SIUYA

Cultural Differences Noticed at the G20 meeting in Toronto ... The Canadian: Self-absorbed and disconnected from reality. The American: Businesslike, unwilling to be distracted. The French and the Italian: "LOOK AT THAT ASS!" http://www.traderslaboratory.com/forums/attachment.php?attachmentid=26684&stc=1&d=1321435392

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FYI..... Hedge Funds | HedgeWorld | The Definitive Hedge Fund Community WASHINGTON (Reuters)—The fact that no one has comprehensively defined high-frequency trading has not stopped it from dominating debates over the fairness and stability of today's electronic marketplace. Such computer-generated, rapid-fire trading has taken hold on exchanges globally, dominating volumes and making it faster, cheaper and easier to trade than ever before. Yet the strategies driving "HFT" and the unintended effects it has on securities prices are contentious and little understood, leading regulators to consider new rules to rein it in. So this week, a U.S. Commodity Futures Trading Commission regulator pitched a seven-point definition meant to serve as a starting point for any new rules. "Without a principled definition of what constitutes an HFT, any oversight scheme may inadvertently extend either too narrowly or too broadly unless the definition and behaviors are well understood," Scott O'Malia, a CFTC commissioner, said in a letter to an advisory committee on market technology. Mr. O'Malia, who chairs the CFTC's Technology Advisory Committee, called his definition a "seven-part test for what constitutes an HFT," and asked the committee to consider it before a Dec. 13 meeting: The use of extraordinarily high-speed order submission/cancellation/modification systems with speeds in excess of five milliseconds or generally very close to minimal latency of a trade. The use of computer programs or algorithms for automated decision making where order initiation, generating, routing, and execution are determined by the system without human direction for each individual trade or order. The use of co-location services, direct market access or individual data feeds offered by exchanges and others to minimize network and other types of latencies. Very short time-frames for establishing and liquidating positions. High daily portfolio turnover and/or a high order-to-trade ratio intraday. The submission of numerous orders that are canceled immediately or within milliseconds after submission. Ending the trading day in as close to a flat position as possible (not carrying significant, un-hedged positions overnight). U.S. and European regulators have warned for at least two years that they could slap new restrictions on HFT hedge funds, banks and proprietary firms that send high order volumes and execute short-term trades, often to make markets. The May 2010 "flash crash" amplified calls from some investors and politicians for a crackdown on HFT—though a regulator report later said such trading did not spark the crash, only that it exacerbated the speed and severity with which U.S. stocks plunged over the span of minutes. In March, a CFTC subcommittee proposed new trading controls, such as kill switches, to reduce the risk of a runaway computer program roiling markets. Commissioner Bart Chilton has said he wants HFTs to register with the CFTC, something akin to the U.S. Securities and Exchange Commission's new reporting requirements for "large traders." The European Union in October proposed new rules that would force high-frequency traders to buy and sell shares or other securities at around the price the market is trading. By Jonathan Spicer

How do you determine where the trend will reverse? How do you let the winners run if you are trading against the trend? Why when you are trading against the trend as it so profitable would you cut and reverse? Basically - Why make it so hard for yourself trading against the trend, if you rarely have any losers using the appropriate method, why not make it easier for yourself and use the same techniques trading with the trend?

josh stands for joshing right??? You sort of understand but really have no idea...and I mean this to help. which is why you need to understand options far more before trading them. if you think a stock is going to fall, why would you sell puts? what if that stock goes to $20, before expiring above $40...eventually decrease is a possibility.....however, what if it goes from $1.5 to $20 first. shorting a put gives you a long exposure. Shorting a call gives you a short exposure. work that one out.

if you are short an option (if you dont know what short means - dont trade options ) then the most you will make on that option is the amount you sell it for......you cannot get any more upside. so if you sell something for 50cents, then that is all you will make. simple...... Also if you sell something for 50cents, and get the chance to buy it back for 1,2 or 3 cents do it. (anything near zero). A lot of people dont and figure that its practically worthless. Wrong.....you have made the money, take the risk off the table and assume rather than selling for 50 cents you sold it for 47 cents - the money is the same, but the risk is reduced. Otherwise, there will be 1 time in 20 (at a guesstimate ) that it will cost you plenty. I cant be any plainer than that - if you still dont understand - dont trade options yet.

