Today's action

Discussion in 'Trading' started by jerryz, Aug 8, 2006.

  1. Now I'll be a bit more daring: I believe EVERY retail trader who was at the computer at the time of the announcement and saw the market taking off, immediately changed their mind about market direction, and got messed up--if they had enough time to place orders.
    #31     Aug 9, 2006
  2. Yeah, thats why they are retail , not pros.

    Get real.
    #32     Aug 9, 2006
  3. romik


    So according to your judgement EVERY pro went short then. Nice assumption.

    EDIT: I think you treat retail amateurs and retail pros as one group of traders. Some actually do earn their living through trading, so there is a BIG difference.
    #33     Aug 9, 2006
  4. m4a1


    i think there are institutional amateurs and institutional pros too. who says just because a trader trades institutional money then it automatically means the guy is a pro.
    #34     Aug 9, 2006
  5. If I may add personal experience(s) myself:

    As an OEX - SPX option trader from mid-1999 thru early 2002, days like 8/08 would have been pretty tough for me. I'd try to guess market direction ahead of the Fed news and adjust trades accordingly. By the time I was long puts one way and/or long calls the next, a third option trade attempt would have been ignored.

    I did make a lot of money trading index options (after losing a ton in the process of learning how) but I definitely had a lack of nimbleness (if that's a word?) during whipsaw conditions.

    Yesterday I dabbled lightly in ES ahead of 2:15pm EST to the short side, which promptly got stopped for -2pts in a nanosecond. When price action hit R2 values in ES and ER, I shorted 1/2 positions in both. Switching to 233 tick charts for the expected fast action, second 1/2 of normal positions were shorted into at obvious breakdowns.

    From there I piled on the shorts and let it run for +6pts ES and +7pts ER total from blended entries value. Exited those, tried shorting again too early and got stopped out for -$100 per contract each. Shorted one more time into the final hour dip and caught +3pts in ES and ER.


    Moral of the story? That type of fast decision - trade execution was impossible for me as an option trader. My mind was totally geared to guessing price turns to buy premium cheapest. That had me in <i>predictive</i> mode, rather than <i>reactive</i> mode of thinking.

    When we try to predict market action, we tend to marry that bias in our mind. Perhaps I shouldn't speak collectively for everyone, but that's what happens to me.

    I only trade reactive now using method tools... no predefined system signals or any type of predictive measure. That helps reduce (never eliminates) tape bias and refusal to see the market for what it is right now.

    I've learned thru my career (painfully, may I add) that avoiding market predictions and forcing myself to trust the chart signals = biggest profits and easiest trades. Invariably, when I slip back into the old habits of doubting what the charts indicate and relying on logic - reasoning - gut feel is when I lose money instead of make money.


    So... my observation is that 8/08 session and many Fed days are tough for option traders. Guess correctly, profit handsomely. Guess wrong, watch a missed fortune roll past. I don't mean to imply that option trading is anything less than emini trading, but range move swings like yesterday (and so far today) are readily handled by experienced emini traders.

    Hope this helps :>)
    #35     Aug 9, 2006
  6. I definitely believe pro's got hit too, just that they're more experienced at monitoring manipulations. Seemingly, it's the selected group of billion dollar specialists who are the ones. And they didn't have to know what the fed was gonna say in advance to be able to coordinate this.
    #36     Aug 9, 2006
  7. I'll give you some free advice.

    You seem to need it.

    Paste this on yoUr monitor, (dont cover up the quotes, though that might actually help)


    #37     Aug 10, 2006
  8. A big difference between specialists not wanting to GIVE away free money for their own protection, versus to TAKE away others money for free till you eventually know ALL their corrupt turf rules.
    #38     Aug 10, 2006