>> Search for firms in your country. And ask them questions about training programs. But first you must know what you want to trade and what style. Prop firms in the discretionary manner is all I know. I don't know anything about the Quant firms. But all I know is, infront of my eyes, there are multi multi multi multi millionaire guys who compute NO models, NO variables, NO statistical modelling, NO back testing, and still make money and have for years and years and years and years. The reason why I even bothered mentioning deposits is to let you all know it's not a Free-Lunch type of game. For the people who never want to put a deposit in my firm, you are going to be stuck making between $50k to $100k AUS a year for yourself basically. Obviously the deposit part usually starts to get put up after you're in the firm and have been making money for 1-3 years... depending on how you go. A good thing they usually do is just open you up a 2nd account and every month you slowly put money in it as a capital base to help you get on your feet. All I know is, at my rate of progress compared to others at other firms... the more money you back yourself with, the faster you grow and the bigger you get whilst learning the same lessons. >> Having more money breeds money. Thats just the nature of the game. Whilst I won't necessarily be a better trader if I'm risking 100k versus 20k, but over a year I would have made 5 times the amount and learnt the same lessons than if I only risked 5k... and its a multiple of 20 between a 5k stop and 100k risk stop. >> I only gave info here because we never really hear about the 'path' people take to get to 7-figure years. It's outlined in this thread and more concrete instead of the vague "ohh yeahh just keep doing well, never lose money, then size up, and keep sizing up."
Hey sommi thanks for this thread. Do you think its just as possible to make it trading spreads without joining a prop firm? Any particular spread you would recommend starting with to gain some screen time. Also how do you determine where to enter. I notice you said you use time stops but still not clear on what gets you in a trade in the first place. I trade TA but outrights and applying a lot of the TA principles does't seem to work on a spread chart. They look a lot different than outrights from a PA standpoint. It would be great if you can post just 1 sample trade you've taken showing your entry, adds, exit, reasoning etc. I know it may be too much to ask but any info is appreciated. Thanks again.
>> Hi friend. Prop shops rarely teach you the real ins and outs about spreads. But all they do is aware you that people trade them. Maybe they give you some ideas as to how some people trade them. >> To learn the ins and outs what you have to do is.... trade it. That's it. Just trade it every single day, talk with other people who know about it, get them to help you and tell you all the juicy gossip about it over the years and how you're executing etc. and then keep trading it. It's all about the hours. >> I always advocate longer hours here. This thread is filled with me just saying to do more hours and work harder. There are so many nerd quant types here who can't get their head around the fact that people make multiple millions without any statistical measurement of volatility, any economic models, no back-testing, no rigorous course of formulation or anything. Just sit down, watch it every day, start trading and participating, and learn from your mistakes. >> What country are you from? I find it necessary to know because a big part of one's edge comes from the fact that they live in a certain country. You will have what I all a 'home advantage'. You can read local commentary about the general consensus towards interest rates, local economy, and the know-how about things. For example, in Australia, I am aware of certain economic commentators and what their opinion on Australia's fundamentals are. I also am familiar with Glenn Stevens (Governor of the RBA) and the type of language he uses. You don't really need to know this, but it just increases your chances of finding experienced people who trade the same stuff at you and you will be able to communicate with them easier. >> Here's an example of a trade below... and this trade is really basic. Anyway, you'll find 95% of trades you do, spread or not, are simple and eventually after lots of hours you aren't thinking too much about them and you don't need to explain to anyone why it's an amazing trade. The most important thing that matters is what you do to escape, and what your plan B & plan C is. This is seriously the difference between winning and losing in the long run. That is what I cannot depict in the next picture... Spread between Au 10yr bond vs. U.S. 10yr Note Note: only works during certain time zones and is very saturated. STEP 1 - basic view - 30-min chart... looks like some sort of trend line. Note I am trading the very very part at the end (this is seriously from the past 12 hours of trading). - When I see this, I just want to keep buying dips in the trend all session if it lets me. Every night is different, some times I'll be able to do this 1 time, others 2 times, other 0 times. Note that my profit target is larger than a lot of the algorithms and bots and kids you will see in the market. I do this because I am preparing for 200 ZN trades. Others are only taking about 1/2 my distance of profit. It's all personal preference. Some nights it works for you, some nights it works for them. Just stay consistent and stay in tune with your own tuned execution method. STEP 2 - hows it trading recently? 