Defining Yourself As a Trader

[Ingot54 13]

Before you add comments to this thread, a full prerequisite is that you have watched all 8 parts of the Video format of the Trading Movie: "Floored" found at this link:

 

http://www.traderslaboratory.com/forums/f18/floored-movie-8-parts-9843.html#post119723

 

About 75 minutes all up.

 

I found after watching the series, that I had a personal mind-shift in the way I view markets and trading. But the biggest shock was that I am now asking myself some serious questions

 

I found myself questioning whether I want to continue in my (so far) fruitless quest to ride the coat-tails of those whose money commitment moves the markets. Winning infrequently is not my idea of success. Nor is breaking even. Losing doesn't quite bring that happy smile either.

 

And if I want to gamble outright, there are the slots, keno, lotto and the ponies and dish-lickers, where the outcome is decided in an afternoon, and you get to sleep decent hours.

 

The floor or pit traders once plied their trade under the open-outcry method, where the skill was not so much getting your voice heard above the cacophony of the trading floor. No - the real skill was in fading your opponent, and getting to recognise and read the fear and greed of the market.

 

One trader commented: "I love the markets, but I hate the people."

 

Says it all.

 

I admit to feeling depressed after watching Part 4 but soon realised that this was just a look at the casualties - many pit-traders had 30 years on the floor - nothing too depressing abut a successful career.

 

What has really hit me is that I have been attempting - for 7 years - to learn skills that are being superceded every day, by innovative algorithms and changing markets. Had I been trading the markets in 2004 with the skills I have today, I might have had a different story to tell. Dunno ... I'd like to think so.

 

Question is ... do I want to continue in this rat-race called trading?

 

I do.

 

Can I survive though?

 

I am unsure about it.

 

The traders in the Video Series all were successful participants until computer trading arrived. Those who learned to trade electronically were kings ... at first. But then ... even they found it was not so much the electronic advantage any more, but the time advantage.

 

If you didn't keep up with the software - and trade in nanoseconds; or if you didn't have an algorithm with the "right" programming - and get in and out of the market at the optimum positions, then you were still being left in the wake of those that did.

 

Do I have the temperament to continue to compete?

Is there enough terrier in me to keep going despite the small successes?

 

I have really hit a watershed in my thinking today. I am thinking my time can be better spent in activities that are far less stressful and more productive financially. And in activities that, in the spare time released, getting in touch emotionally at a better level, with those who care about me.

 

And while I'm at it, I can find more time to watch movies and grab some exercise, play a little tennis and so on.

 

The video series woke me to the fact that I am asleep at the wheel of my life - I thought I was an aspiring trader - but that is still not what my tax agent is putting on my taxation return.

 

In many ways I feel like the guys and girls in the video series - always trying to compete, never catching up, and rarely getting to savour the kind of success that tells me the journey is going to end well.

 

A bit negative ... but I think I am done with the glass-half-full approach - it is not going to comfort me in my advancing years.

What about you?

 

How do you feel about trading after watching the series?

Does it change how you see yourself as a trader?

 

In terms of the kinds of accelerating changes traders are faced with - eg in the series - do we really need to define ourselves as traders, speculators, gamblers or fools? Some of those guys made the cut - others were washed out and washed up by the change from open-outcry, to electronic trading.

 

What is it that defines us as traders, in terms of constantly evolving markets?

[TradeRunner 10]

What has really hit me is that I have been attempting - for 7 years - to learn skills that are being superceded every day, by innovative algorithms and changing markets. Had I been trading the markets in 2004 with the skills I have today, I might have had a different story to tell. Dunno ... I'd like to think so.

 

Does a 1min, 5min, 15min from 2004 and before look any different to a chart from today?

 

Yes - please post some examples showing the difference

 

No - what skills have been superceded?

[Tams 20]

Does a 1min, 5min, 15min from 2004 and before look any different to a chart from today?

 

Yes - please post some examples showing the difference

 

No - what skills have been superceded?

 

if you are looking for similarities/differences in 1min, 5min, 15min or 1999, 2004, 2008,

you have the analysis in a different place than mine.

