The Secret (or Not) to Day Trading Futures

[phantom 16]

Every large move is made up of smaller moves. You exit the trade when the momentum slows down. How do you know when to exit your "swing" trade?

 

Read my thread and you'll have your answer.

[phantom 16]

Folks,

 

The object of trading, whether it be day trading or otherwise, is to make as much money as possible in the time one devotes to the business. If you want to make a living at this as a day trader, that means you'll have to earn enough money to cover your losses, your living expenses and your savings/retirement income.

 

The reason that 90-95% of traders fail is because they don't earn more than they lose (obvious, but important).

 

If you're reading this and you are one of the losers in the business, maybe its time to rethink your approach. Why take a momentum-based approach for peanuts (unless you can trade major size) when you can trade consolidation breakouts, intraday, for 100, 200, even 300 ticks at a time? (This is why I trade gold and crude oil; they routinely move like this)

 

Many people on this site will confuse the average trader with so much BS that its no wonder most fail. Simplicity is KING in trading.

 

If you're looking for a simple, yet highly effective approach to trading, read my thread:

 

http://www.traderslaboratory.com/forums/technical-analysis/9764-what-really-works-technical-traders.html

 

and apply the insights I provide their. I have received many emails from traders that have improved their results using the information in that thread.

 

Are you on this site to make more money or not?

 

 

Luv,

Phantom

[AgeKay 10]

phantom, your thread has not much to do with what I wrote here, but still you made three posts were you tell people to read your thread. I think everyone understands now that you want everyone to read your thread. That's ok, but please stop referencing it in my thread as it adds nothing to this discussion.

[youngamerican 10]

Phantom is there any original ideas that you discuss in your thread that you can point me too? Much of what I have read has been written about before.

 

Thanks

[phantom 16]

phantom, your thread has not much to do with what I wrote here, but still you made three posts were you tell people to read your thread. I think everyone understands now that you want everyone to read your thread. That's ok, but please stop referencing it in my thread as it adds nothing to this discussion.

 

AgeKay, my thread has everything to do with this discussion. The discussion is all about day trading "secrets," which in my mind translates into "How to improve your trading using things that aren't talked about very much." Just because you've allowed yourself to change that into "How to trade only using the book..." doesn't mean that my thoughts are insignificant to the discussion. We are here to enlighten traders who need help. If that bothers you, I apologize.

 

 

Luv,

Phantom

[AgeKay 10]

No, this thread is not about day trading secrets. It's just a secret to the retail world that this is how most professional traders trade that are responsible for a significant volume of the futures markets. Anyone who trades in a prop firm knows about this, so it's definitely no secret.

 

And this thread is not about chart patterns like "hammers" or "dojis" and not about indicators like "MA" or "MACD" what your thread is clearly about. You give simple concepts like S/R turning into R/S after breakouts fancy names like "price rejection" that also is no secret to anyone.

 

This thread is in fact only about trading with the order book and nothing else, and it does bother me that you pollute my thread with your irrelevant posts. I've read you thread and have a different opinion on many things, yet I refrained from making any posts there, so please do the same here.

[phantom 16]

No, this thread is not about day trading secrets.

This thread is in fact only about trading with the order book and nothing else.

 

Then you should have called the thread "How to scalp like a pro" instead of "Day trading secrets."

 

I will not post to your thread anymore. Sorry for ruffling your feathers.

[Nemesis 10]

phantom, your thread has not much to do with what I wrote here, but still you made three posts were you tell people to read your thread. I think everyone understands now that you want everyone to read your thread. That's ok, but please stop referencing it in my thread as it adds nothing to this discussion.

 

Im glad Phantom referenced his thread considering his shares and yours shares nothing but ambiguity.

[AgeKay 10]

Im glad Phantom referenced his thread considering his shares and yours shares nothing but ambiguity.

