Ideas for Struggling Traders

[Bearbull 10]

There is no problem in my head, nor with Db. Infact he had continuous problems shifting your posts elsewhere and it was his decision to bring an end to that.

You entered that thread and were the main cause of the problem, not only were you off base but totally off the main theme of the thread, ie. to trade using wyckoff methods.

 

Anyway don't wish to engage in any further debate with you, at least make an effort to address the questions directly with concrete examples and trades otherwise, keep blowing your trumpets here. you will always find an audience.

[Bearbull 10]

Kiwi, why don't you talk to Db and ask why he made that decision, he had to weed out superfluous discussions day after day, not pertaining to the theme of the thread.

[Kiwi 16]

It was still db's choice and responsibility.

 

I suggested that he start another thread for related but slightly off topic discussion.

 

Wyckoff has been dead a long time but seemed to be the sort of inquiring mind who would be interested in some of the related material. Perhaps I'm wrong in that but I'm not wrong about your post earlier in this thread - I think I read every one of Steve's posts in the Wyckoff threads as well as most of yours and db's and given how few there were I can assure anyone that "he had continuous problems shifting your posts elsewhere" is a gross exaggeration similar to the ones you made in your earlier posts.

 

Now if you want to whinge about someone's useful posts further why don't you make up your own thread to do it. You are off topic in a thread titled "Ideas for Struggling Traders" doing exactly what you wrongly accuse Steve of doing.

[firewalker 10]

Here is my intraday chart. Be advised that I only use the 1 min chart because it is easier to annotate. To execute I am looking at (constant volume charts) as well as 15 minute candles.

 

Nice long on the test of 855-856, which was my re-entry for a long as well (as posted live in the chatroom). Out of curiosity, where there any elements other then technical that persuaded you in taking that trade?

[firewalker 10]

Some questions in general. Not directed at anyone in particular, but just some things that came to mind reading the latest dozen posts or so.

 

Does professional money position itself before the news, or does it take advantage of the public's initial reaction after an event?

 

If professional money is "in the know", is everyone "in the know" at the same time and does that automatically mean they will all act in the same way?

 

Does professional money all over the globe has the same time horizon? And do they have the same goal/incentive?

 

Since the markets are almost open 24/5, with futures trading overnight, news reports are being released through the whole day&night. I think it would take a lot of study to predict what the market will do based on just one report, let alone develop strategies for a whole week where dozens of reports come out...

[darthtrader3.0beta 10]

Does professional money position itself before the news, or does it take advantage of the public's initial reaction after an event?

 

If you look up on the NYSE site...the average breakdown of trading goes

50% program trades

40% institutional trades

10% retail...

 

 

"the public" simply does not matter. Shark vs Shark, us Ants are just in their way.

[steve46 12]

Nice long on the test of 855-856, which was my re-entry for a long as well (as posted live in the chatroom). Out of curiosity, where there any elements other then technical that persuaded you in taking that trade?

 

I know from experience that the market likes to retrace about 10:30am EST

 

So I am testing various ways to estimate how far that retrace will go. I put in that horizontal blue line to estimate that point at the open. I'll be glad to give more info when my forward testing is completed. Today I came pretty close. To more fully answer your question, I was also reading the tape at that point. When you see a configuraton like that (a spike down with very low volume on the tail) it is almost always a reversal point.

[steve46 12]

Some questions in general. Not directed at anyone in particular, but just some things that came to mind reading the latest dozen posts or so.

 

Does professional money position itself before the news, or does it take advantage of the public's initial reaction after an event?

 

Yes, professional money does position itself before the news and it does so on a variety of time frames from longer term months to days to weeks, to shorter term days to hours depending on the specific agenda. The longer term particpants often do so looking to create tax favorable situations, while the shorter term participants are looking to simply to create short term profit. In answer to the last part of your question, yes some pros use options to try to make money on the reaction side. One example of this is a trade that I used to execute called the "volatility crush" For that one, you look for high volatility events like FDA decisions to allow use of medications or legal verdicts that affect companies patents. The options ramp up due to increased vol prior to the event, the event happens and then vol collapses (because the decision is known) so the trader sells high cost prem and then buys it back cheap at the conclusion of the event.

 

If professional money is "in the know", is everyone "in the know" at the same time and does that automatically mean they will all act in the same way?

 

Of course it is possible and even likely that professional opinions will diverge as to how markets will react to certain events. The old saying is "thats what make horse racing"...so as in most pursuits there will be pros (and some retail) who win and pros (and some retail traders) who lose.

