The Stock Market is slow today, Entertain me

[Gaucho]

Ever heard of? Chartists, not billionaires, but wouldn't be far off!

Louis Bacon
Paul Tudor-Jones
Toby Crabel
Jerry Parker
Salem Abraham
Rich Dennis
Bill Eckhardt
Keith Campbell
Ken Tropin
Monroe Trout
Martin Schwartz

An indicator? What are you referring too? Volume, price action, time in confluence? I am not talking of RSI, MACD etc, these are TA 'indicators'.

At the end of the day, does it matter if the direction is right or wrong? I get 40% right and still make $$. Because I maximise my winners.

Look for an entry point, usually a micro pattern, within a long-term uptrend, yielding good swings, and enter at the break of resistance. Vice versa for shorts. Change exits depending on market conditions. Trailing stop of one form or another, whichever you choose, if the market is trending. Can either be an MA, or ATR chandeleirs (spelling), using your preferred (backtested or forward tested if you will) MA period. Use any stop criterion you choose if it works and is tested to work. Either way, whatever works, as soon as you trade live, may not work anymore. Keep good records and you can keep track of this. Decide your maximum drawdown. All the same things most systems and mech traders have to use themselves.

Times like now, profit targets are best, and high frequency, small timeframe trades.

Keep it simple! Sure, quant traders (yes I have two degrees myself, but maybe not from an Ivy League institution) can make cash, but so can discretionary traders or any type of trader if you find the edge. And this IMO is with trade management. Entries are never going to guarantee a high win %, as is the nature of the markets.

And I never said you need 5k to make a living, you need a HELL of a lot more than that, unless you have a MASSIVE edge, something not many can claim. Not even a Hedge fund. I am with Man Investments, a top hedge fund, and they do not make near the money a discretionary trader I work with makes.

Oh, and I think you will find the Turtles had a bit more than 5k to begin with! They were longer term trend followers trading commodity futures, generally a new 55 day high or low. Basic trading, and only a very simple algorithm involved in position sizing.

 

[Gaucho]

And I never said you need 5k to make a living

Then again, Dan Zanger turned 10k to 42mil through the use of EW (something I do not use personally), except to note trend and basic structure.

Oh and you say price action and tape reading may have some validity? Are you aware TA is simply price action, but relating it to crowd behaviour? Add in VSA, time, position sizing, money management and prooven exits and you have a very robust trading methodology.

 

[Wiesman44]

your p&L

Only 2 months in to trading futures there bro. Do u expect to make it to the major leagues after playing baseball for 2 months ? Think not

 

[Gaucho]

Out of interest Wiesman, what set-ups are you using to trade and where did you learn to trade futures? A particular book or mentor?

I started reading 16 hours a day, 7 days a week for a long long time, but so far, has been well worth it. I have a couple mentors I have finally stumbled accross, bot much older than me, and both very very successful. Each close to the hundred mil mark now and both trade full-time, have done for many years and with incredible consistency.

Needless to say, they use that TA crap.

 

[synergy1]

I don't trade so don't get all up in here if you disagree!

I have read several books on TA, and the premise seems to be this; utilize the past to predict the future, or as far to the right of the chart as you can. However, when it comes to resistance/supports, those depend on the time frame, and are all relative - one support can be another resistance. Same goes with the formulaic X number of peaks constituting an uptrend or down trend....how time frame are we talking about? Any yahoo can package something and fit the data to match predictions on the past. I am unimpressed with model parameter adjustment; I have two degrees in engineering and understand the amount of BS one can input into a model that is incorrect.

As was posted on this thread; the market is indeed organic. No amount of math, or patterns in the past will predict the future. From personal experience, mathematics has a difficult time describing simple phenomena such as system dynamics, viscous/laminar flow, heat....I have a hard time believing any math can describe the crowed.

I honestly believe Wutang has the right idea with hedging. The idea of quantifying risk, and minimizing losses of a diverse portfolio of stocks bonds or whatever seems like a better use of mathematics to me.

