Pretty funny to hear talk about averaging with big size....maybe you are right and 9/10 times or even 97/100 times you will get rescued and maybe turn a profit on those trades. But those very few times you that the trade does not come back or there is some big news that is driving you even more offside---you will get crushed--majorly crushed if you are that stubborn. So many blow up this way or it could ruin your entire month or easily your year. The way i look at it now is --there are two outcomes only 1) you average down and get rescued and you break even or 2) you get killed breaking even or getting crushed are not good outcomes, I understand every trader needs to be put offside and feel heat...but personally i dont think you can be too stubborn or else you wont last. I traded in an office once--pretty funny, they hired this guy---he just kept averaging until he made money or broke even, he was making 3-6K a day for a few months---management was happy, the markets were very choppy at the time so the strategy worked well---then it changed and he started to get crushed--management forced him to stop averaging..and he quit
> Something I gathered over my years of trading is that.... Trading is an Art. First, you learn the rules (the colour in between the lines, to use matching colours on your painting brush..) Then, when you're done learning the rules, you break them when the time is right. > You can view your trades as independent, but what I do is I view myself as a discretionary trader, an asset itself. I believe I have an edge, all around, for picking value trades and being able to work my way out of dangerous would-be situations. > There is absolutely nothing wrong with breaking some rules in this game. You know, I have pnl targets? But how? My friends even ask, "that is absurd. how can you have a target you don't even know what the day and night will involve, or the activity levels..." I know it's tough to grasp. But I just do. I've gathered my averages over time. I know what type of trader I am across all markets. I know myself very well. Just like every trader should know him or herself the best they can. > Also, the trades aren't a clone of each other. Example: > I will make $800 in a spi-versus-emini spread > I scalped a tick during the day in the Aussie bonds and made $500 > I scalped a tick in a Aussie 10yr-vs-U.S. Tnote spread, making $1k > Up until this point I'm up 2.3k. > On my last trade, I end up going offside -2k for 4hrs. It won't move. I can't be bothered dealing with this garbage low-volume period, so I am not trying to average/profit from this trade. I'm just happy to scratch. Simply because of how my entire day has run so far. That's the main jist of the flow, how I operate. EVerybody is different. People think about it differently on their own accord. Whatever works for you.... do it! But don't be afraid to learn about others and how others perceive it. > Friend, what you have said is completely true. However, I am talking about the best of the best. They obviously have their own 'averaging' style. They know when they themselves should get aggressive, or passive, or defensive. They are aware of these all. It's just unfortunate when we think of averaging, we think of 9/10 traders who blindly just add size because it's gone a certain distance. This is averaging in its worst form and eventually markets will change, and catch you out, and you will bleed continuously weeks and months on end unless you adapt. > Also your story about that guy who came in and averaged... I have seen that guy appear in my firm many times. Granted, I have not seen this market cycle end yet. But those blind averages, WILL, not be able to survive in 12-18 months. They think they are trading sophisticated now... but I know the truth. In time, you will get caught. Plain and simple.
I thought you didn't scalp, but your best trades today are scalps? At what point do you decide the losing trade you have had on for four hours is a loser? You seem quite confident. How long have you been trading?
> In truth I don't want to scalp but in this particular scenario when you've been in something for 2-3 hours and it's put you offside and you only average a little bit of size... you're happy just exiting for a tiny amount of profit. > Also, funny enough, for the past 2 months my 'bread and butter' strategies have become more and more dangerous. I'm risking 10-20k just to make 1k more often. What I am forced to do, is look to other things, to try scalp money here and there on small substitute size. It keeps me in the game, and if I go offside in my bread-and-butter stuff, then I don't need to average hard in them... I can just let them ride. OR, I can just 'wait' because I don't want to take a crappy price yet. If you only trade 1-2 products, on every single half-move they do, you will be inclined to enter them. To be honest, most even big traders are complete scalpers. However, they do not just exit straight away for a small loss. They always work around to see what they can try and do. The big guys at my firm are not running massive 500-lots for like 8-10 ticks here and there. Trust me, they are taking a tick when they are approaching that size... I'm serious. Most of them are scalpers. If they 'build a position' they'll have a target on their core size but the majority of their size is to try to job little amounts of ticks here and there. > I decide it's a loser because of the specific time frame I'm doing it. The euro session is closed.. I'm in Australia.. its 2am... and when it lets me scratch at 5am I am out. The alternative is to wait till 8.30am to try see if it maybe pays a tick. Not worth it to me... since I was awake at 8.30am the previous day. This game is all about sitting in front of that screen, doing your hours. When markets change, or get sh*tty, or get dangerous, you know them as soon as it happens. You get first hand. Algos and bots need to trust back-testing for 3 months. For example, I noticed from Day 1 that holding an Australian equity spread into its re-open @ 9.50am was not guaranteed money anymore. It worked 4/5 times for 2-3 months straight. But then it stopped, and the spread was only 50% chance of making money, or losing a little, or opening at scratch. So you need to get out immediately on that re-open auction. > It's constant variables like this which are toggling through out the day. There's no perfect rhythm. You need to be able to apply yourself in all these scenarios. It's not a gift from God.. just practice and focus and discipline and journalising everything over time. You just get gut feelings over time. If you don't like how the chart looks, you just get out early. > I'm never really confident in this career. Some would say I act confidently but trust me, I have very low self-esteem and confidence. When nothing works in this job, it won't be 1 day.. it will bleed you out for 2 months while you struggle, toss and turn to adapt. It can take everything just as quick as it gave you the hope of making it. I've been here for 2.5 years. For the first 1.0 years I made ZERO. I went through multiple products, trading for free, living off nothing, finding my own things and creating stuff. But right now, I have skipped the 'cruise for a few years' period of slowly staircasing size. I'm aggressively adding to my account. I only see myself getting marginally, very marginally, better over time in the next 2-3 years. I know how unsophisticated the big guys are sometimes, they're not geniuses.... it should prove to be inspiration for those who want to tackle the big numbers game too. The only confidence I truly have.. is that I have copied the masters of the game. I know how to scale up. I know everything I need to do, in order to be a 7-figure trader in a few years. It's just a matter of building dollars in the account to back myself. I copied everything. I asked the right questions, and listened to the right people and took on board the best stuff. I share everything on this forum under this account. There are a lot of c*nts in this industry. Ruthless, pathetic, scumbags. And most of them are sh*t traders too. I won't be like that. Our oldest trader, who's been profitable for 20 years and never had a down month, said to me... my greatest asset is that I'm a sponge. I look, learn, listen, to everyone. Whatever info they have, I'll take it all in, and re-work it in my head. Just copy the best bits from other peoples stuff, you'll end up somewhere great with your own list of pearls. Sometimes the answers in this game are right infront of you. It just takes a little push to get your ideas executed.
Are you ever worried about having all your size on in your losers and never having any size on in your best trades, the ones that go your way right off the bat, because of averaging? Also, I'm really confused because first you said that all the big guys didn't scalp. Then you say when they have their biggest size on they are just looking for 1 tick.
Thanks for the post. Not many insights from prop firm traders on this board (maybe cause in the US they are dying).
Well from reading ET it seems that after '08, prop firms are diminshing, due to any number of factors, more regulation, high frequency trading eating their lunch, etc.
Thanks for giving such good insight into how successful spreaders operate. Can you give us any more colour on the outright traders at your firm? I'm curious to know whether they fall under the market maker or directional category more.