 

I am sorry you feel that way. It might seem ambiguous compared to charts because it's a lot easier posting a few charts and saying "look here, this looks like that so you do that" or "do this when this line crosses that line" but trading isn't that easy. There is so much going on. You need to take it all in and consider everything that has happened before and what happends next. I would never be able to explain every facet of it even if I wanted to. I just received a PM asking me about one of my earlier posts. I quote this post here so you get an idea of what goes on in your head when you trade this way:

 

I give you an example of a trade this morning in Bund where I was sure what was going to happen. And I was right - to the tick on both the entry and exit. Bund and Bobl trading down slowly. Big bids in Bobl and offers keep getting lifted but it just won't break the high of the day in Bund at 122.59 which held 6 times. Big bids in Bobl but it just keeps going down, slowly. Meanwhile Bund should have been trading much lower but doesn't. Bobl is bid 2500 contracts at 116.63 and trades 11,000 contracts at 116.64 and only 164 on 116.63. Similar thing happening in Bund: trades 6,200 contracts at 122.54 and 1,600 at 122.53, 122.53 goes offer but no one wants to sell even one contract at 122.52. Why not? It's highly likely that this is as low as the market is going to go based on how many contracts traded and the huge bid in Bobl. So no one wants to be the one who sells the low of that move in either Bund or Bobl. So everything is telling you to buy. So you go long 122.54 or even 122.53 if you were lucky to get filled. Then Bobl is offered 116.64 for some, still no one wants to sell 116.63. Then you see 116.64 offering 1500 contracts to bully long traders into panicing and taking out that huge bid of 2500 on 116.63. It works: some one sells 50 contracts into 116.63 and its bid only 1000. But remember there is one guy who just bought 11,000 contracts in Bobl and probably a few thousand also in Bund and he was bidding 2500 below that. So the big guy cancelled 1500 contracts because some one sold only 50 contracts? No, because half a second after he cancelled his 1500 contracts he just lifts the entire offer at 116.64. Get it? He didn't really want to get filled on 116.63. He just posted this bid to keep the price up. And when he got challenged by the big offer, he quickly made sure that no one who was long had to worry about his position thereby avoiding traders puking into his bid and making him lose. Sure enough, everyone who was short and saw that knows their fucked and start puking. Market goes higher. This is the momentum the market needed to break the high of the day that I was waiting for. I know that after having traded so many contracts and having seen what I have seen that the market should move about 10 ticks. I don't remember the price in Bobl, but I do see a huge offer in Bobl a few ticks away and at the same price level in Bund (122.65) also. And sure enough it trades 5000 contracts at 122.64 and a few on 122.65 making it the high of the day for the next 15 minutes trading in a narrow range (where the long big guy probably dumbed his position). See, I risked 1 tick to make 10. Talk about risk/reward ratio. And I was sure it was going up. It did trade even higher (trading 166.77 now) but I don't care, I reached my daily target. This is what you have to look for. This is what goes on in my head. See why it's so hard to describe using words?

It's all psychology. Who has the most money? When are traders going to puke? If they do, how far will that move the market?

[joshdance 10]

AgeKay, do you trade ES? Given that the volume there is typically 5x or so higher than the Bund and 10x more than the Bobl, isn't it a bit more challenge to identify the players when the market trades so much more volume?

 

I think the deal with charts is that for me, they give a frame of reference. Too many people trade blindly on the chart alone; I simply am not trained enough yet to make much sense of the orders on the book; however, no one can hide their traded volume, and this is what I use through look at time and sales and a simple volume histogram (both per bar/time and at price).

[AgeKay 10]

AgeKay, do you trade ES? Given that the volume there is typically 5x or so higher than the Bund and 10x more than the Bobl, isn't it a bit more challenge to identify the players when the market trades so much more volume?

 

No, I don't trade ES. It's not the volume that is the problem, but the "noise". It's correlated with so many markets, it's much harder to see what is directional trading or just spreading or hedging. I think bond markets just move a lot cleaner than stock markets, but it's certainly possible to trade them using only the order book.

[pawancarrot 10]

i agree with u. really nice post.

[madmedmat 10]

thanks for this thread. liked the first couple of posts very much.

[geezer42 10]

It is very interesting to me. Feels like I was looking for this for a long time. My question to you - have you practiced all this and if you did for how long and what you have learned, accomplished and.... are you winning or losing the "game"?

