It's funny, I've been following posts/threads with respect to spread trading for a while on this forum and Bone has been one of the most consistent/knowledgeable posters on the forum across a wide variety of products. Sure, he talks his book (and has a poorly designed website), but he is happy to back himself up with credible references. I've a few years behind me scalping and spreading various products in a prop firm, and you can spot the spoofers on here a mile away. I've actually taken the time to go through Bone's post history for trading specific posts and believe I've a fair handle on his trade method and business model. There's a lot to be said for avoiding the HFT noise. Personally, I like scalping against them in some products as you get to learn their patterns and make a few ticks off of them. ( A newbie poster, I must be Bone!)
The patterns are continously changing, so how can you learn something which is constantly changing? What pattern works one day does not work the next Bearing in mind there are no scalpers left in EUREX products ( as is evident by Volume ), I would be interested to know what Exchange you are using to scalp? Many thanks
Surely patterns changed everyday before HFT or algo's came to the market? That's the nature of the business/game. If you can recognise a particular set up you have a potential edge. It doesn't have to happen every day or every 20 minutes. The market is more repetitive than you think. Going into much more detail would potentially give away some of my edge. As for markets traded. Well, I look at whatever is moving. volatility can be better than volume. I'd guess that the reason the traders you know are leaving Eurex is because they failed to adapt to the change in market conditions i.e. they failed to reduce their size when necessary. You are very likely to be shaken out of your position if you're an intra-day trader. The algos constantly bring a trade back to your price or try and squeeze you out. Trading small, being nimble and putting it on when the opportunity presents itself is the only way to day trade I think. The other alternative is to avoid the HFT game altogether.
It is not as they have failed, the problem is the volume isnt there anymore in order to absorb the size which they trade being in and out of the market many times a day clipping upto 300 lots.The facaillity that EUREX once provided is no longer there, hence have moved to an exchange which does. As regard reducing size and position trading , these guys are active scalpers not position traders ( eg 5 trades a day looking for 20 ticks- if this was the case they could do that via the spreadbet route- there would be no need to waste life sitting all day at a PC staring at an order book DOM )
I'm not implying they have failed as a trader, but that they failed to adapt to the conditions. Saying I'm a 1/2/300 lot trader looking for 20 ticks and that's it has a short shelf life. What will they do if the volume dries up in their next product? You're example suggests these guys were pulling out up to 300K per day on five trades or six million euro a month assuming a 20 day trading period. They must have got some spankings, especially when the liquidity dried up and the volatility turned up a notch.
No sorry, you have misunderstood.I meant if my buddies were position traders ( as per my example looking for 20 ticks, as opposed to 1/-5 ticks), then fine EUREX would still be a viable exchange to trade.However, they are not they do say 50-100 trades a day trying to nick ticks here and there, and hence require direct market access within an arcade etc.. The positional trader guys ( 5 trades a day looking for 15-30 ticks sort of trader) do not require Direct market access and all the costs associated with it, when the spread betting route is far more cost effective when not looking to actively scalp for a tick here and there all day long.
Ok No probs-What Exchange do u use to scalp on?Or are you more of a positional trader guy and hence still using EUREX? Thanks
I scalp and I spread. European and US exchanges. Multiple products. Jack of all trades, King of None. I sleep at night unless I've a Erueka moment. The market is like a bull in a china shop at the moment. Have you heard of Trade2win? You will find more European traders over there who may have the same issues as yourself.
Ah makes sense I guess, is that direct via the Exchange or spreadbetting for your positional trades ?