thanks Tams....thought I might add to this.... with one particular take away quote.... " If Warren Buffett is old-fashioned in any way, it is in his patience and commitment to his investing strategy. When the times don't suit him, he simply bides his time. Then, when the planets align, he has read and thought enough to be ready to strike quickly." Read more: Buffett's IBM buy a lesson in patience Buffett's IBM buy a lesson in patience

Write a Covered Call Close a Covered Call Perform a Buy / Write (Buy a stock position and write a covered call) Perform an Unwind (Close a covered call and sell a stock position) All Level 1 strategies above, plus: Buy a call (to open) Buy a put (to open) Sell a call (to close) Sell a put (to close) I dont know how various levels work but it is interesting that who ever sets them clearly does not understand options and risk. (unless I am missing something in their definitions) most of these are just closing a position....there is only really 3 possibilities here.... Write a Covered Call = Perform a Buy / Write (Buy a stock position and write a covered call) = sell a naked put .................the exposure is the same, it just might be your collateral instrument changes Buy a call (to open) Buy a put (to open) I guess they have to start somewhere - keep it small to start with, really understand how the options move, decay and react. Always buy short options back when they get near zero, and remember the most you will make on them is on the day you sell them.

Qa.......50% as a rough guess Qb.....50% as a rough guess depending on the day I say this as someone who knows they can always do better and yet at the same time knows that you are only as good as you are on any particular day. (My life from trading is very very very different from my life as someone separate to trading.....maybe why even though I appreciate the ideas in this thread I dont necessarily subscribe to them for me. ) and gosu ( I had to say this ).....I would hate to put you on ignore...but it is too hard to follow the threads. I would love to have an "admitted BS artist" button. (please make note MMS, it might be nice.) that way you remember to take everything said with a grain of salt from certain posters as they deliberately decide to post BS rather than discussion., because while I dont agree with everything on the internet and I also support everyones freedom to speech, I also support a system that lets me appreciate self censorship in my own terms. (you do realise gosu that you are now in that pigeon hole as a result of your own actions/words....>>>)

there are more blogs/articles/calls for the accounting systems/practices to be overhauled. example: MF GLOBAL AND REPO ACCOUNTING » Grumpy Old Accountants So basically in answer to the question can it make the industry change - given its happened before, the sad state of history tells us - no.

Problem is gosu, Rande actually says he does not trade and is more an expert in psychology, and you are making it personal. I like you am not much of a believer - thats part of my personality, but I still dont mind reading other points of view without continual interjections from one who is admittedly full of BS. From a common decency point of view, once your point is made are you best not to let it drop and ask questions that might create debate/discussion rather than conflict??? Too often the skeptic looses credibility and pushes those wavering toward the guru....maybe thats what you really want, maybe you are the real lackey of Rande and Zdo is just the fall guy.....ahh the Machiavellian evil brilliance. (Plus Rande, just because the US army and corporations use the personality test is not evidence it works - just evidence its widely used and recognized compared to other personality tests. and so probably still has great validity. --- and on that note, a serious question - if we have personality tests that catgorise us, and I assume the premise that we can change our base personalities remains the same. In which case a myers briggs test taken at one stage in life is likely to reveal a different personality at a different stage in life? or are we really stuck with who we are?

yes...is it the 3-5 year cycle or the 100-200 yr cycle If we are just at the end of the biggest credit bubble in history that was ten years in the making culminating in a 25 yr equity bull mkt then we may have a long long way to fall. Only historians will know later.

were they trading as prop, hedging a book or operating for clients? Did they have vwap orders over the day.... Was the same client operating through different brokers, or did GS, JPM and others give their orders to each other as well? Very hard to tell anything unless you have real information about the origin of the orders.