[Ingot54 13]

TradeRunner and Tams

 

1) Did you watch the 8 Videos?

2) I did not mention charts ... too late to edit my post now to try to legitimise your responses

3) A chart is a chart is a chart ... no brainer - doesn't bear mentioning ... obvious ... I expected more insight from traders of your standing.

 

Perhaps I was not clear enough.

 

The Vid series depicts the decline of the floor trader and the rise of the electronic trader.

 

It clearly shows the temperament of floor traders who had real "grit-in-the-pit" but became like putty in the hands of the electronic traders. Clearly this is down to the requirement for a different set of technical skills today than say 10 - 15 years ago. Floor traders didn't even use charts. They read the tape, or simply had an intuitive grasp of their particular market ... cattle, hogs, beans, coffee ... whatever ...

 

Forex is a different beast - Retail Forex is a newcomer. But I can see change in the way currencies behave now too. Gone are the longer trends; welcome to the volatile market.

 

My comments had nothing to do with being a scalper, a position trader or anything in between, on any time-frame chart, so please try to pay attention to the post and the question put from watching the video series.

 

What is going on in markets that is more competitive today, is that those with the software and computer horsepower are front-running, or creating artificial turnover/volume; this in turn shaves pips and ticks from traders who are not competing on equal footing.

 

The game has changed in that the venue is now the office, or the computer trading room - and than might be the kitchen table, Starbucks or the on beach in Bali. The dog is still eating the dog, but there are bigger dogs now, and the competitive edge is being eroded.

 

This may be the natural evolution of trading, but the question I ask myself is : "Do I want to be a part of where it is going?"

 

I am not so sure. I am tired. I am not making money trading. I made more when I was trading CFD's, but that too is now subjected to electronic tricks that I can not match.

 

And that's the problem. Charts will always be charts ... thanks boys ... but I am not a machine, and I am not a 20-something with time to spend burning my way into something that requires something that I ... apparently ...don't have: trading IQ.

 

I am NOT a successful trader, despite the fact that I can "trade neutral" regarding profit-loss. So technically I am not affected by all the changes going on. Had I been really profitable at one time, but now finding it difficult, I could perhaps pin-point some reason or other, and address that. But what I have said above, is that I feel all the knowledge and practice of the past 7 years has gotten me nowhere, and the way things are going, there is nothing ahead to keep me in trading.

 

I identify with the "has-beens" in the Vid series, even though I "have never-been."

 

I take it you have read all of my post, watched all of the videos, and have given an informed ... and your best ... response.

 

I don't have any answers either.

[SIUYA 11]

hi Ingot (I have not seen the video yet) but as an ex floor trader, I think Tams and Traderunner were more pointing out that while the markets have not necessarily changed that much - a chart is a chart is a chart - the edge that floor traders used to have as a part of geopgraphy has changed. It has been eroded.

which is why context is always very important.

Floor traders could afford to scalp etc as they had an immediate edge of speed, while the algos have this now.

Patience and context are vital - why compete against the algos. Some ex floor traders choose not to, some bang their head on the wall, some adapt.

[Ingot54 13]

hi Ingot (I have not seen the video yet) but as an ex floor trader, I think Tams and Traderunner were more pointing out that while the markets have not necessarily changed that much - a chart is a chart is a chart - the edge that floor traders used to have as a part of geopgraphy has changed. It has been eroded.

which is why context is always very important.

Floor traders could afford to scalp etc as they had an immediate edge of speed, while the algos have this now.

Patience and context are vital - why compete against the algos. Some ex floor traders choose not to, some bang their head on the wall, some adapt.

 

Understood Siuya - thanks.

 

The responses reminded me instantly of T2W and I was surprised. I guess I wasted a bit of time on the idea.

 

I'll have to try harder to stimulate thinking ... even if it's just my own!

 

:crap:

 

Cheers

[BlowFish 10]

Hey Ingot, I watched the video, quite a long time ago now but I qualify .

 

Baldwin, Borsellino and most of the pit traders that have to written or talked about the golden years of trading say even then most pit traders just disappeared. Seems like Peratos principle was alive and well in the pits (the 80 20 'rule'). Even 'back in the day' it was tough.

