carltonp

I too am a scalper and I'm on the same page as you .... Only trade what I see....

Very interesting.... I got the following statement from an Intraday trader: It happens all the time. Nothing amazing about it. It is called program selling. Nothing fancy about it either. Index arbitrage will also do it. Buy the futures and sell the basket of stocks in the index. Would you guys agree? BTW, Crossbones, I do indeed watch ES and NQ along with YM, however I'm not familiar with TF. What index is that? Cheers

Hello Gents, Thanks to all for your comments. I've read and re-read your comments and I think Siuya has the key "Adapt, learn adapt" is the key. Before this event I thought I was invincible, I was making between $500 - $700 per day and I thought it would never end. Yesterday, was rough market but I managed to make $701, but ended up losing $1055. It was real eye opener. Anyway, I scalp the mini-dow. I stopped trading stocks after reading John F. Carters book. It made sense that to trade individual stocks left traders open to all sorts of events that may happen to company - legimate and illegimate. So by trading an Index and buying a contract depending on how well the underlying stocks are performing meant that no single individual company could adversely move an index (unless it has a very high weight in the index). But what really messed up my brain was when I saw all 30 stocks move in unison. I promise you, anyone that was watching the stocks of the DOW will agree with me. It was amazing. Anyway, thanks for your comments. I wish the guys at Elite Trader were as forthcoming with comments as you guys here on TL. Cheers Carlton

06-03-11 12:53 AM Hello Traders, Can someone tell me if it is really possible for a large investment bank/house to control the prices of all the stocks comprising DJIA? The reason why I say that is because at precisely 14:17pm all 30 stocks from DJ 30 tumbled - and at the same time. I mean they were steadily climbing then boom! They all tanked in unison. I could understand if they lost steam and were sold off gradually, but to suddenly drop and then rise again within minutes leads me to think it's possible for a few large banks to make that happen. I was trading the mini Dow at the time and my style of trading is to buy/sell a contract depending on where the majority of the 30 stocks are going at the time of placing a trade. So I was long around 14:15 and the index was moving up in line the majority of stocks, then everything crashed - I mean all stocks just crashed in unison. I actually thought there was some outside disaster, but then all stocks started to appreciate. Of course I was stopped out, however I would love to know if there was any news event that happened today to cause the stocks to behave the way that they did or was there some entity involved? Would love to get your comments Cheers Carlton

BigAl Thanks for responding mate. I will play around with scaling in and out Cheers

Hello Fellow Traders, Can someone please tell me in simple layman terms what my full risk exposure is when trading Futures? In particular mini-sized DOW and E-mini S&P 500. I fully understand that when traders buy a futures contract, they are not physically buying anything - its simply a way of participating in the price movement of the the market of their choice. So, if the market moves 10 points, traders can buy a futures contract, long or short, and make money on the move if it goes in their direction. They can also lose money if the move goes against them. My question is what exactly do traders stand to lose? With stocks if a trader buys 10 IBM at $10 that will cost him $100. If the share price goes down to 0 not only will he be the proud owner of worthless shares he will also have lost is $100 investment. Now, lets say one E-mini contract is $1000 (just to keep things simple), and lets say my initial margin (performance bond) is $4000. If I were to purchase one contract and it moves one point, i.e. from 1000 to 1001 that will translate into $50 on my P&L i.e. 50 x 1 x 1 contract = $50. All very simple so far. Now, question 1) If the contract went down 80 points (from 1000 to 920) would that mean my margin would be wiped out? i.e. 50 x 80 x 1= $4000 2) If the contract went down 40 points would I get a 'margin call' from my broker? i.e. the initial margin is now $2000. 3) What would happen if say the contract went down 100 points? Would that mean I owe my broker $1000? i.e. 50 x 100 x 1 = $5000 - $5000 - $4000 = $1000. 4) What would happen at the end of the settlement period if I still own the contract? For those of you willing to provide feedback on the questions please understand that I'm just starting out with futures and plan paper trade before dipping my toe. Really appreciate your comments. Cheers Carlton

zdo, I don't fully understand what you're suggesting. Excuse me if I sound rude, but can you help me or no? Cheers

Tams Thanks for responding At the moment, I well capitalized so don't really need margin. I use no more than 2% of my account to buy one stock. I hold my stock for maximum of seven days. I have a pre-defined stop for when I position goes against me.. So, any ideas? Cheers