5min chart - Use small time frame chart to see how its been trading recently. Market changes often. Sometimes they're rangey. Sometimes theyre straight line up/straight line down. - The green line is where I'm happy to enter. The red is where I wanna get out. If it pays quick, I'll just get out who cares. The distance I want is about 4 tnote ticks worth (about 0.8 basis points). - Entering green line = long (Buy XT Aussie, Sell ZN U.S.) STEP 3 - execution - So I'll watch the chart and watch the ladders back and forth and just see what prices I need in the book to actually get the spread price represented on the chart. It changes depending on the time. I just placed a random limit order here to show you how I will sometimes just leave the bid in areas that I'm comfortable being long for 2-5 mins unedged. - I am just a price taker. Many other people like to leg into the notes. I've seen what type of damage to your anus that the tnotes can do if you get legged in them and refuse to enter the spread at a wide/sh*t price... so I just accept the spread price. I'll either limit order XT or ZN and wait for fill, then just immediately market the other one most of the time. - If you do this for 8-10 hrs a day at least, over time you get a feel for how most markets behave STEP 4 - back up plan (most important) -So this is the easily THE most important part of trading that never gets spoken about. The difference between making it and not making it, comes down to analysis like this. I don't sit here watching this chart and doing this analysis before-hand anymore (but it's really good if you're starting.. you must do this if you want to increase chances of making it.) -The vertical point is just a time-region and we are looking at everything to the east of the vertical line. What I did before-hand was look at each of those blue points. What are they? If you scrunch up the 30-min Tnote chart you can see that they are previous levels/regions where the tnotes have topped out. -So what I was basically doing is making my plan B, C, D. Tonight the spread was safe, but very often it can go nasty against you. What I did was plan for future situations.... if I am long the spread (remember: my ZN leg would be short) and the tnotes rally against me and out-perform the XT, then I am going to watch the blue areas mentioned... When the ZN stops there for a good 15mins to 1hour (thats IF they stop) then I will average a little more into the spread. All I am doing is watching the outrights and just adjusting for chances that the Tnotes will stop and retrace. -Now tonight what actually happened was the Au XT out performed the ZN. A buyer came in and swept it up as the ZN was rallying and I was able to exit. Obviously some big guy was watching the ZN and knew it had broken a series of levels up and was going to finish upwards, so he got his order done early and I got paid. -This means that, in the very rare chance, I am actually fundamentally right. There are buyers emerging who want to out-beat the Tnotes. -Now I know why this is fundamentally the case but you dont need to know this to be profitable (it's to do with the Aussie cash bond auctions over the past 2 months which have been bat sh*t low). -This is a smooth trade. 90% of your trades won't be like this. In fact, if I got the original upwards trend-line wrong, I would just sit in the trade and wait it out, wait until the spread ranges, and then average some more. I've planned for scenarios like that all the time. -You can only have the confidence to do this if you do a little back-testing over the past 1 or 2 months, see 'how far it can go' recently and then keep trading it so you know what a small, medium and big 'deviation' is in the same session. I'm not gonna give all the tips here, because that is informational advantage I need to survive. Summary >> The most important part of trade was the last part. What are you going to do when it hits the fan? How are you going to average? Quarter clip? Half clip? Full clip? Where, when? Can you even average? Do you want to be the guy who cuts early and then gets back in? That's fine, just learn how to execute it consistently to make money. Everyone has a different personal preference when it comes to execution. Universally, if you are more patient then on average you will always build positions better. I don't know why but markets just don't pay you for sitting on all bids/offers anymore and making money in between. Its smarter and more efficient now. You have to pick your moments to add and subtract risk. >> I was in that trade for 6-7hrs. The reason why I didn't get out was because it didn't move heaps against me and I was waiting for Tnote activity to pick up. Other days, I might go 3 basis points offside and just be happy to scratch. >> Finally, if the Tnotes actually sold off from the time interval after the vertical line, I would've made about 25% extra profit and it would've happened in the space of 2 hrs. This is why I spread, I don't know what the outcome of the outright is going to be, all I know is that I'm watching a spread which I hope other big instos are too, and I hope we are thinking the same thing. >> Hope you found this post useful. You can apply this very very very basic trading scheme to just about any spread you do.
Sommi, thank you for your reply and for being so thorough. And to answer your question, I'm in the states.
>> I would strongly suggest you get ahold of the following ladders/spreads and start learning one by one: 1. ZN vs. ZB (10yr-v-30yr) spread 2. FV vs. ZN (5yr-v-10yr) spread 3. 4th or 5th STIR vs. 2yr spread (aka Mar14 or Jun14 Eurodollar bill vs. 2yr Note) >> Start by trading the ZN vs. ZB because it moves around a lot more and its more flicky, so your very small size can still be used to learn heaps. The others requires your ideas to be a bit more correct since they're more rigid. The ZN/ZB has orders flowing around that can pay you even when you're 'wrong' simple because of its thin and flicky nature.
Thanks sOmmi. I am following this thread with some interest. Is there any ratio you recommend for ZN-ZB spread and other spreads?
>> Sorry I don't trade that spread or any other American-only spread... but I would advise getting the real ratio from the ICS ladder spread market and work with that. I'm sure there are more experienced people who trade it here that can offer more advice. If you day-trade you don't really get pumped on longer-term over/under hedging and mis-match of hedging be >> If I had to learn it from scratch I would simply just put the two ladders up, side by side. And their charts. And I would either trade the spreads and/or do some outright in the ZN or ZB depending trying to take like 2 or 1 ticks and see how I go.
Why didn't I receive an invitation to trade the firm's capital? No funds from me though. Firms capital is enough. I provide IQ equity, and they provide funds equity. Feel free to PM me.
TJ, the partners saw your FX journal. They were sooooooo close to backing you. Then they read your journal.