 

Does professional money all over the globe has the same time horizon? And do they have the same goal/incentive?

 

This was answered above...as you can imagine, in a diverse group of participants the time horizons and goals vary.

 

Since the markets are almost open 24/5, with futures trading overnight, news reports are being released through the whole day&night. I think it would take a lot of study to predict what the market will do based on just one report, let alone develop strategies for a whole week where dozens of reports come out...

 

Yes it takes a lot of study, and experience. In addition, anyone who wants to excel at this needs to look for every possible resource to give them an edge. For instance, I used to develop relationships with analysts who demonstrated the ability to anticipate earning reports accurately. This is a competitive world and those of us who take it seriously make every possible effort to get an advantage.

 

Thanks for your questions

 

Steve

[BlowFish 10]

Some questions in general. Not directed at anyone in particular, but just some things that came to mind reading the latest dozen posts or so.

 

Does professional money position itself before the news, or does it take advantage of the public's initial reaction after an event?

 

If professional money is "in the know", is everyone "in the know" at the same time and does that automatically mean they will all act in the same way?

 

Does professional money all over the globe has the same time horizon? And do they have the same goal/incentive?

 

Since the markets are almost open 24/5, with futures trading overnight, news reports are being released through the whole day&night. I think it would take a lot of study to predict what the market will do based on just one report, let alone develop strategies for a whole week where dozens of reports come out...

 

If you want to know who trades, why they trade and how, I recommend Harris' Trading and Exchanges: Market Microstructure for Practitioners. Apparently O'Hara is pretty good too, I haven't got round to that one yet (its taken me a year to digest Harris Your questions are answered over numerous chapters. In short there are dozens of types of participant with fairly different motivations and time horizons. For example someone hedging currency risk is likely to behave quite differently to a broker/dealer (different categories but sometimes performed by the same people) riding on the back of order flow.

 

He also also identifies the different types of information asymmetry and who tends to loose when a particular category of participant wins. I think its a remarkable book though it is perhaps a little 'difficult'. I can't say it improved my trading but it lifted a veil.

 

A separate point. The liquidity that news can cause assists people with large positions to unwind, or wanting to build large positions. It provides activity they can use to do their business.

[HAKUNA 10]

With due respect, there is enough info. about big and small players , I have Tom Williams book and it is there also. I use VSA and was interested in finding out if I could recognise or not any entry point of those who positioned themselves with prior knowledge of news or reports by using what I know of VSA method. All I was looking for was a recent example , I presented analysis based on that and asked for comments but was told to read another book.

[firewalker 10]

If you want to know who trades, why they trade and how, I recommend Harris' Trading and Exchanges: Market Microstructure for Practitioners. Apparently O'Hara is pretty good too, I haven't got round to that one yet (its taken me a year to digest Harris Your questions are answered over numerous chapters. In short there are dozens of types of participant with fairly different motivations and time horizons. For example someone hedging currency risk is likely to behave quite differently to a broker/dealer (different categories but sometimes performed by the same people) riding on the back of order flow.

 

For sure there are dozens of types of participants with each possible different motivation. My question is simple however: is there a way to identify the goal of each of these participants in real time, and if yes, how can one profit from that?

 

If I understand correctly, Steve is trying to tell us some things about the motivations of different market participants, which might help form an extra layer, but rather then dwell on the theoretical, I'm all ears to see this turned into a practical (preferably real-time) example.

 

I can't say it improved my trading but it lifted a veil.

 

My economics professor lifted a couple of veils too. However, it didn't assist me in improving my trading

Edited December 13, 2008 by firewalker

[OAC 10]

This whole subject of event trading is fascinating. But I just feel it is inappropriate to be presented in a thread about ideas for struggling traders. It really should be reserved for more established traders who have already mastered the fundamental discipline of trading. It has many pitfalls , some may even be detriment, for beginning traders:

 

(1) It will give them a bias. (Can be dangerous in this volatile market)

(2) It will give them hope. ("Hope is for Dopes", Larry Williams)

(3) Adding to a losing position

(4) Having a stop that is too wide

(5) Create confusion and lengthen their learning curve to profitability.

[HAKUNA 10]

I thought the major part of this thread deals with this professionals and was just making an attempt to understand, thinking it might provide an edge.

 

It may be fascinating in theory but I am interested in the realtime and there is no question of hope or bias.

 

I was asked to look at a 81min chart and note the rise in vol as prices went up.

This action I was told was due to people in the know who had figured out all the news, events, report before it was in public domain.

I did that and came back with my take and requested if it was correct or not.

