For those of you who trade at prop firms where you have access to the electronic que in futures and mainly SCALPERS, do you guys mostly work the que position,or hit bids, or lift offers? I ask because Im trying to figure out which method has the most "edge" I know of one trader who gets in the office VERY early in the morning, about 1 hr before the open to put his orders in the que to be in the front. He does very well, so Im wondering what the ET's opinions are. Buy the way I use Xtrader if that matters at all.Thx
If you're good at "forecasting", being first in the queue can be valuable. It's only a problem when the market spikes through your "supportive" orders when you're initiating new positions and doesn't retrace at all. If you're indeed a scalper, you ought to be hitting bids, taking offers & placing limit orders close-by as you follow the market without being too concerned about arbitrary price levels.
dhale75, What contract(s) do you trade and how do you trade it (do you pick levels where you think it will reverse or do you read the order book to know where the next tic is going to print)? Cheers, TRADERguy
It depends on the contract but a queueing strategy is a definite part of the overall strategy of almost everybody I have traded with. I certainly use it. Basically, if you've got some decent levels that you want to potentially get in at and you're early enough in the queue, you have the luxury of letting that order get filled and having the time to assess whether you really want that trade or not without getting shafted. Obviously sometimes the market will go straight through your level and make you look stupid but if you know what you're doing and can read flow, a high percentage of the time you will be able to scratch the trade before it trades past your price. This is all good and well but if oyur commissions are high, you might use this idea a bit more sparingly. Scalpers and position traders do this- it's all about identifying a level and making sure you get filled at it and/or have the time to change your tune. The value of doing this does widely vary depending on what contract you trade (with Euribor you'll probably be spending all f*cking day in some kind of queue, in FX you've got to have a high risk appetite to be calling tops/bottoms) but everyone with a brain queues up. On the flipside, daytraders need to be wary of the inevitable bullsh!t information that is offered to you by watching queues. Anyone who has traded for more than 5 minutes has been subjected to and must learn from flipping/spoofing if you ever expect to make money. It's because so many people were successful (going back a couple of years) by analysing queues, that people like Paul Rotter have created an edge that they can exploit. Assessing queues now is as much of a skill in itself as trading by using ta/fundamentals. I'm assuming you are quite new to trading so this might not make sense now but you'll figure out what I am trying to say with time by yourself...... or you'll go broke without knowing why. Looking at the idea in a broader, more objective way, if you're dead certain about a move and you want to be involved, then you should at least have the confidence to hit the market rather than waiting at one price above/below. However, it depends where your stop + pain threshold lies...... At the end of the day, like every decision in trading, you need to use your own initiative and experience to decide which tactic to use. You might be queueing all day at one price for a trade you may/may not want to execute when the market gets there whilst hitting the market whenever you see fit inbetween. You have to figure it out yourself. All I will say is make pretty damn sure you pull all your orders before NFP...
Nah, Im not with Refco. Im with a new start up firm. Thanks for the reply. I am aware of all the spoofing and BS in the markets. I trade the ZN (10yr) and the biggest spoofer in that is probably one of the Brumfields I am told.
Yeah, Hardy tends to spoof a bit, but it does actually trade that price usually (often 1000 times plus), whereas in the Bund it will be spoofed/flipped and does not always trade that size. Often times he is doing that to attract the big Goldman orders and other big paper, or to get them to bid it up or offer lower to his advantage so he gets the high/low of the move. Essentially I have learned when working the order book that you can give up the edge (hit bids or lift offers) in the meat of the move, but might want to place yourself in the que early if you feel a top/bottom has been made.