 

One of the big edges in the pit was seeing customer paper enter. If you where not venerable enough to have a good spot on the top step or be close to the guys that worked those orders you could hear what was going on. Nowadays there is less and less paper going through the pits, that edge is gone.

 

The pit (in the case of futures) is not the primary market, Electronic markets are now prevalent and there is usually an electronic contract that directly equates to t the pit contract (fungible). Most of the pit traders would make money scalping a couple of ticks here and there (market makers if you like). It must be impossible to do that in this environment.

 

It's over, the guys that had trouble in the film where those that did not recognise that.

Edited May 26, 2011 by BlowFish

[TheDude 10]

1. stay away from t2w. fools damn fools.

2. i used to be a local on the floor and have adapted. (most of the time, it was dull to be honest. memories are like the TV stories - only recollect the busy exciting times when the pit was full before a figure) when the floor closed, they all started scalping upstairs on x trader. some did really well, others got hosed. same old, same old... now these clickers are all gone, or, have again adapted as there is no money in clicking/scalpin any more as its a high freq game now

3. youll never be successful at anything if your heart isnt there. if youve lost the passion, take a break.

4. trading isnt actually that hard. the difficult bit is the self awareness and understanding yourself is the hard bit. discipline - youve heard it all before....

5. dont be a hero. go for smaller objectives on a more frequent basis to get the feel good factor, using a simple trade idea.

6. theres nothing holy about being a trader. the sacrifices are huge, and the rewards for the few. i know as many people who have been successful in other ventures as trading, but i havent met as many people who have quit in disgust in other ventures as i have trading.

7. good luck in what ever you decide.

Edited May 26, 2011 by TheDude

[Ingot54 13]

I suppose about now would be a good time to put my cap in hand and apologise to Tams and TradeRunner for being such a grump!

 

Sorry guys - a bit frustrated that work commitments are eating up my trading time ... nothing to do with you at all.

 

Thanks for bothering to straighten out that point though - appreciated your input, though it certainly didn't come across like that.

 

Trade well

 

Ivan

[Tradewinds 12]

What has really hit me is that I have been attempting - for 7 years - to learn skills that are being superceded every day, by innovative algorithms and changing markets.

 

I did watch all 8 parts of the video.

 

I'm not fully in agreement that traders can't compete in a market full of automated trading and computer algorithms. Fear and greed will be a part of human nature unless science figures out how to genetically program that out. Support and resistance still happens. Volume still effects price. News still moves the markets. Speculation continues to go on. Volatility, consolidation, cycles and momentum seem to be happening on a constant basis.

[Ingot54 13]

I'm not fully in agreement that traders can't compete in a market full of automated trading and computer algorithms.

 

Maybe so, Tradewinds. But FINDING the way to compete becomes the issue ... as it did for those traders.

 

Most failed.

 

Are we all (as traders ... or wannabees) destined to end up just like them?

 

Are we going to be able to compete on level footing ... high-frequency trading ... front-running ... insider information covertly disguised as market data ... and so on?

 

Are we fooled by the term "level footing?" Are we victims of the hype ... that "we" CAN trade like the professionals?

 

Will "success" rely on the ability to afford the latest hardware/software/data/gimmicks?

 

On the other hand ... can retail traders continue to pick up the crumbs that fall from the table as they do today, regardless of where the "floor" is today, and regardless of what it has become?

 

How is that working out?

 

Fear and greed will be a part of human nature unless science figures out how to genetically program that out. Support and resistance still happens. Volume still effects price. News still moves the markets. Speculation continues to go on. Volatility, consolidation, cycles and momentum seem to be happening on a constant basis.

 

Of course, mate. But the traders in the movie knew that better than we. How did that work out for them?

 

The ability to achieve "success" in trading seems to rely on a matching ability ot stay ahead of the technology ... or does it?

 

Is there a "bread-and-butter" way to trade that does not depend on trying to out manoeuvre the algorithms ... software ... hardware ... data ... braniacs etc?