Again, I am not a trader..just a reader with an opinion I have started to take an active interest in financial engineering, and have started doing some reading.

 

[Gaucho]

You make two very good points synergy:

Any yahoo can package something and fit the data to match predictions on the past - why it is vital to only take advice from prooven traders, those who post their statements and not any old vendor.

No amount of math, or patterns in the past will predict the future. From personal experience, mathematics has a difficult time describing simple phenomena such as system dynamics, viscous/laminar flow, heat....I have a hard time believing any math can describe the crowed - exactly why I do not try and predict price movement, only use entries in which make ME feel comfortable. After that, it is simply managing the trade. This is where it becomes important. For a basic look at such logic, read Van Tharp. Then again, I believe Black and Scholes came accross a form of maths which could predict the behaviour of the crowd, only to fall to the fallacy of composition.

Phsychology is a HUGE part of successful trading, you do not need to be a mathematical genius to succeed. Far far from it.

Oh and another point, global macro can be seen within the charts, many caught the rise in oil, coal etc, many caught the fall of the USD and of the financials lately. Momentum within volume, and price action can catch this, just as global macro can.

 

[Gaucho]

I have read several books on TA, and the premise seems to be this; utilize the past to predict the future, or as far to the right of the chart as you can.

No, not really. It is dynamic, you cannot try and predict more than the immediate future and even then, it is never accurate, no method I have ever come accross is. If you can get 50% winners, you are doing well.

A few set-ups will gain high % winners over a certain period of time, as per Larry Williams, however, again, you need many opportunities to trade these winners so you don't have to risk too larger % of your portfolio on one single trade. Further, these high % winners will never stick around over the longer-term.

Once you understand trade management, it will become a lot easier and is something probably 99% of traders never seem to grasp.

Ah well, good luck in whichever method you guys choose. Let me know how you get along Wutang.

 

[Evzone]

A guy that I respect who works S&T at BofA straight up told me that if you don't prop trade in S&T, you don't make money. He said that this wasn't just a Bank of America thing but characteristic of the industry and that firms hardly make anything (if anything at all after expenses) on working bid-ask spreads. Interesting stuff.

I am thinking now would be a good time to consider going long on refineries. My bet is oil is going to close below $120 this week. Gasoline will take longer to react (Keynesian sticky-price dynamics, ect.), good for the 3-2-1 spread and good for refineries.

 

[Gaucho]

A guy that I respect who works S&T at BofA straight up told me that if you don't prop trade in S&T, you don't make money. He said that this wasn't just a Bank of America thing but characteristic of the industry and that firms hardly make anything (if anything at all after expenses) on working bid-ask spreads. Interesting stuff.

I am thinking now would be a good time to consider going long on refineries. My bet is oil is going to close below $120 this week. Gasoline will take longer to react (Keynesian sticky-price dynamics, ect.), good for the 3-2-1 spread and good for refineries.

I personally, don't think oil will get too far below $120. If it does and momentum picks up, watch out below! However, it may have a crack at that level, but I don't see much effort coming in from the sellers, whilst I think there will be quiet some buying demand coming in at those levels.

If you want to look at global macro, despite the belief oil is being pushed up by speculation, where is the excess supply? What is the explanation for Contango? Furthermore, just because prices go parabolic, why does this mean it is blamed on speculators? Iron has no futures market, and look at the price rises it has experienced lately..........something to think about at least...........

 

[synergy1]

A few set-ups will gain high % winners over a certain period of time, as per Larry Williams, however, again, you need many opportunities to trade these winners so you don't have to risk too larger % of your portfolio on one single trade. Further, these high % winners will never stick around over the longer-term.

Don't get me started on Larry Williams. The guys picture should be next to fraud in the Websters dictionary.

Either way I don't trade, so my opinions on TA, MA , MACD, Stochastic, Force models are moot. Regarding this i'll keep my mouth shut, but if we want to discuss the demerits of Mr Williams, I'll post a wall of text!