Hello Fellow Traders, I've posted here before and received some helpful advice so I thought I would try again. I starting to dip my toe into in trading Futures, mini-sized Dow. I've researched in quite some depth the nature of the product and I understand the basics. For example, If I bought 10 mini-sized Dow contracts and the current price of the contract was $10548 and it moved 27 points to $10575 that would equate to a profit of $1350.00 10575 - 10548 = 27 points 27 Points x $5.00 per point = $135.00 10 Contracts x $135.00 = $1350.00 Now, I was wondering if someone to give some idea on how they manage risk? I'm sure some of you would say I ought to manage risk in futures the way I manage risk with equities. However, I'm having problems translating the way I manage equities to the way I might manage futures. For example, when I'm trading stocks I normally base the number of shares I wish to trade on how much I willing to lose/risk on a trade. So if I stock is currently priced at $8 and the high was $10 and the low was $7 my entry would be the high and stop would be the low. Now if I wanted to risk say $100 I would purchase 33 shares: Number of shares: 100/(10-7) = 33 Can someone please guide me as to how relate the above risk management to futures, mini-sized DOW? I only intend on buying one contract to start off with. Because the mini-sized DOW works on a point system and I'm only going to be trading a single contract I'm quite confused. If you guys could show me how you manage risk, or point me to relevant websites I would be very grateful. I hope I've explained myself well enough to get some positive feedback, however if you need additional clarification please let me know. Cheers Carlton

Thanks Jason. And Good Luck to you too mate

Hi Jason, Thanks for you comments mate. I've read it, but will need to re-read it over again for it to sink into my brain. I totally understand where you say "If you determine that you want to go long stock XYZ at $50.25, you must also determine exactly where you are willing to get out for a loss. Lets say that you determine your stop loss location to be $49.75. This gives you a $.50 cent stop size. If your max risk is $100, then you should purchase 200 shares at $50.25 and place your stop at $49.75..... Lastly, your exit location (for your profit) would be $51.00 (for a profit of $150)." However, I think I also need to follow MightyMouse's suggestions and learn to walk away and let my profits run until the target is hit. At the moment, instead of letting my trades reach its target of $150 (which is 1:5) I'm taking profits at 100 (which is 1:1). I'm sure once I've read your comments again, I'll have a few questions. Thanks again mate... Carlton

MM, Thanks again for responding. Apart from moving my profit target up when the price goes say 5 ticks past $100, would you say my system is profitable?

MM, I just read your comments again, for the third time. I'm going to take your suggestions, along with The Negotiators comments on board. However, I would like hear your thoughts on position sizing?

Sam, I did mention that I trade equities, not forex. Therefore, your sample may not relate to me?

Negotiator/MightyMouse, Thanks ever-so-much for responding. I'm reading and re-reading your comments before I respond. In the meantime, are you guys essentially saying the issue isn't necessarily position sizing but having the courage to let my trades continue to my profit target? To be totally straight with you, what I've been doing is letting the price go beyond 1:1 target of $100. Once it goes past the price by say 5 ticks I'll raise my stop to $100. The thinking behind that is if the price goes down to my newly raised stop its going to to down much further - and almost every time it does and I just come out with $100 instead of my target of $150. I know the last statement is poor grammar but does that make sense? Negotiator, thanks for welcoming me to TL. Cheers

Hi Sam, That helps immensely. I will take your advice and use your example with my future trades. Cheers mate...

Hello Fellow Traders, I'm not sure if I'm phrasing this question correctly, but here goes. As you'll probably guess from the following question, I'm fairly new to trading. Over the last 10 weeks, 02/22/2011 to 04/01/2011 I have placed 46 trades. I currently trade equities. Sixty one percent of the trades closed at a profit. However, the Pay-off Ratio is terrible, 0.64. At the moment, I'm risking $100 per trade with R/R of 1:5. So for every $100 I would like to achieve $150. I size my trades purely on how much I would like to risk and how much I would like to gain. Therefore, the number of shares I purchase would be determined on this factor alone. I would say that most of my winning trades close for about $100 and my losing trades stop me out at $100. The reason why I mention that is because it would seem the poor pay-off Ratio is partly due to taking profits before they reach $150 but always letting my losses run until they stop me out at $100. However, I don't believe that is the major reason for the poor pay-off ratio. I believe the major reason for the poor pay-off ratio is due to bad position sizing. The problem is I don't know the best way to size my positions, other than how much I'm will to lose and how much I want to gain. Another option is to stop trading equities and start trading another financial instrument. If any of you guys/girls can give me some advice on position sizing and what instruments you think are better traded than equities (bearing in mind I'm a relatively new to trading) I would be very grateful. Cheers Carlton

SIUYA, Thanks for responding. Very good advice.

Hello Traders, My first post. Can someone please tell me how does one determination the realistic spread that can be achieved for a stock? For example, depending on how my strategy pans out, I plan to purchase ESRX for $53.33. My target price is $55.76. Therefore, the spread is $2.43. I would like to reach that target by Friday. I would like to know how do I determine if that is a realistic objective? One school of thought is the ATR for the stock. Any suggestions will be greatly welcomed. Cheers Carlton