 

I think there is ... and while the "failed" traders in the movie (those who could not adapt) were trying to compete on superceded terms, they did in fact miss the point.

 

Maybe I am missing "the point" but I think that trying to compete against such tech is foolish ... you can not. You just become someone else's liquidity ... fodder. If you aren't profitable now ... how are you going to be profitable tomorrow?

 

I think the solution to the "march of technology" issue is to approach trading from a longer term perspective. The marketers want us to buy their gear, but it won't help us in the future ... it didn't help us in the past.

 

The issue is one of "adapt-or-perish" ... but how to adapt?

 

Isn't that the real issue? Isn't that the issue the floor traders faced?

 

Adaptation? Adapt from what ... to what ... ?

[BlowFish 10]

The real problem was not the technology but the fact the order flow they relied on is going elsewhere.

 

The fundamentals of markets really have not changed that much, the participants have not really changed. The opportunities for speculators have not really changed. This was in reply to a different post but is somewhat relevant http://www.traderslaboratory.com/forums/34/see-behind-flow-order-flow-9781-2.html#post119389 If it is all a bit bewildering start exploring market microstructure slowly in the background. It might not make you a better trader but knowing who is doing what and why might make things a bit less intimidating and a lot less bewildering. It might also help you 'define what sort of trader you want to be' by breaking down what sorts of trader there actually are.

 

Retail traders have loads of advantages (shock horror). The biggest is perhaps we don't have to trade, we can pick and choose what when and where. Most of the 'pro' participants do not have that luxury. On the subject of technology we have never had it so good. I am sitting with a laptop that has more grunt than a co-located 'big iron' monster of 2 or 3 years ago.

 

Bandwidth has hit a ceiling but it is ample. I could get fibre to the premises if I wanted/needed it. Latency is not a problem really unless you want to do HFT and you know what....? If you did you could rent CPU space in the same data centre that the CME is hosted. Latency is fine for most things and reliability is through the roof compared to just a handful of years ago. Reporting, and transparency is as good as ever even FX is slowly starting to change.

 

Sure competing in certain spaces is going to be pretty darn hard (HFT market making is an obvious one) but that has always the case. There are just as many (or more) areas where it has never been so good.

[ptcman 10]

I understand your tribulations Ingot. I too suffer from them.

 

I've been a trading for 10 years now, well, as a part time job, not full time. Meaning that when I would arrive home from work, I would open my trading platform, what some charts, making a couple of trades, and at the end of the day ended flat, with a minor gain, or a minor loss.

 

I lived like this for 10 years.

Last December the company closed and I got unemployed. So I decided to become a full time trader. 5 months have passed and things continue to be the same.

 

For 10 years I created such a mess in my brain that now I clueless in what to do. I spend 12 hours in front of my 8 screens, looking at charts, 6E and NQ, and most of the time I don't see shit. I'm basically flat all the time. Maybe in the morning things go wrong and I lost $500, but during the afternoon things lighten up and I recover the initial loss, or the opposite, in the morning I gain $500 and lost it all during the afternoon.

 

I continue to make the same mistakes over and over. Everytime I read my trading diary I'm amazed how can it be possible. Einstein's definition of insanity really said it all - "insanity is doing the same thing over and over again and expect a different result".

 

The Floored documentary really put things in perspective. Make us think. Do I really have the capacity to survive?

 

YES I HAVE!

 

Trading is easy, the problem is that stuff that we have between our ears called brain.

 

Greed it's a bitch. If we have 5 ticks profit we want 10 ticks. If we have 10 ticks profit, we want 20 ticks. If we take 5 ticks and prices rise til 10 ticks we curse all and everything and re-enter to try to catch a couple of more ticks. All of a sudden prices reverse and you have a loss of 10 ticks. You feel outrages, once again you curse everyone.

 

Adapt. I think that is really the key word nowadays.

Daytrading, for some traders, is now scalping.

 

All I've just written about is known by most traders. It's one of those obvious things. The problem, again, is with that stuff between our ears. When trading, our brain just can't remember none of that stuff.

 

The videos rise many questions, but for me, it rose questions that give me more strength towards the future.