On another sad note, I can't believe I wasted money on Bruce Babcocks book either!

 

[stumped]

I'm willing to bet most of these "quants" can't beat the market over
the long term either.

Everything works until it doesnt. Its not possible for the market
to be a mathematical formula, its dynamic with ever changing themes. Otherwise, everybody with a phd in math would be a billionare. Not the case though. Sorry. The black swan will get you eventually.

Goldman's phd's lost BILLIONS last year during the volatility during the credit crisis. Now they are calling it a 100 year event. HA, nice. You lost billions, you suck, get over it.


Having said that, yes most so called day traders will never be net positive because they will never get it.

I do know daytraders making 500K and up ever year. They trade equities though. I don't know any retail ES traders that make money, doesnt mean they dont exist though. The ES is an index, its hard to try to exploit something like the ES. The one thing day traders have as an advantage is trading small size. They dont need to put 100s of millions to work everyday. You can get in and out with a thousand shares easy and lightning fast.


And of course you don't become a billionaire daytrading... duh! The more you need to put to work, the longer your time horizon needs to be.

 

[Wiesman44]

I'm willing to bet most of these "quants" can't beat the market over
the long term either.

Everything works until it doesnt. Its not possible for the market
to be a mathematical formula, its dynamic with ever changing themes. Otherwise, everybody with a phd in math would be a billionare. Not the case though. Sorry. The black swan will get you eventually.

Goldman's phd's lost BILLIONS last year during the volatility during the credit crisis. Now they are calling it a 100 year event. HA, nice. You lost billions, you suck, get over it.


Having said that, yes most so called day traders will never be net positive because they will never get it.

I do know daytraders making 500K and up ever year. They trade equities though. I don't know any retail ES traders that make money, doesnt mean they dont exist though. The ES is an index, its hard to try to exploit something like the ES. The one thing day traders have as an advantage is trading small size. They dont need to put 100s of millions to work everyday. You can get in and out with a thousand shares easy and lightning fast.


And of course you don't become a billionaire daytrading... duh! The more you need to put to work, the longer your time horizon needs to be.

I knew there were a few smart people on these forums !! 100% agree !

It is much difficult to exploit an index, but it is MUCH easier to exploit when u have an edge compared to an edge in stocks. You can trade much bigger size in the ES than stocks due to liquidity.

You won't hear of the guys making 500k trading ES retail b/c many are humble, and many will just call themselves 'equity traders'

 

[stumped]

I knew there were a few smart people on these forums !! 100% agree !

It is much difficult to exploit an index, but it is MUCH easier to exploit when u have an edge compared to an edge in stocks. You can trade much bigger size in the ES than stocks due to liquidity.

You won't hear of the guys making 500k trading ES retail b/c many are humble, and many will just call themselves 'equity traders'

That is the beauty of the ES, you can trade crap loads of size and not affect
it a tick. You can literally get in with millions and out with more millions and
not a sole would have noticed. Leverage is a beautiful thing.

 

[Gaucho]

Don't get me started on Larry Williams. The guys picture should be next to fraud in the Websters dictionary.

Either way I don't trade, so my opinions on TA, MA , MACD, Stochastic, Force models are moot. Regarding this i'll keep my mouth shut, but if we want to discuss the demerits of Mr Williams, I'll post a wall of text!

On another sad note, I can't believe I wasted money on Bruce Babcocks book either!

Exactly why I said, many high % patterns are ONLY very very short-term. Though I backtested two of his famed strategies and they did work, unfortunately, not anymore, as is the market! It's why I say if you can get anything over 50/50 over the longer term, you are doing well.

I would not compare TA ro MA/MACD/Stochastics, as the later 3 are simply indicators and most successful TA analysts never even look at them.