I just caught the end of someone on Bloomberg TV who used to be with the SEC - talking about the same thing. I will try and find a link or replay.

if you are trend trading you will need your own definition for what constitutes a trend and this is needed for your systems entry and exits.....but you dont necessarily need to know why it is trending. Having a philosophy/theory of the way the markets work in terms of overall structure is important to understand how you intend to capture profits from the markets, however the in depth analysis of these people are buying here, those people are selling here for these or those reasons is largely irrelevant....just like magical trend lines. The market does not care why people are doing things, it merely reports that they are being done. If you really think you can track why people are doing things as opposed to how market patterns seem to repeat and continue and how you can put the probability of those patterns repeating in your favour then become an economist. If you choose trend following then it is simple - you think the market will continue in the same direction you think it is trending in....the rest becomes money management. Worrying about missing the first two higher highs is missing the point if you think those higher highs will continue. The markets are always trending - it depends on YOUR time frame.

read my post...... (disclaimer - blaming accountants is in jest, but there is a practical point that the issues supposedly being regulated are in my belief not the real issues which will cause lasting beneficial change) I actually blame it on the global conspiracy perpetuated by those evil cellar dwelling whatsamacallits

MMS is right.... think of it in terms of accounting....it might be easier to understand. (or not) At the start..... Buy stock $50x100 = $5000 outlay Sell calls $2x100=$200 inflow then..... Scenarios for exercise/expiry day are.... 1....calls are exercised. sell stock at $55x100 = $5500 inflow buy calls back at zero (to take them off the accounting books) Total PL realised = +$700 2...calls expire out of the money no change in stock position - unrealised PL is the difference between the $50 price you originally paid and the current price buy calls back at zero (to take them off the accounting books) Total PL realised =$200 The only things you are interested in is initial stock purchase price, strike price (if exercised) and premium of the option. If the options are ITM on expiry day, and the calls are exercised, the final stock price is irrelevant to you as you have pre sold the shares at the strike price.

Sad, but increasingly true. Unfortunately this lack of trust is a large part of what will kill any healthy functioning economy. There is a reason a lot of economies never really boom....a large part of that is that the people do not trust the institutions within that economy. Think of South America, there is a lot of mistrust of the governments there and the previous nationalisation of wealth done last century, many wealthy Chinese are trying to take money out of China at present - dont forget the government is still not big on individual rights. When the trust goes, so do a lot of other things we take for granted in a healthy functioning economy, which is why I despair when many take the buyer beware, dog eat dog mentality Yes all these things are true, but do you really want to go down that path without the checks and balances, regulations that help protect and guide (not that I am a fan of bureaucratic regulations just for the sake of it) ....if so, be prepared for the consequences.

all the extra analysis in the world wont matter if you cannot deal with the trade off running positions has. This involves giving up profits sometimes....often with the occasional big win. If you dont like, that, cant deal with it, or dont want to tolerate it then stick to what you are doing. If you can do some backtesting on it where you can have an idea about the reality of what numbers will occur do that.

exactly - no matter the regulations, no matter the types of controls at the front end....some people are either frauds, or are tempted enough and incentivised enough to commit fraud....hence you need to head them off at the pass, not through regulation just saying you cant do this and that, as it will be ignored, but through checks and blanaces that make it harder to get away with things....such as good/better more transparent and accurate accounting standards, total segregation of accounts, checks on PL AND Cashflows at the same time. You cant stop fraud - you can only make it harder to commit, easier to pick up and when committed leaving less damage. Silly example in case; a programmer stealing the rounding error off millions of bank accounts....most people wont notice, there is no leverage involved, only really picked up by looking at the accounts..... still fraud, but less damaging :0

yes, we already have some checks and balances for those to voice their opinion. Largely it works.... We also need to encourage people to not turn a blind eye to things and not just support those who bully and force their ways around firms taking excessive risks. Too often many people turn a blind eye to things they know are wrong, dubious or just plainly represent a conflict of interest....even if there is nothing illegal. If you have worked in a trading firm you know what I am talking about. What we appear to have developed is a system where those who are meant to be the best in the system, the leaders of society are rather more self serving and worse still make no apologies about it....unfortunately the old boys networks do exist. What happened to being a member of society. ....not one of the haves and the have mores. (wishful thinking I know, and its not about to occur, but wouldn't it be nice if more of the top were a little more humble and thankful - not to take away from those that already do, as there are plenty of wealthy people who do a lot.) Bod Diamond (not to pick on him) Bob Diamond: No apologies. No restraint. No shame. - Business News - Business - The Independent supposedly is to make a speech shortly whereby he is reversing his previous stand.....interesting.