[prosentti 10]

This thread is quite a bit missleading by saying that you can be successful only by using this or that technology.

 

To be succesful in this business is nothing to do whose technology you use as long as they have the needed quality. This is because of every platform shows the same data. I am talking about the trading which goes through the exchange (OTC business is different). Today there is plenty of alternatives who have the needed quality. TT is only one of them.

 

Also it is missleading to teach that by trading the depth data, order flow and volume is the only way to go. There is no right or wrong way to trade ("professionally" as you say). Only thing which counts is are you profitable and by what kind of risk. In the right hands everything is the right way.

 

So "the secret to day trading futures" is not in technology or system/methods you use it is in "have you found the components which works for you".

 

The main problem for the people is that they don't or do not want to understand how much time, work and experience it will take to find the right system. For most of us 2-3 years is definitely NOT enough.

 

After all what you said about the TT it really is a good technology and for many traders trading the book/volume is profitable. But there is also a bunch of traders who are loosers and using these things.

[bakrob99 11]

...The main problem for the people is that they don't or do not want to understand how much time, work and experience it will take to find the right system. For most of us 2-3 years is definitely NOT enough.

.

 

I really thought when I started trading in 2006 that it would be easy for me and I wouldn't have such a long learning curve. This was my ego talking. I have always been successful in the things I choose to do throughout my life - so why not trading?

 

Well, I agree with this post. It took me longer than 2-3 years to become profitable. And even now I struggle at times to accept the risk and avoid the self destructive behaviour that dogged me for years.

 

Technology is a requirement - but is insufficient. It's a cruel fact that things will go wrong at the worst moment possible. (At least, that's what you remember because when they go wrong at times that don't matter, you don't event think about it again.)

 

Example: Flash Crash. My platform almost completely froze during this event and all I had to "watch" was the time and sales. I got caught with too many charts open and the volatility and volume spiked so much that the platform was unable to catch up. I have made changes and improvements since - but I still remember thinking if I were on the wrong side of this I would have been in serious trouble.

 

So yes, having a backup plan, having an alternative, reducing risk in every wau possible are requirements but again are insufficient to produce a consistent profitability.

 

 

It takes time - screen time - trading time - mental time - and then it finally starts working and then you build, slowly, consistency and confidence. Then it's very good.

[lexus4849 10]

Hi,

 

It also takes a great amount of reading and investigation on what you are trading because the platforms cannot do that for you ( even though the tell you.). I thought 15 years ago that this would be a snap.

 

I also forgot that when I spent $10,000 on a great system the instituitionals spend billions and have super trades at their disposal.

[bidie 10]

Hi,

 

It also takes a great amount of reading and investigation on what you are trading because the platforms cannot do that for you ( even though the tell you.). I thought 15 years ago that this would be a snap.

 

I also forgot that when I spent $10,000 on a great system the instituitionals spend billions and have super trades at their disposal.

 

-----

There is a big hand in the market I believe-

Observe when that big hand comes in and trade along with it-

[Colonel B 10]

Hey bro. Fricken awesome thread. You hit it out of the park in just 3 pages. They should put a stickie on this so every one can read it. Oh yea I use MD. Try the 4 P&F on the Spoo.

[mickeybh 10]

OK I dont have much experience in these forums. Followed the markets all my life. traded emini options and contract, even before emini. breakeven. used footprint charts as well as candles, breakeven. Knew there was something more. Yep, except for the footprint when used with the DOM charts are useless. Yes I like a picture of where we've been, swingpoints, general trend, but beyond that there is no value in the charts. There are no rules, no magic formula. Only you. Still working but I have turned the corner. My trade ratio is in the low 60% winner. It does work and it will take time, however if you read the tape and throw out your bias (except the bias of the trade you're about to enter), then you will become profitable and will continue to improve that profitablitiy. Two sites, zigsawtrading.com and nobsdaytrading.com. Visit them, read all the free stuff. I bought the zigsaw DOM (very cheap for what it does). Bought the $50 course on nobs. The rest you have to learn.

