATR or similar filter the same in terms of then modifying quantities traded? Or are you looking to go where the stops are adjusted but the qty stays the same? pairs trading.....double the risk with half the profit.

I was with you on this...however started reading the recomended book dark pools by patterson.... interesting. Initially they are talking about HFT as being what we used to do as option market makers with pencil and paper.....however even these guys are not sure where its heading. For me, if people are getting access to information before others then its is insider trading, if they are able to read information and data mine information better and then act on it quicker than others then its fine.....because what is it that actually makes them the money....speed, data mining and better insignt, inside info, combinations, different option valuation models, better market direction analysis to scalp better ????? Sorry if its getting a bit off scalping topic,,,,maybe it needs a whole new one in itself.

like the first point....plus a lot does depend on where you are in life. A 25 year old might view things differently to a 45 year old. Re the 2nd point, isnt that what TL is . I am sure variations exist ...personally I have little interest in constant chatter, and find it a bit like trying to have a phone call while driving. (hands free of course) They cant see what you are seeing and loose all context so while you are swerving trying to miss the truck they are talking about last weeks episode on TV, and then saying "can you hear me?" It is the real life social interaction (must be too old school)- and not with strangers locked into a soulless room that the only things you have in common is the same stock code....that i miss ....sitting here naked, coffee and deciding the trades for the day while scratching myself is one upside to the solitary life (today I think i might look for longs in the EURUSD)

thanks for the experience feedback zdo....especially showing there are many ways to do it. (the catch all term of scalping, or jobbing) one question I have --- what do you mean by 100+, 200+ without a loss --- are you talking about number of trades? also what would be the rough percentage (not dollar amounts) of profit - net and gross - to you and the broker. I ask as when I was a market maker, and we could see it becoming more computerised and a different race, we changed our styles a fair bit. One reason was that while profitable, we hated paying the brokers/clearers/exchanges so much. (Scottish blood in me), plus we would have ended up competing against the larger firms that have two IT staff to every trader. We modified to having less trades, less costs, bigger margins so to speak...... (My idea of the adrenaline, was that image of people banging away on a computer, focused, manic that too many people get....doing 5000 trades to make $1000....not for me...if my computer could do it that would be another story......) thanks.

depending on the market, some of the HFT actually were able to see orders before others....dont know if thats the same. More than anything they can load up and pull out faster than you and so with enough of them doing it they are the Q. Plus they use all sorts of tricks - like loading up the bid, seeing what is getting hit, disappearing, selling down etc.....it is all about speed.....but its a different game IMHO. (Thanks for the heads up on the book windsurfer i just downloaded on kindle for next time i have a few hours......) Scalping still can be done, but I think its not for everyone due to the limitations, and I feel the same things are true....scalp with the trend, cut, cut, cut, and do it with an edge....ie, you buy on the bid, or something similar. Too often people sell it as a low risk, high profit, fun adrenalised game.....not for everyone.

None taken and I would agree with you. The original reason i moved here was at 36 years old i had one of those, "maybe i might do something different moments".....a few years later we have female issues - presently I am here for her and her career....I am a modern man. Reality at present is - London is cheap compared to Oz for many things, its a great time zone, I travel a fair bit, and it has certain tax advantages as a non dom.....may as well make the most of the advantages, but Oz is the place i intend to get back to to live.

