Good question. Level2 for me has evolved to be of little value, except for perhaps watching the widening or tightening of the gap between the bid and ask. There is a lot of head faking going on with level2. On the other hand, the volume bars on several different time frame charts as a supposed read on the fear/greed emotions, resulting in the various price and volume patterns, are espoused by some as valuable supplemental information. For example, the theory is: 1. Dryup in volume and potential price reversal. 2. Volume surge or spike followed by reversals (euphoria or capitulation). 3. Steady volume with continued price trend movement. 4. Volume crescendos lasting several periods, followed by decline in volume and subsequent price reversal. I am attempting to pay more attention to this to see if it will be of some practical use in timing entries and exits.
What a great, far-reaching thread.... Disclaimers: I am NOT (yet) a "successful" trader although retooling my biz plan to get there. However, have been successful (lucky) spoos trader, started being a pretty consistent nyse scalper when outside life intervened and have read scores of trading books (and even tech-edited one that is still in print after almost 5 years). Also ran a so-so daytrading shop in the wild and whooly yrs 97-00 where I saw every human emotion possible, up close and personal. So......I have some observations about what's been sed so far. First, I believe the truly great traders have to take at least 1-2 yrs "to find themselves." They have to be in the market long enough to be able to get hammered when the mkt changes. They have to know that they have the fortitude to keep going, the commitment (my moment of truth occurred in oct 97 when I lost $10k of a $20k spoos acct--nothing like sitting at the monitor, trying to get out, and dry heaving at the same time--never will do THAT again). On the positive side, I believe the great trader almost has to have an epiphany--a "oh shit, thats what Ive been missing!"--moment that carries them through to the promised land (at least for now). So, it looks like Mr. Net got there as described in his first posts. Congrats, and good wishes to you. Two, our friend obogdan is very brainy guy, and I would not deign to keep up w/ him. But I do see some real warning signs that he might be consigned to failure in the long run ("In the long run, we're all dead," jmk). I say that because I believe that anything that reaches 85+%success rate as he claims, is almost by definition, overly optimized. This means when the market changes--and it will--that his system which is dependent on so many variables (a red flag of over-optimization) will blow up. I do not believe in the long term viability of obogdan's system. I think two historic examples support my thesis. One, the market will change, particularly the naz he is trading. Think how if abogdan had developed his system in the days of harvey houtkin, that it would have been optimized to play in between the inside bid and ask, when the effective spread was still 1/8 pt. Once the mms caught on to that mkt inefficiency harvey's edge evaporated. Then think of all the other changes since then: teenies become the defacto spread, the rise of the ecns eventually whittle this to speed-play 1/256ths, then decimalization, then a stagnent mkt for a yr+ (leading bright, echotrade, etal to develop mkt on-open plays), you get my point. In order for abogdan's mechanical (perhaps overly-optimized) system to remain profitable, the overall behavior of the mkt must remain constant. And I believe even if abogdan's system has a component of AI, it still wont work--been there, done that. My second observation is based on my reading (supporting the the mrkt-always-changing effects): Check out "When genius failed: the rise and fall of long-term capital management," by roger lowenstein. An exciting read--at least I think those on this thread would appreciate it. The one sentence synopsis: nobel laureates, with MAJOR capital backing, employ some of the worlds best traders and finance managers, carefully develop "zero risk" leveraged futures and option hedges, and relying on the (historic, by the way) pattern that those spreads will ALWAYS close, proceed to melt down the world's financial markets, were it not for a government-initiated infusion of funding to cover the margin calls. (Hows that for a run on sentence.) What did them in? The mathematical concept of singularity. There was a massive non-linear occurance--in this case, the spreads increased, not in just a few markets, but all over the globe (remember the financial "asian flu" and all the markets taking their turns collapsing?) and the nobel laureates and their traders could not get out of the trades--interestingly because their trading system didnt "allow" them to, and because liquidity had evaporated, they could not have, even if they tried. So I see the potential for obogdan's system doing the same thing. So how does one attain success in the long term? I always come back to the individual, someone who uses set rules long enough to survive in order to develop "intuition," but thats another thread.... My $0.02. javaboy
Java, if one needs fortitude to trade then the guy is doomed. After getting acquainted with the way our mind works, I am convinced that trading should be effortless once u get "intimate with your mind", as Bundlemaker put it.
Anybody out there? I dont get it. I give you ingrates my pearls of wisdom garnered through the ages, and you ignore me? ;-> Seriously, I would have thought that Mr. Obogdon would have been compelled to respond to my "guarantee" that his mechanical system will ultimately fail, especially after everybody else seemed to be accepting his pablum. Cheers. javaboy.