 

Yes, maybe a vacation would be a good idea, to put things in perspective.

[SIUYA 11]

just watched the videos while I sober up before driving home - long lunch

 

interesting, but really there is nothing new. I have to agree with everything the Dude says above.

Plus in the videos...., LBR says it nicely - every business needs to adapt. period.

...the guy who was not even a trader the pit official even he had a good perspective on it. where as that loser (sorry could not think of a better word) who was so anti computers and saying they are evil.....who cares about guys like that he wont even admit that change is here!

 

Ingot - your question - do you want to be a part of it - there is no easy answer, but I would say, if you are competing against (of just feel like you are) then the obvious question is why? You cant beat a computer for speed or discipline, but you can provide context and patience - I am not sure they have taught a computer that yet

 

We were discussing this in my office the other day - there are multiple people trading different styles, everyone has their up and down days, nothing works all the time, but the thing that makes the difference (and this was mentioned in the first videos) is that its not the guys who make the money but those that limit the losses that survive.

You dont need to trade every day - as an example- sit back and look, look, look for the one trade/the one pattern/the one idea that will make you $1000 a week. ...get rid of the I need to make money every day mindset......Be prepared to cut it at a $200 loss and get it wrong 5x - ONLY if that opportunity exists - if it does not this week dont trade, whereas next week it may occur three times....... you will only need to get it right once to make money.....worst case you go broke slowly, but if this still looses you money, you will find that you are either not doing your homework, or have a really really bad sense of where opportunities lie.....either change that, or exit this game. Give your self a ten week program....and dont over trade. You dont need to trade all the time. The default position for most traders should be cash - you are not paid to invest a clients money, you are rewarded when you make the most of opportunities when they present themselves.

[Emotion 10]

If you think you can do it or think you can't do it, YOU are right!!! - Henry Ford

 

My favourite quote!

 

So if think it isn't possible you will NEVER make it and you should stop!

 

About the movies, it was funny to see how those cheaters where losing when they came to world of hard working people!

 

Pit trading in my opinion is just a way of cheating, as some in the movie said also, if you had good friend in the pit you got good fills, by seeing the faces and emotion from the other guys around you, you could have such a great advantage by reading the emotions and having better fills because of your friends in the pit.

 

And whay do you see, those guys got angry because they couldn't cheat anymore but got their fills based on first-in-first-served as anyone else a more honest approach :haha:

 

And the big evel computers got the blame, while they where cheating, so yes I loved this movie! Burn pit traders burn, always had the possibility to make a lot of money without the hard work!

 

 

Yes, you can't trade for the difference between the ask and bid anymore without high performance and fast computers anymore! But you can still trade as the people outside the pit have done for centuries, did you think those guys outside the pit had any chance before on making money in the small difference of the ask and the bid? No, only the pit cheaters could do it!

 

But comming to your question, can it be done? You see yourself as a starter, so trade the NQ future contracts, an easy start. Watch it and look if you could make with one trade a day, only one! Look if you could make with that one trade only 4 ticks! Yes, it is hard looking to the chart the whole day only looking for 1 perfect trade for only 4 ticks of profit.

 

But do you think someone could do that?

 

Do you think you could do it?

 

It is just looking for human behaviour, which you can devide into a setup which results in forecasting human behaviour, in trading terms called a pattern. Look for one pattern that you see occur multiple times a day and watch when it fails and when it succeeds! And then trade it! 4 ticks is $20 but when you trade 30 contracts you make $600 a day...

 

So the question is can you take only 1 winning trade of 4 ticks a day? Yes, you can live as a trader - No, you should do more research and think about Henry Ford!

[$5DAW 10]

Ingot54

 

I always enjoy reading your posts/threads, although somewhat wordy (at times:)) I feel the "take away" is worth my time. I saw the "Floored" documentary awhile ago (seems like over a year{?}) and watched your 8 part series as a refresher, BTW thanks for posting that. I'm lucky to say I've been to the visitors gallery at the CME when crowds of traders were trading there, now my visit is just a fading memory. I believe the thoughts/comments you've posted run through the minds of many traders, especially new struggling traders searching for that elusive style/method that "fits" their personality.

