Hi Don, Were you doing well trading imbalances close to end of day trading this Spring? Were you entering market on close orders?
Most prop owners (not all) are not traders. They are salesmen/Saleswomen. Nothing is wrong with that. The CEO of goldmansach, merrill lynch, and the big house are salesmen/saleswomen. Their job is the increase profit.
i was referring to prop firms for average daytraders. The prop firms that are discussed on et all the time. Why are you talking about investment banks ? ok then..
I don't get how these yield curve guys are still around. I know guys at different firms who trade the yield curve...and they all do the same exact thing. They have 60 guys at one firm...they all have on the same exact position. The guys at a competing firm also have the same exact trade on. It must be tough when the spread starts blowing out and they are all stepping on each other trying to get out. The ones that I know of will make money 6 straight months..then have a 3-5 day period where they lose their whole year.
My typo, I was referring to the Russell Re-balance.....but, of course, we use the MOC imbalance numbers every day to see where the market will be likely closing or heading. Don
I don't get it either. They basically have a p&l profile of a premium seller in options. They all are trying to lean on the edge they are getting in the cash market, but that edge is just a few ticks. Believe me, that trade has dried up hence why most of these firms expanded into energy and metals spreads.
Don, people use to do that in 1998. You really believe you can tell market direction by the MOC imbalances? Really? I'm not sure I buy that. That technique went out the door with reading the level 2 quotes. LOL.
To me it's a disaster strategy. They put on huge positions to make a half tick or a tick. Then as it goes against them they put on bigger and bigger positions. If they get bailed out great...they make a small profit. But the one time the spread blows out they are screwed and blow out their accounts. I have heard that some of the firms up there tried going into Crude, Gold, stock indexes....but got absolutely murdered trying to use the same strategy.
Yeah I heard the same. most of these firms have scaled back big time in their hiring and got rid of all their dead weight. You know it's funny, there was a lawsuit awhile back that many of the prop firms had against Bill Gross at Pimco when he squeezed the shit out of these guys on a delivery. He bought up all the CTD's in the cash leaving nothing for the prop firms and they were all scrambling around like a chicken with their heads cut off. Incidentally, I think they won the lawsuit.
MOC imbalances used to be free money. Man...back in the 90's when you could put in MOC's whenever you wanted and cancelled whenever you wanted it was like going to an ATM. Especially the last day of a quarter.....hell...Dec 31 each year used to be a huge day for us. Just wait until the imbalances came out...position yourself on the same side....put in an MOC and wait for the print on the close. And if for some reason the imbalance changed, cancel your order and just hit the market at that time. There were always a bunch of stocks with big imbalances that you could make 2-6 points in. But the imbalance trade ended (I believe) when they put in the rule that MOC's had to be in by 3:30 and could not be cancelled. I haven't heard of anyone using that strategy in a long time. From what I an tell imbalances really mean nothing anymore. Another one of my old favorite trades was watching the bond futures close to determine the last hour's trading. If they went out on their highs (and in a screaming way) you could buy bank stocks recklessly. Chase, Chemical,Citi,.....any stock with the word bank in it. God was trading easy back then. Now you actually have to work to make money.....