I have been through many variations.....and this is my personal experience..... Traded on a floor - Always someone to talk to - 80% had nothing to say and talked crap about sport most of the time, or their egos talked. Moved to an office and screens (12 of us together) - much the same, the good social atmosphere made the good times great, the bad times always sucked regardless. Moved to an office with two of us, then three of us - we would either banter about nothing or the markets most of the time, or might sit for 4 hours saying very little......(this was my personal preference) Traded in Oz by myself, at one stage I worked out I was probably going out 5-6 nights a week, with different friends or family - this was my social interaction to make up for the fact i had little contact during the day.On the really quiet days (or often those whereby the profits were being run i made friends with the local shop owners and cafe owners) It worked for me. Also sat in an office for a time with about 12 others, mainly market types doing different things.....great socially, but not so good for work as too many distractions. Sitting in an office with strangers can be more lonely and frustrating..... Moved to the UK - sitting by myself in "friendly" London where even the shop owners who you see every day wonder who you are each time, and are rarely talkative :crap:. This really sucks especially in the dark winters. Now have a good bunch of friends, but the social, impromptu aspect of Oz is not here in the UK. After seeing many versions and sorry for the long history ....for me I need the real (not skype etc) social contact of even just one or two people who are of similar mind and trading ideas - we dont need to trade the same, but we need to understand the traders mind so to speak. This usually means you know when to shut up, what questions to ask, and can also provide level thoughts when needed.......IMHO - hard to find, and only comes over time sorry Tams - I hate FB, prefer TL as I like the topics here more than which friends dog ate a pizza then puked on the carpet. but agree trading is a lonely existence, and one of the aspects I really hate about it when you dont have the substitute for an established network of friends or trading buddies, or your partner (even though she also is in finance and very smart and talented) just does not get what you do - from a trading perspective. (working on solutions, but it all takes time)

if i trade it correctly then my wealth has been built......honestly that is my primary focus. I am with Mr Hendry (who I for one wish he would do more enjoyable interviews - but even he realises he has to play the game), it is good to be aware of these things have a general idea, and then hope that it creates opportunities that you can benefit from.....otherwise trade what you see, and not what I think/fear or what others fear or think..... Bad things happen all the time, and yet we are still here....maybe something really bad will happen and we wont be one day.....in the meantime.....as i dont have a 800m portfolio to worry about i can remain nimble and quick....and still think about the scenarios.

I am pretty sure most of the bank fines actually go back into the local treasury to reduce the costs that are charged to police the banks in the first place..... A bit like the criminals funding the police......when they are caught they pay a fine and then continue on their merry way.

(below is just my personal opinion and a general rant) It is a good question Bill, and I think one of the most often abused cons in the industry. the percentage returns quoted on accounts. As mentioned, leverage is what most of these things rely on. And leverage can build an account or destroy it quickly. Most quoted returns quote it off the minimum margin required to fund a position. Well IMHO that is the only industry that tries this con on. Lets put it in a real life scenario..... Have you ever seen a bank tell you, make 100%s on your money? Well if you buy a house for 100,000 with 5% down and the market for houses rises to 200,000 (as the past has shown it can) supposedly your account has grown by 20 times..... Hence dont fall into the trap of thinking every one turns small accounts into big ones.....dont get me wrong - it can be done, however you do need luck, big balls and the reality is its more likely not to work. Like many industries you still need money to make money, and using leverage is another tool if you can get that right. Re your options....These only benefit you IF you get lucky and hit a string of winners early......and are effectively the same thing no matter what you do - you are just using more leverage in all cases as the one thing that does not change is the base amount in the account.....and this is the problem you have.. " 1. Increase my risk from 1% to 2% or more. 2. Always buy no less than 100 shares, and just run tight stops. 3. Stop being so cheap and put money I can't afford to lose in the account. " There are spread betting and CFD options available to use, whereby you can modify and tailor make your quantities, alternatively you could take the time, build a proper consistent track record and then be prepared to increase the leverage at a later time.....risk it when everything is n your favour....as it can be done. Here is a question for you to ponder......how do people really make money the top hedge fund managers who return 25% year on year.....did not become billionaries due to the returns on their own money - they did it because they used other peoples money to get more leverage (with little risk). (a 1mill account compounding at 25% pa, with no withdrawals (you have to live) gets to about 85mill in 20 years....from memory)) Even for other industries......other business owners either use leverage in terms of capital to buy inventory, plant etc, some leverage other people to do the work and take a clip. Very few manage to strike it rich with an app they wrote in their back yard.... Leverage can help and destroy.....and no matter how you wish to pretend risk is control one way or the other....this is the key (and tough) issue for small accounts.

