Thanks S0mmi for your posts. They are absolute gold. I did join a prop trading firm in Australia and left after a short stint and seeing how much BS there is. Its always motivational BS speak and not much 'juice' as you say. The odds of succeeding are extremely low at these prop firms with their desk fees, small clips on non-moving spreads, zero training etc. Better off just getting a full-time job and swing trading on the side. Anyway, had a quick question...what about trading other products during the Asian sessions like the HSI or the Nikkei?
early in the thread you talked about changing your style to more tick scalping (what I do), then later you went back to talking about spreads again. What method are you trading currently?
Hey babe. I cannot overstate just how much junk, filth and False Prophets there are in this industry. And the prop firm situation along with dead volatility in Australia is absolutely no exception to this. A lot of traders I know of are simply surviving because of their bankroll built up between 2008 to 2015 (depending on when they started). Along with this bankroll came size, limits, and a lot just rely on the rebate scheme (from the SFE). I am not in this pool by the way so I am not winging it or on my last legs anymore. If you want a healthy career that has longevity you should never ever rely on the rebates from exchange or you're a sitting duck waiting to blow out. As for trading other products in Asia: When it comes to Outright trading I want you to be aware of something. The "Outright" world you used to know of is almost entirely gone. The point-and-click dream traders of the past are almost all gone (and back then, they were already a rare breed). They were trading based off easy-to-read price-action and fluid movement, large orders/spikes appearing, momentum moves and correlation in play (e.g. if the Aussie dollar was down 50 ticks in the middle of the day, the Aussie SPI and the HSI and the Nikkei would most likely allow you to get short and scalp around) This is important as a contrast to today. You have dwindled volatility and you have a 'factor market', all the algorithms are in there doing correlation trades and going off the same principals of research. Most of the winning rates from Outright trades will hover between 50% up to 70% (just a rough guess). So you definitely need to have an understanding of this and the profit v risk metrics just to get ahead. If you are going to trade the Nikkei and HSI and anything else you need to know that it's not enough to just go in blind anymore. The only Nikkei trader I used to know of, started in 2010, and quit in 2015 I believe. Eventually, the inconsistency of returns and the pain of the swings (on a weekly and monthly and quarter scale) just become too over-bearing. I wish I could bring you more great news... If there are outright traders right now they are probably in the form of either the 1 or 2 guys left with 50,000 indicators on their screen and levels everywhere... or a group of traders with ADL who have statistically backed research and coded their rules to execute trades I have to stress this once again... what I am doing to be successful is to do LOW frequency HIGH probability trades. It's not enough to just commit to a few products or spreads. I really do recommend looking for the same 'setup' across as many indices or products as you can. This isn't a holy grail but its most definitely the absolute difference I see between profitable + efficient accounts versus the primitive one-dimensional traders trying to salvage a career
I went through a very shameful Cuckening period and had to learn many different trading styles and experiment with approaches and philosophies. Right now I am trading bond spreads (2-leg spreads, flys or double spreads). This is not going to change because I am happy with 80-90% win rates and I've backtested these things for ~10 years. I strongly do not recommend Outrights unless you have statistically backed information and an edge which you can quantify. With spreads and research you can start making money from the first 1-2 months. You don't need to wait and develop a "feel" (whatever that means) for the market after 6-9 months and hope that you're still around. And the 50-70% max rates are absolutely garbage for a point-and-clicker. The difference between what I'm doing now and many years ago is that I have an expansive list of products/spreads and I am looking for high probability (lower frequency) type trades. Then again, maybe it will change in a year or so. If there is a world recession again and Central Banks have to cut back to 0% interest rates, we are in for big trouble as Bond Traders and I'll have to move into Outrights again.
Interesting how the nobody came to this thread to read what was posted to newbies and made a comment here. Who is the real idiot then? Thanks ET! For a good response!
Hi s0mmi, Are Outrights referring to directional bets? Would you care to explain what you mean by Outrights? Pardon my ignorance.
Hey s0mmi. Thanks so much for all the insights and direction. I've been trading the Aussie bond markets for a little while now ever since I came across this thread. With the spreads your trading now, are these in the Bank Bill Futures? Are you also trading Eurodollars as well? It seems as though these markets don't move very much so I'd be very interested into hearing your insights into them.
Outright = Single product, one leg (Can also be a spread which is heavily directional) Outrights are explosive in volatility and nature. For example the Bund, can do 3-4 tick ranges over a couple of minutes, but it can go 50 to 70 ticks in quite a straight line over a few hours. Compare this to a spread of some sort; example the Bobl v Bund spread (5yr-10yr spread). Just a few days ago, even though the Bund had an insane range the other day the Bobl-Bund spread range was something like 2 basis points (28 bund ticks) Total distance travelled in Outright = 70 ticks Total distance travelled in Spread = 28 ticks You can reduce your risk by 50-60% simply by moving into products which are fundamentally correlated. This is very important when you start pumping some risk metrics into a trading simulation as you compare win rates and maximum loss.
Hey s0mmi, many thanks for being so generous with your knowledge. You are right about outrights not being easy to mean revert trade. Have you tried trading breakouts for outrights? That might be a more suitable strategy.