I apologise Pussycat. In light of some "on the money" commentary in the "god and trading" (oops.. that was "age" and trading) thread...(whatever happened to that anyway?? - seemed we were so close to an answer!) and other gems such as the one above...I really have to retract a comment I made on another thread (which I now hope you didn't read) that you had nothing better to offer than some snide remark. Forgive me. Daniel
"Trading is as easy as you'll let it be, or as difficult as you want to make it." I've been saying that for years....it is easy, not necessarily simple, but if you don't "over complicate" it - you'll have a much better chance for success. Don
There is a popular game played at carnivals, the object of which is to hit the head of a joker as it pops out of one of multiple holes. Most people will "lose" this game by continuing to watch where the joker once was. When I watch many market players reacting to the markets natural coiling and uncoiling tendency, I am comically reminded of this game. After an explosive move to the upside (Think last Tuesday) everyone is all hyped up and ready to go. Unfortunately for them it is normally at this point that the market volatility cycle begins to coil, and in the process separates most traders from their money. After several days of chasing the joker (momentum), traders become disgusted with themselves and the market. They decide now is the time to play it safe, or stand on the sidelines. Its at this time that our joker will jump out of his box and make a surprise return. A heads up, the joker is still in the box and if you listen very carefully you can hear his giggle as he is preparing for his brief return. The market is currently coiling tighter than a mad Arizona Rattlesnake ready to strike. Fridays 7 point range in the SP500 gave us an NR7 (narrowest range of the last 7) trading day, which as displayed by Toby Crabels research in his book "Daytrading with Short Term Price Patterns and Opening Range Breakouts" commonly occurs before a strongly trending day. Additionally, the ADX on the 120 minute chart is at lows not seen since 4/02, and the hourly SP500 chart is lower than at any time since 4/09. This shows us a high degree of trendlessness in the market. Often, this precedes a period of explosive trendyness. What does this tell us? It simply tells us not to be watching where the joker just was, because he is going to return right over there! Our little Joker (Mojo) is about to return. His presence will be fleeting, but for those who are ready and nail him on the head the carnival barker has a nice prize. Brandon Fredrickson
Don, Humans will naturally have to run/guide the system. In the US the options pits are open outcry, thus you need people in the pits. I pointed to the S&P rating as it goes into more detail than I would be willing to provide in regards to our trading. (For the most part, I imagine people with successful systems prefer not to talk about them). In Asia we do not have any floor traders. Upstairs we do "guide" the system depending on certain factors and we do speak to brokers (computers don't pay commission and thus we are blackmailed into paying brokerage - i.e. they won't hit us on the screen unless we pay - that's a story for another day). But for the most part, we let the system do its thing. As for whether or not we are automated, you be the judge. Worldwide the group has 400 or so employees. The prop side does about 200,000 trades a day globally. Of the 400 employees, only a couple dozen (outside of floor traders) are upstairs piloting the trading. Even taking every employee into account, that averages to about 500 trades per head per day per employee. This doesn't include the brokerage side of the business. You could argue that on a macro level there are people managing the system and thus it is not fully mechanical. But literally having hundreds of thousands of prices electronically updating and being sent to exchanges around the world on virtually a 24 hour basis could not be done w/o a mechanical system.
Hi Def...I have complete respect for your firm and their prowess in the business, and feel that if there is a "leading edge" in this business, that you guys are part of it. When "Bright" was trading actively in Chicago, it was Blair (Hull Trading), CRT, Steve Fossett, you guys (and us, and we were "dancing as fast as we could to compete with your teams) doing a big chunk of the derivatives trading. Although we "went full circle" - back to equities trading, we still refer to those days as the "good ol' days" - and we fully realize the progress that you all have made. Many times I have mentioned Timber Hill as one of the strongest competitors on the Street. Your "human assisted" automation is something to be proud of, and is used to a lesser degree by a couple of groups within our business. To a lesser extent, however, since there is not as much need (or opportunity) for "cross market" arb's as there was once (with us, that is...since we stick to the basic markets). I'm still waiting for the computer that we don't have to take phone calls from, who doesn't need to be reminded about their risk, and doesn't end up with a zillion "out trades." keep up the good work!
Perhaps the representatives of professional firms could give us some data on income distributions for their firms. E.g., what percentage of their traders year to date have made: - less than $0. - $0 to $10,000 - $10,000 to $25,000 - $25,000 to $50,000 - $50,000 to $100,000 - over $100,000. This would answer most questions regarding "if anybody is making any real $$$". If this information is confidential then perhaps we could get turnover statistics. I.e., what percentage of traders leave each year. That would be an indicator of the failure rate. (We can assume that the vast majority of traders leaving are because of failures.)
The bond gave a decent example of this with its earlier action today as well, though not nearly as good as the stocks did. Hope some of you caught the move yesterday. Good trading. Brandon
Aside from becoming aware of volatility and how it coils and uncoils and how this effects your trading, a few other things I would suggest to someone who is having a hard time. First, probably trade a bit less during the day, and reduce your size. I would'nt say to paper trade or stop trading though. Think of Jordan, when he has an off game, he gets back into the zone by shooting. And also, as Tony Oz pointed out in his new book, if you accumulate a lot of paper trading profits, its more likely to be upsetting than helpful. Also Id say to be aware of gaps, especially gaps that remain unfilled. Those are very strong. CECO is a good example today, I have the chart attatched below. Whenever you see a stock gap up, if its going higher, then basing and not filing in the gap..that is a strong stock. I would also say two other things to stock traders, first we are have definatly been in a market of stocks, not a stock market lately, there are leaders and strong gainers every day, many of them small and midcap shares that don't give a damn what the futures are doing. Also, just that stocks are not the only market out there. Grains have been nice, meats, the currencies have been experiancing great moves etc. If you are a trader, then there is always something out there. Brandon