Anways, I am not here to teach, I simply KNOW how to find the edge. Check out CCOI last night and look for micro patterns breaking down from a huge momentum downward force. Quiet a runner there! Look at SOHU and for the same but this time long! I balance shorts with longs. Manage the trade, THAT is your biggest edge! If these reverse, most I can loose is about 0.5%, other than a one off black swan event, if they run my way, winnings are practically endless. With their kind of momentum, more likely they will run my way, but I won't hang around if they don't do it instantly to wait and see. I will not hold onto hope, only what they proove to me instantly. Once they move my way, generally about 40% of the time they do it instantly after breaking out of a micro pattern, then I am already in the green, and more likely than not, they yield around 4 times what I do when I have to cut my losses, add to that commissions, data feed etc, and you still have decent profits. Trouble is, only a few set-ups come up each day in the US market alone, and hence why I trade multiple markets, from futures (both commodity and index) to global equities.

As for the ES and liquidity, 50% of volume actually pours through ETF's currently. So they are obviously the most traded vehicle. Furthermore, many professional traders only trade the NASDAQ, which itself has huge liquidity.

Cheers

 

[Gaucho]

The one thing day traders have as an advantage is trading small size. They dont need to put 100s of millions to work everyday. You can get in and out with a thousand shares easy and lightning fast.


And of course you don't become a billionaire daytrading... duh! The more you need to put to work, the longer your time horizon needs to be.

Yes, this is called less slippage. However, you will be paying higher % commissions. Though, if you use a platform like IB, you only pay around $1 brokerage per trade, I personally, find them fantastic.

I believe Tudor-Jones is a billionare.

Bible, you have been awefully quiet considering a trading thread has come up! Have you been doing any yourself lately?

 

[Wiesman44]

Unemployment figures 5.5%, people were expecting 5.1%.

Short this PIG today. We're gonna fall heavy IMO. 200+ on the Dow. Dow rallied yesterday morning b/c of a short squeeze, and in the afternoon b/c of non-farm payroll speculation. Black FRIDAY !

 

[Wiesman44]

Unemployment figures 5.5%, people were expecting 5.1%.

Short this PIG today. We're gonna fall heavy IMO. 200+ on the Dow. Dow rallied yesterday morning b/c of a short squeeze, and in the afternoon b/c of non-farm payroll speculation. Black FRIDAY !

Dow smacked down 300 ! Gaucho hope u made some good $$ today. Wasn't really that difficult, lol.

I'm calling it quits for the day. Time to get a haircut, go to the gym, and get me some money hungry sluts.

 

[Gaucho]

Today was good friday for me, infact that includes the last 24 hours!

Oil contracts are real payers! Add to that a perfect demonstration of technical analysis, high tight flags at their absolute finest and in consecutive order, and you have a few months of pay in a day! A grand, per contract, per dollar! A few contracts at a $125 entry and you have a bit of cash rolling! There's an easy equation to do some quant analysis on! What does 4 x 11 = 44k baby!!!!!

Thankyou Mr Market!

:cheer:

 

[Wiesman44]

Today was good friday for me, infact that includes the last 24 hours!

Oil contracts are real payers! Add to that a perfect demonstration of technical analysis, high tight flags at their absolute finest and in consecutive order, and you have a few months of pay in a day! A grand, per contract, per dollar! A few contracts at a $125 entry and you have a bit of cash rolling! There's an easy equation to do some quant analysis on! What does 4 x 11 = 44k baby!!!!!

Thankyou Mr Market!

:cheer:

Yah, you make $1000 per $1 oil moves. $10 per 1 cent. You can certainly make a good buck trading oil. I won't touch the little bastard until I am consistantly making a good buck.

 

[Gaucho]

I don't really trade oil often, I only look for swings. This was a very important one, an easy to predict one and a great runner!

Went para, retraced, consolidated, long-term trend well up, broke out of a short-term downward trendline on high volume, showing high tight flag patterns (the MOST reliable pattern statistically in TA).

Very nice.

Now looking for a gold swing, it's broken above $900, just needs to get a bit higher to break it's downward short-term trendline, with strong volume. Would be nice if it too could add the high tight flag patterns...........

Great swing opportunity either way if it comes to fruition. And from a global macro perspective, it well could.