This game is hard but easy at the same time. You will see how the pros trade. When you get right down to it you need to determine when and where the boys want to play, determine where the volume is being accumulated and go with it. Accumulation most always ocurrs before the move. You can see it. Then feel how strong and adjust size and enter. Only two outcomes. I also average in and usually all out. If I see accumulation at say 1690 down to 1688 then a quick drop to 86.75 (stops) but bounce right back with market orders I put on another trade to average down, then when / if the move happens as soon as it slows or stops I'm out. Fine line but is working very well. You just get a feel and that's what trading is the feel and nothing can give it to better than watching the orderlow.

 

My 1.5 cents.

[steve46 12]

Dealing with the previous comment. A couple of things to think about

 

First, while it IS true that one can find S/R and put on a position (scaling in) as it retraces...YOU MAY WANT TO CONSIDER....that this is how a legitimate reversal looks to traders on the other side...and those traders may have something YOU don't have (more size going the other way).....

 

What matters is time frame and context....always.....once you understand that big players operate on specific time frames, THEN you can put yourself in the right place....and the previous comments about volume, about retracements and scaling in and out, have real value.

 

There is a key....its understanding the broad market in terms of time frame and in the context of significant events (economic reports, earnings, etc)...when you put the two elements together you eventually (if you are a good observer) see how the institutions and commercial players make decisions to put capital to work....then you start to see accumulation and distribution and finally the picture becomes clearer..

 

and for those who think just asking me "what is the proper time frame" will fix their problems its not that simple....its not just time and its not just context.....its the integration of the two that matters....become a good student and a good observer of the markets and you might get where you want to go...

 

Good luck

[mickeybh 10]

Dealing with the previous comment. A couple of things to think about

 

First, while it IS true that one can find S/R and put on a position (scaling in) as it retraces...YOU MAY WANT TO CONSIDER....that this is how a legitimate reversal looks to traders on the other side...and those traders may have something YOU don't have (more size going the other way).....

 

What matters is time frame and context....always.....once you understand that big players operate on specific time frames, THEN you can put yourself in the right place....and the previous comments about volume, about retracements and scaling in and out, have real value.

 

There is a key....its understanding the broad market in terms of time frame and in the context of significant events (economic reports, earnings, etc)...when you put the two elements together you eventually (if you are a good observer) see how the institutions and commercial players make decisions to put capital to work....then you start to see accumulation and distribution and finally the picture becomes clearer..

 

and for those who think just asking me "what is the proper time frame" will fix their problems its not that simple....its not just time and its not just context.....its the integration of the two that matters....become a good student and a good observer of the markets and you might get where you want to go...

 

Good luck

 

Thank you Steve. I do agree totally with your assessment there. I have a protfolio that I trade and do fairly good. That's real money and my savings so I'm very careful. I love fast money, record and watch every day. They are on it. If I'm interested in a stock I might sell puts to enter or just buy, but always averageing in.

 

As much as I agree with you on the macro and the time frame, daytrading is different. It really is. Look at the charts of the S&P cash. intraday moves and range. The daytrader's job is to make money out of those moves. When the big boys come in, the only way you see it is on the tape, or should I say the fastest way to see it. Volume and accumulation moves the markets short and long term. The big boys are averaging in and out and playing with a very small percentage of their overall positions. They are picking up money daily trading the markets, otherwise fundamentals would be the only driver of prices. It's not on the short term. The S&P move from 1702 back to 1689 doesn't reflect the fundamentals at all, but a move to 1500 would, or a move to 1750 would. It's inbetween where the daytrader has to play.

 

Currently I feel we're at a top, I'm out of stocks but in a few other things. Could be right could be wrong, but whether I'm right or wrong doesn't tell me if the emini market will open up or down tomorrow, and if it will go back to 1700 or trade down to 1675, but the tape (trading action) will give me a clue. And whatever it does is just trading in those 7 hours and becomes part of the context of the overall trend, wherever it's heading.

 

Do agree at all with that logic, because what you said is very relevant and in fact very interesting.