Those who know...

Discussion in 'Trading' started by Coinage, Feb 21, 2011.

  1. Coinage

    Coinage Guest

    Good morning,

    For the last three years I have dedicated myself full time to the study of the markets. Prior to this I saved a reasonable sum of money to cover my living expenses and for the last couple of years I have been day trading the more volatile liquid futures in small size.

    During the first year of my journey I did not trade. I simply studied the markets with the following basic tenets:

    1. The markets are not random. They are controlled by those with the capability to do so. Indeed, to think that a source of such enormous wealth would be left to operate in a random manner is nonsensical.

    2. Those operators controlling the markets collaborate with each other. Their aim is to exploit the ignorance of uninformed market participants and this can best be achieved if they are not acting against each other. However, to think that these interests communicate directly (e.g. via email, telephone) is naive in the extreme. Since it is ridiculous to think that they personally know each other they must communicate using the single medium common to them all, that being the markets themselves.

    3. The medium of communication (market data) is accessible to me so, with a sufficient level of study and experience, I should be able understand the language used by these participants and read their intentions.

    4. The goal of any operator is to make the maximum amount of money in the shortest possible time. Therefore, since liquidity is not a limiting factor for the small independent trader, the best approach is to try to capture the intraday swings of those markets which offer the best balance of daily volatility and liquidity.

    5. Trading is gambling and as such the management of risk is the most important consideration for any operator.

    With these in mind I developed a system to trade the most applicable futures products (mostly energies, metals and currencies). This strategy has been operating profitably since 2009.

    During this time I have lurked silently on ET, reading a good deal of the posted material, with a view to establishing one thing. Who knows, and who does not. I have concluded that the fraction of the readership that fall in the former bracket is tiny. But I suppose this is to be expected…

    I have not posted on ET during this time for two reasons:

    (1) I do not feel it would be prudent to publicly share most of the knowledge I have gained.
    (2) I do not wish to participate in debate where the general level of respect shown for other contributors is so low.

    Throughout the vast majority of this site the blind are leading the blind. When their view points are questioned they have a tendency to start foaming at the mouth. However, very occasionally a member will surface and the quality of the material they post will make it clear, to me at least, that they are one of the few that understand. These contributors do not surface often though and, predictably I suppose, are usually quickly set upon by the rabid mob for presenting alternative ideas which challenge the mainstream thinking.

    I wish to strike up a dialogue with those others that understand the true workings of the markets in order to exchange ideas. As a trader I do not come to the table without information to trade. I have what I believe to be some valuable insight to swap with other suitably experienced market participants.

    The question is how to establish such a dialogue. Obviously the discussion must take place out of the public gaze and must only be between suitably qualified operators in order to prevent information leeching by the lazy or irresponsible. Since I know someone will suggest it, let’s remove the idea of making market calls to display proficiency right away. During trading hours I am fully focused on the markets and will not be spending any time on this, or any other, internet forum. To be honest, I seriously doubt that any professional players regularly spend time here during trading hours.

    Perhaps the best way would be for me to kick off discussions with the following tenet which I developed soon after starting my period of study:

    One of the main concerns of those large interests that are capable of moving the markets must be liquidity. Therefore, understanding the relationship between these interests and liquidity is key in predicting future market movements. (As an aside, I am sure this is one of the main reasons why the majority of small independent traders fail. Because they are not affected by liquidity constraints they are not stimulated to take the time to understand the modus operandi of those participants that are.)
  2. NRITV


    Hello Al

    Let me Thank You in Advance for contributing to this thread. Really appreciated.

    I have been looking at the markets for quite some time now and I think I am in the right direction. I would like some experienced people to advise if I am following the right path.

    After trying numerous methods, I came to know that the best way to gauge the market is with Resting orders(DOM). I started looking at the DOM and it was very painful. I tried for couple of months but just gave up. At last I created a program where I am able to get the real time values of BEST BID/ASK. I do not care about the other values in the DOM just the best bid/ask volumes. I am also able to get only those volumes that are above certain size and all this happens real time. With this I am able to make some sense of the market.

    My question; Do you pros use Best Bid/ask volumes. If so how?. Please let me know if I am not making any sense here.

    Thanks again..
  3. Coinage

    Coinage Guest

    Who is Al?

    A more pertinent question would be to ask how would you use order book data if you were looking to move real size?

    Clearly this thread has not attracted those ET members I hoped it might. It is possible that they no longer participate in this forum. As such I'll let this thread die...mods could you please delete if there is no further activity.