 

If I am wrong, then to show a chart pointing out the locations of entries of a realtime trade as firewalker sugggested, of pros/insiders whatever you like to call them, or trades taken by those on this thread with that kind of info.

 

I would then go back and look at the chart and see for myself if I could have figured out that entry from what I have learnt on price/vol via VSA/Wyckoff etc.

 

If not then there would be clear demonstration that without this knowledge, early entry cannot be gained in the market, don't understand why this simple question appears to be complicated.

[steve46 12]

Excuse me Hakuna

 

You weren't simply told to "read another book"

 

1.) I apologized for my lack of teaching skills..

 

2.) I asked for your patience

 

3.) I referred you to another source of information (a book certainly) that has been valuable to others.

 

4.) and I am still considering your question

 

This isn't the window of a fast food establishment, its one human being trying to help you as best he can...

 

I am sorry I haven't met your expectations.

 

and NO this is not just about professionals, in this thread we are presenting "Ideas for Struggling Traders"

Edited December 13, 2008 by steve46

[brownsfan019 17]

Here's my on event trading - it can be very profitable, if on the right side.

 

There's 2 ways to look at event trading:

1) Construct a plan for event trading only.

 

2) Take trades that you normally would as they appear and if an event helps it, great.

 

As for #1 it's rather easy - find out what events normally move markets, get a whole bunch of historical data and then do the leg work. Hakuna, if you are looking for a silver platter here, I think it's obvious by now that Steve has give some ideas to work with BUT THEN IT'S UP TO YOU TO WORK THEM.

 

If you really want to take this further, start a new thread that specifically discusses event trading and then do some work on your end. Step 1 is to get a nice chunk of historical data. W/o that, you won't be able to put together any realistic hypothesis.

[steve46 12]

Yes Brownsfan, I agree

 

The idea from the start, is that persons having difficulty trading might read about a subject, learn some basic principles, then try to develop the concept in a way that suites their style.

 

There is by the way, another resource for traders who want to further investigate how to identify where and when the various types of professionals enter futures markets. That is the CBOT Liquidity DataBase. This is a way to visualize the activities of several classes of participants. The database is marketed by several vendors including AlphaTechnologies and Cisco Futures (there may be others). I attach an internet link for some background on the Liquidity Data base from an interview with Pete Steidlmayer

 

http://www.traderslog.com/steidlmayer-interview.htm

 

Scroll down to read the information associated with CBOT Liquidity Database.

 

 

Thanks

 

Steve

[BlowFish 10]

Not sure who the book comment was addressed to Hakuna, me or Steve? I think probably Steve. I was responding to Firewalker. If you are interested in who the 'smart money' is, how they operate, and why, then Harris or O'Harra will answer those questions. If you are prepared to accept they exist without knowing anything about them thats fine, as I said the information is not needed to trade successfully.

 

Anyway apologies Steve if this was off track, I did think it pertinent to some of the questions being asked and one of the core concepts that Harris discusses is information asymmetry and how it is utilised, what naively and simplistically could be called 'smart money'.

[HAKUNA 10]

guys, I have already thanked and shown appreciation for the info. on this thread. As for looking for fast food or silver platter, that is quite unfair. I am not exactly a novice, have been doing my homework for a few years now. Gone through most books including Master the markets, Market Maker's edge by Josh Lukeman, classic work of Gary Smith "How I trade for a living" now he was really good at reading reports and market internals.

 

I also now understand price and its relationship to volume (VSA first and recently some of Wyckoff). Have some working strategies and setups and was keen to see for myself if reading P/V gave me early signs of what those in the know were up to. i.e whether or not it would be possible to recognize that activity in realtime without the benefit of that knowledge

 

Was told to look at past few weeks activity as of 11/20 on 81min chart plus vol, did just that, put up my interpretation of what I saw and asked if I was on the right track or not.

 

Post 194:

“Steve,

I see your logic now,

 

o.k 81minute chart on ES (RTH), presume this is because there are 405 minutes of trading and therefore 5 bars per day.

 

When you say volume ramps up in the past week, does this money professional money marked up the price by buying and were then unloading to the public on the past 3 narrow range days as the highest vol (dec 1-8) came in on the 9th and prices did not go up much, then even more vol on the 11th, but no cigar, ie. distribution

 

As for today, reports came out at 10a.m, prices drifted down somewhat, then up again above the support S1 (pivot number of RTH you use, incidentally the lift off was from S1 at 9.30a.m), prices struggled at resistance of yesterdays low 870 and are now once again at 860., so how are we to read the effect of the reports and how did the pro. take advantage here.