a good description of the system flaws....and why if they are serious they can fix them. Guest Post: MF Global Shines A Light On Monetarism's Incapacity To Enhance The Real Economy | ZeroHedge not to be confused with capitalism (which I support) and corporatism (a whole other kettle of fish affecting more than the finance industry) Basically - the things you need to regulate most is the amount of leverage and the accounting for risks. These things allow/encourage people to time and time again take risks with money they dont have - (note - while leverage is fine, excessive leverage is not.). Too often accounts take into consideration the idea of values - not of exposures to risk, and they can too easily be hidden. I have said it before and I'll say it again - there should be no such thing as creative accounting..... fraud is very hard to stop (it appears this may have occurred in MF), and its encouraged when people get access to the instruments that allow them to massive leverage themselves with little personal risk, but when its encouraged under the guise of "its legal" then it makes the head spin. To those who defend these practices and system are the ones that allow it to continue, how often have you heard "everyones doing it"..... regardless of how many protests there are...... (an accountant once tried to defend creative accounting once under the argument - these are extremely complicated issues that often we dont follow - WTF...k ...scary) The accountants are to blame :rofl: So as to the question of can it make the industry change....probably not if the core problems are not addressed..... (disclaimer - blaming accountants is in jest, but there is a practical point that the issues supposedly being regulated are in my belief not the real issues which will cause lasting beneficial change) Plus....these guys are arguing over how much of a short fall there is....thats scary - everything should be reconciled quickly and easily these days so its either there or its not (referencing client account balances which were MEANT to be segregated and given every client gets instant access to their supposed balances what was MF doing?)....now the lawyers and accountants are involved watch them milk the teats.

Tradezilla, if this in essence sums up your trading style, and the method reaching it is not so systematic then I think its fine (that is largely what I have tried to do as well)....explaining that to others is incredibly difficult. I could not agree more with all the points WRB has made and have been through the same things myself working alone and with others......but I have never tried to use a Skype room as I think another major issue with it is that it becomes noise. A lot of context in speaking with people is visual, and different parts of the brain works on talking as opposed to visual components.....and when other participants dont see what you are seeing, or cannot see when you are busy it makes it difficult. I know I hate getting phone calls while I am watching something, but if that person is watching the exact same thing (or has the exact same style) then its a different kettle of fish. Plus have you ever worked in a room with people when someone is bearish others are bullish.....it does affect people, moods, and how you interact and feed off each other. Agreeing to disagree all the time will become exhausting....look at the EU not worth it

rule number one is Capital preservation.....so sitting and waiting is best if it does not suit your system/style of trading. Plus unless you have setups that are robust, then they are not good setups, and taking them regardless at best might feed your broker but at worst will mess with you mentally and financially.....if that makes sense. If you are a trend trader then these markets can be difficult unless your time frame is small enough, OR your trend entry system allows you to take a view and enter retracements and you happen to be bearish....then opportunities abound If you feel you need to play, why not play very small size, or paper trade for a bit, or only take those setups you feel are the very best...(this last one is of course the hardest to sit and wait for). While you need to participate to win, you also need to be able to afford to play when it suits YOU.

So in other words he completely f...d up and he is the only one to blame....you cant have it both ways Steve. .....and as an aside if you do understand the rules you would no there are other fiduciary duties and responsibilities. As a director you cannot just do what you see fit. Which if you did not take a simplistic standpoint you would understand that while people are pissed off he f..d up, they are expecting jail if segregated client accounts where dipped into and that illegal actions occurred. Even if someone within the firm was doing it to cover his liabilities of his trades (and he admits they were his trades)- as CEO/director he should be responsible for ensuring processes where in place for this not to occur.....he should have at least understood the risks and the capital flows of his own company - or was he asleep at the wheel as well. CEOs generally dont get paid big to take punts even though they might and are able to they are paid to run the company in the best interests of the shareholders. They get paid a lot because they have responsibilities and liabilities that go with that position....when people f...k up even as a CEO they should not be defended for this. This is not little league where you say - oh better luck next time. now when it comes to ethics, morality etc...its a whole other kettle of fish, and people are entiltied to their opinions, just as you are yours, but it appears you are saying the same as everyone here (which is why I wonder it is that you think everyone else an idiot and does not 'understand' and when people do suggest that the "rules" get re-written or amended to avoid or minimize such collapses your best answer is "thems the rules".)