 

I did find this posted on the web the other day, more information to weigh on your or others decision. High-Frequency Traders Descend onto Forex Markets. What are the Implications for Retail Traders? | Forex Blog

[Tradewinds 12]

Here is a Wall Street Journal article about high frequency trading:

 

High Frequency Trading: What You Missed on ’60 Minutes’ - Deal Journal - WSJ

[Tradewinds 12]

60 minutes ran a segment on robotic trading.

 

How Speed Traders Are Changing Wall Street - 60 Minutes - CBS News

[$5DAW 10]

The issue is one of "adapt-or-perish" ... but how to adapt?

 

Adaptation? Adapt from what ... to what ... ?

 

 

Ingot54

 

I think you've nailed it down right here :hmmmm:

We've all read the articles and seen the videos on high speed trading, we know they're in the market waiting to pounce on our orders/stops, but what can we do to adapt? I trade the euro futures and for a few years now I have two methods that (so far) still work. One is a trend follower, it seems to survive the flash "sweeping of the book" that appears to happen more and more often intraday. The other method I use is primarily used around important news releases, since IMO that's when the action is. I use a combination of time/price/volume histograms along with a VWAP charting out five standard deviations for four different session opens. I'm not really interested in the bias of the news because computer programs "don't give a shit." All my trading is intraday and I only trade around opens, closes and news. I hung up my scalpers jock strap long ago and lost faith in the old school indicators when used on time based charts shorter than ten or fifteen minutes.

 

I watched the 60 Minutes segment (rerun I think) and two lines, IMO say it all. I'm paraphrasing, "the speed (of trading) is limited to, how fast electrons can travel." And the other (punch in the gut), "we have no way of knowing, what goes on in these computers (at the co-location)." I find the last statement almost unbelievable.

[TradeRunner 10]

Ingot54

 

I think you've nailed it down right here

 

Well it sure is a load off knowing that our trading failures has nothing to do with us and can all be blamed on HFT!

[TradeRunner 10]

"sweeping of the book" that appears to happen more and more often intraday. The other method I use is primarily used around important news releases, since IMO that's when the action is.

 

You trade news releases because "that is were the action is", but then you complain about book sweeping? Can you post some charts showing "book sweeping" events that didn't occur during news releases?

[Ingot54 13]

Well it sure is a load off knowing that our trading failures has nothing to do with us and can all be blamed on HFT!

 

Yeah ... I feel better already! :rofl:

[MightyMouse 12]

Ingot54

 

I think you've nailed it down right here :hmmmm:

We've all read the articles and seen the videos on high speed trading, we know they're in the market waiting to pounce on our orders/stops, but what can we do to adapt? I trade the euro futures and for a few years now I have two methods that (so far) still work. One is a trend follower, it seems to survive the flash "sweeping of the book" that appears to happen more and more often intraday. The other method I use is primarily used around important news releases, since IMO that's when the action is. I use a combination of time/price/volume histograms along with a VWAP charting out five standard deviations for four different session opens. I'm not really interested in the bias of the news because computer programs "don't give a shit." All my trading is intraday and I only trade around opens, closes and news. I hung up my scalpers jock strap long ago and lost faith in the old school indicators when used on time based charts shorter than ten or fifteen minutes.

 

I watched the 60 Minutes segment (rerun I think) and two lines, IMO say it all. I'm paraphrasing, "the speed (of trading) is limited to, how fast electrons can travel." And the other (punch in the gut), "we have no way of knowing, what goes on in these computers (at the co-location)." I find the last statement almost unbelievable.

 

You guys seem to me to view HFT in some sort of awe stricken manner and assume that they all make money. Trading sub minute does not guarantee anyone anything. They face the exact same variables that we all do. The HFTs promote themselves as being more than they are to attract funds so that they can make fees. Wall Street firms are expert not at trading but from sucking money from the the large moneyed gullible public. Its all about the fees.

 

When you watch 60 minutes think of the program as an infomercial for the subject being covered instead of a valid, objective news source covering a topic of importance.