 

would appreciate your comments”

 

To me this is the logical way to learn, which part of this appears as looking for a silver platter or fast food.

 

But now we are talking about concepts and to go away to figure out strategies and investigate CBOT liquidity database. And all I asked was a single example of a trade taken in realtime by anyone here as of 11/20(positioning of the people in the know) which could not have been read from the chart without this knowledge. If you reckon that is asking too much, that I guess I have to apologise.

Once again thanks

[steve46 12]

Not sure who the book comment was addressed to Hakuna, me or Steve? I think probably Steve. I was responding to Firewalker. If you are interested in who the 'smart money' is, how they operate, and why, then Harris or O'Harra will answer those questions. If you are prepared to accept they exist without knowing anything about them thats fine, as I said the information is not needed to trade successfully.

 

Anyway apologies Steve if this was off track, I did think it pertinent to some of the questions being asked and one of the core concepts that Harris discusses is information asymmetry and how it is utilised, what naively and simplistically could be called 'smart money'.

 

Hi Blowfish

 

First of all, I appreciate your participation (as I do everyone's) and I have no problem with diverse opinion or even contrary opinion. I do not expect to be correct in my opinions all the time. I encourage people to read and think critically about everything that is proposed. If it doesn't work for you then... certainly you have my apologies.

 

I have not read the book by Harris, but I have spoken with him a couple of times and I found him to be a good guy, smart to say the least, and a good observer. I hope others will try his book.

 

One last item...my comments are meant for anyone and everyone who are trying to improve their skills. I hope people will take what they can and if they feel inclined leave additional comments that will might help others.

 

Thanks

[OAC 10]

Excuse my ignorance, since we have touched upon Wyckoff for a couple pages in this thread. Instead of getting thrown out of the Wyckoff Forum as Steve46 did, I am going to ask the question here:

What is the proper way to draw a Creek ?

[erierambler 10]

Excuse my ignorance, since we have touched upon Wyckoff for a couple pages in this thread. Instead of getting thrown out of the Wyckoff Forum as Steve46 did, I am going to ask the question here:

What is the proper way to draw a Creek ?

 

OAC, the question needs to be addressed at the proper place. I believe gassah moderates a group on Yahoo, called SMI/Wyckoff.

erie

[OAC 10]

Or may be I should just google it. Isn't that how most of us found TL ?

[steve46 12]

Excuse my ignorance, since we have touched upon Wyckoff for a couple pages in this thread. Instead of getting thrown out of the Wyckoff Forum as Steve46 did, I am going to ask the question here:

What is the proper way to draw a Creek ?

 

Here is a resource that shows how a "Creek" is drawn

 

The authors are Pruden and Von Lichtenstein

 

According to this article a "creek" is a "loosely drawn line spanning the rally peaks within a trading range". I know from my own reading that a creek also is said to have major and minor branches, and that these rally peaks are characterized by higher volume

 

http://www.hankpruden.com/MTWyckoffSchematics.pdf

 

and here is Craig Schoeder's (from the Wyckoff Stock Market Institute) comment on what constitutes a "creek"

 

"A creek is the zone of resistance usually near the top of a trading range defined by a series of rally tops within a trading range. It represents an obstacle to up side progress that must be overcome if the price is going to work out the potential that has been built while the price has been in the trading range."

 

and I would add the following.......(and its my opinion only)

 

It seems to me that "Rally Tops" are identified by supply volume coming in to stop the move, rather than simply lack of buyers (low volume).

 

if I am right you would identify the "creek" by looking for that series of rally tops within a trading range where supply volume has come in to stop the move up.

 

My thought on the subject is perhaps we can get Mr. Schroeder to comment further. I'll see what I can do about that.

 

I hope this helps

 

Steve

[OAC 10]

Thanks, that is brilliant, Steve.

I don't know why they called you a troublemaker over there at the Wyckoff forum ?

[steve46 12]

You're quite welcome and now a couple of additional comments

 

One, it might help others if you had some comment of your own as to the value of "creeks"....how for instance do YOU use this concept in your trading (just in general terms).

 

and with regard to your comment. I think about it this way... In my opinion the approach that works best in life is be inclusive...to try to meet everyone halfway...and to look outside the boundaries of traditional approaches....in my experience if you take the other tack and exclude people who don't agree with you, what your doing tends to stagnate, because no one is ever looking outside the traditional boundaries. Correct me if I am wrong, but what we are trying to do here is find out "what works" to make us better traders?

 

Good luck to you sir

 

Steve

Edited December 14, 2008 by steve46