If you are looking to hop in front of a change then why scalp....why not let it run? Plus scalping often was going with the flow, and the trend for the day...... For me, scalping is tough work, requires a lot of capital as you will get hit every now and again, and largely just feeds the brokers, and those who do it properly really have low low costs. Basically why scalp when you might be able to make the same money for less trades....maybe traders are getting smarter , or maybe they have burnt up and blown away. I am sure it is still profitable for some who attempt it, but in simple terms for me, it has never made sense, unless you have an edge to that scalping - ie; low low costs, some trade flow edge (eg; the old pit), or something similar. The HFT may have also made it harder to scalp, but I dont really know....maybe they are the new scalpers.....

The regulator made me commit fraud over the last twenty years.....the latest Joke excuse. Excerpts From Russell Wasenforf Sr.’s Confession - Deal Journal - WSJ "It was this encounter with CFTC’s Agnew that I discovered that the Industry’s regulators often used audits of Firms as punishment and for retaliation. And I saw for the first time the mean spirited nature of the industry’s Regulators. The cost of an Attorney and the requirement to maintain a greater capitalization pushed us into a financial crisis, I had no access to additional capital and I was forced into a difficult decision: Should I go out of business or cheat? I guess my ego was too big to admit failure. So I cheated, I falsified the very core of the financial documents of PFG, the Bank Statements. At first I had to make forgeries of both the Firstar Bank Statements and the Harris Bank Statements. When I choose to close the Harris Account I only had to falsify the Firstar statements. I also made forgeries of official letters and correspondence from the bank, as well as transaction confirmation statements. Using a combination of Photo Shop, Excel, scanners and both laser and ink jet printers I was able to make very convincing forgeries of nearing every document that came from the Bank. I could create forgeries very quickly so no one suspected that my forgeries were not the real thing that had just arrived in the mail." ................f..n pathetic excuse for an individual.

Exactly every bear and bull will have their day in the sun...... It is interesting though when you consider a lot of equity market crashes, they usually had good falls before they really had what was considered the event......the timing, and the holding on was the hard part. Or alternatively the TRO option of only trading one way and crossing the fingers might work just as well. (Friends were putting on some big positions when the twin towers were hit and only managed to have 1/3 of what they wanted on - they made a lot of money and were embarrassed that they felt it should have been three times as large due to the black swan going their way.)

Off the top of the head - it will give similar results to exponential moving avgs, and as with all of these things, the mean that is either being reverted to, or exploding away from is the key issue in that it moves as well...... Might make for a good volatility filter maybe.....but I guess it all depends on what you are planning to do with and while I am not mathematically up to it.....my guess is that it will be much like your conclusion that a simple MA is still a great and simple way to measure trend. (I hope I am wrong )

a bit silly really, but my strategy is to make money....or is that my mission statement .....I guess the tactics are the execution part ---- eg; do I buy a break when bullish, or buy dips..... eg; today EURUSD, strategy was to remain bearish, sell rallies, did well on the down tick, but i had no strategy today to go long -- so I did not and the rally that I did not anticipate and hence did not participate in would have been good if i had a different strategy ready to apply different tactics. .....so long as the mission statement is intact

When ever someone asks me the first thing I suggest is - go and get the book market wizards and read it. It may not make a lot of sense but if it was interesting and you want to take it further come back and see me. You know how many people have come back to me after that simple recommendation to buy a $25 book and spend a weekend reading it - about 2 out of 30 people....clearly the 28 are not serious. so if you cant be bothered reading an enjoyable book or interviews that most serious traders I know continually refer to for inspiration, ideas, consolation or simply a good read then what hope have you got of controling any emotions even if you dont like the book.....why ask for advice if you are going to ignore it. :doh: