Trading like a Local

Discussion in 'Financial Futures' started by SPARtrader, Oct 4, 2011.

  1. Hi,

    I have read a few of your posts on ET, so thanks for contributing :)

    But to your point, I think just trying to buy bids and sell offers is now the realm of co-locators and computers. I agree that a human just trying to do that will end up being too slow/inefficient.

    But, I think, that does not mean that there are better times to "open the shop" to buyers and sellers than others, and I think (hope) that it takes a human to decide when these times are, it's not something that can be programmed into a computer.
     
    #11     Nov 18, 2011
  2. Hi

    good to know :)
     
    #12     Nov 18, 2011
  3. Hi,

    what caveats please?

    As I said in another post, I understand fill algos and stuff. I don;t expect just to post bids/offers and wait for the cash to roll in :)
     
    #13     Nov 18, 2011
  4. Yeah, commissions are something on my mind. I think overall plan will be build a track record and then try to get in a prop shop with much lower commissions than I'll start out paying. Leasing seat on exchange is also possibility depending on progress.
     
    #14     Nov 18, 2011
  5. i did reply to all the posts, if they don't appear by tomorrow i'll re-reply to the other 2 :)
     
    #15     Nov 18, 2011
  6. Hi,

    Obviously trades can go against you, but earning the spread (I think) doesn't just mean taking one tick winners. You could ride it up 4 or 5 (or 40 or 50) ticks, the idea is that you get in on one side and out on the other. The ticks inbetween are, in essence, "noise".

    Also, from watching markets, I think that it's OK to hold a position that has gone against you by a small amount, and still try to earn the spread but on a trade that has gone against you. But, small movements in one direction tend to bring about bigger movements in the same direction, and before you know it you are sat on a massive loss. I guess it's just a case of knowing when "too far" is and paying the spread just to get out ASAP. and the discipline to do it!

    I have traded off a DOM before (no strategy, lost money, stopped), so I know about order cues and stuff.
     
    #16     Nov 18, 2011
  7. Hi,

    i agree that if it was just a case of posting bids and offers then a human being would be outperformed by a computer (I think at least).

    But, I think, the overall market which absorbes all the "flow" is mostly a limited number of humans (like a big poker table), and if you can see where another human is caught somewhere, you can start posting your own bids/offers to give you a little bit of an edge. I think (hope) that this part of trading needs a human to do, not a computer.
     
    #17     Nov 18, 2011
  8. I am aware of that, but how does he determine when the are buying or selling outright vs. hedging? I don't think they would telegraph their moves that easily?
     
    #18     Nov 18, 2011
  9. There are a few markets that algos have dominated just yet.
     
    #19     Nov 18, 2011
  10. the idea of 'earning the spread' as a strategy has always interested me, although I don't think i've ever really understood it, so i'll look forward to your video.

    What market would you do it on?
    Could you do it on the ES? Wouldn't you want something with a big spread and something less liquid?

    When people have spoke about it to me in the past, they make it sound like free money; ''just buy the bid and sell the ask and pocket the spread'', but that makes me instantly skeptical.

    cheers
     
    #20     Nov 18, 2011