5% of traders that make money

"This is why we teach our people to trade on the same side as the Specialist "

There is something so zen about this kind of statement. Like, always trade with the axe. That would be great if you knew who the axe was. LII makes it impossible to discern real buyers/sellers, even on volume. COT trends are practically meaningless as predictors (so many people like to pt. out the correlation between retail/specialist as a predictor to 2000 crash, but there are numerous failed cases afterwards).

The only way you could know if you traded on the same side as the specialist, is if you had order flow or TOS prints afterwards. Anything, other than that is speculation.

I'd be curious to know some objective way of knowing you are on the side of the specialist, without knowledge of hindsight.
-------------------------------------------------

Regarding the edge...

It seems to me that the majority of successful traders have had some form of insider info to get an edge...

Jesse livermore-- was connected on the cotton trading, and explained how he would dump while retail was buying.
"R.O.S"

Marty Shwartz--- hey marty, i got a tip for ya about a company that's gonna get bought out. He put in tons of his hedge fund money on that tip.
Talked about how the other huge hedge trading wizard called around for tips.
"Hey Jack buy me mzaarrppph."
"Pit Bull"

George Soros---
"Baker and key finance ministers huddled... Soros learned about it and quickly realized what the finance ministers were about to do. He worked through the night, buying millions of yen."
"Unauthorized Bio"

Cramer--
So then the big three specialists called cramer and said, "you weren't on the other side of the trade were you?"
"Trading with the enemy"

It seems that with the abundance of books on great speculators, I can always seem to hone in on the little obscure sections were they seemed to violate their own rules of the 99% of the rest of the book's advice, and made a killing on some type of inside info.
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I think the only edge that out of the loop and honest traders have, is risk management and position sizing.
 
personally i think that if a firm is in the broker business it shouldnt be allowed to have a prop desk/trading unit,,,its like a conflict of interest
 
Gentlemen

Pure agent of principal's(not traded from proprietary account)

Ameritrade (after selling interes in NITE)
Optionsxpress
MBT
Thinkorswim(but founder is ex-market-maker and based in
Chicago)
Rush
RML/Integrity
Questrade


IB is market -maker

All future's broker's are FCM (traded from proprietary account)

Dorman,GB,Trademavern,PA,TA,OEC


Statement's about China Wall have not matter .

Some of ex Investment Banker's stated ,that China Wall is not
problem .

Your respectfully
 
Quote from dtrader98:

I think the only edge that out of the loop and honest traders have, is risk management and position sizing.
More...

I'm not certain what your definition of edge is but mine (and most short term traders') edge is recognizing a pattern of price volume behaviour that leads to profitable moves and then, after testing its historical validity, trading it with entry, stop and exit rules.
 
Great post, very well thought out and articulated. I too would be absolutely shocked if this were not true. However it does happen, then there is surely something tradable for others that somehow have access to information. Its much worse in the currency market I have heard.
 
Quote from dtrader98:

"This is why we teach our people to trade on the same side as the Specialist "

There is something so zen about this kind of statement. Like, always trade with the axe. That would be great if you knew who the axe was. LII makes it impossible to discern real buyers/sellers, even on volume. COT trends are practically meaningless as predictors (so many people like to pt. out the correlation between retail/specialist as a predictor to 2000 crash, but there are numerous failed cases afterwards).

The only way you could know if you traded on the same side as the specialist, is if you had order flow or TOS prints afterwards. Anything, other than that is speculation.

I'd be curious to know some objective way of knowing you are on the side of the specialist, without knowledge of hindsight.

We know when we're on the same side of the Specialist quite often. During "opening only" trades and MOC's when there are imbalances, of course (this is a function of NYSE rules). We also "know" when they do sweeps, which happens often with the new hybrid system. The Specialist must "accommodate" orders, he cannot participate on the side that causes the sweep.
-------------------------------------------------

Regarding the edge...

It seems to me that the majority of successful traders have had some form of insider info to get an edge...

Jesse livermore-- was connected on the cotton trading, and explained how he would dump while retail was buying.
"R.O.S"

Marty Shwartz--- hey marty, i got a tip for ya about a company that's gonna get bought out. He put in tons of his hedge fund money on that tip.
Talked about how the other huge hedge trading wizard called around for tips.
"Hey Jack buy me mzaarrppph."
"Pit Bull"

George Soros---
"Baker and key finance ministers huddled... Soros learned about it and quickly realized what the finance ministers were about to do. He worked through the night, buying millions of yen."
"Unauthorized Bio"

Cramer--
So then the big three specialists called cramer and said, "you weren't on the other side of the trade were you?"
"Trading with the enemy"

It seems that with the abundance of books on great speculators, I can always seem to hone in on the little obscure sections were they seemed to violate their own rules of the 99% of the rest of the book's advice, and made a killing on some type of inside info.
-----------------------------------------------
I think the only edge that out of the loop and honest traders have, is risk management and position sizing.
More...

Having enough capital to participate in strategies that work, like M&S, pairs, opening only, market making, etc. is an obvious "edge". Trying to pick a stock or market direction is pretty difficult without the illegal information you describe above. Being in a group where a lot of detailed research is done, is certainly an edge. Being able to use a couple of $million dollars every day is quite an edge too, I believe...I know is sure helped my brother and "back in the day".

You're right, it is all in "what you know" - but most people "don't know what they don't know" as the saying goes...that's where we try to help.

All the best,

Don
 
I TOLD YOU SO! Read the end of this story.

http://news.yahoo.com/s/nm/20070301/bs_nm/insidertrading_dc_2

Just like the drug dealers I mentioned, they used anonymous throw away cell phones, DUH :D

The SEC said those involved in the schemes used clandestine meetings, disposable cell phones, secret codes and cash kickbacks to conceal their conduct, making profits of up to $15 million over five years.
More...



Quote from traderdragon2:

Anyone who doesnt think this is going on is naive.
With millions at stake, it becomes easy to talk thru secret channels without ever getting caught.

Hell, anyone can get military grade encryption with chat clients and talk directly to the guy on the other side of that firewall on a third party server, out on the internet, and the SEC will never trace them or crack their communications.

Its a complete joke. Its too easy to do, and there is lots of free software out there that will enable you to do it.

Hey wait sec, why go high tech like this at all? Just buy a prepurchased anonymous cell phone and talk all you want with the other guy.

Drug dealers do it, surely youre smarter than a drug dealer mr hot shot broker LOL
More...
 
To Don Bright,

When you say to take to trade with the MM, what do you say about the following:
If retail traders took a big position let's say in a small-medium cap stock, does that create a "need" for the stock to turn against them? (If yes, in the short run, intermediate, or long)?
 
Quote from Option Trader:

To Don Bright,

When you say to take to trade with the MM, what do you say about the following:
If retail traders took a big position let's say in a small-medium cap stock, does that create a "need" for the stock to turn against them? (If yes, in the short run, intermediate, or long)?
More...

No "need to turn against them" - no "needs" in market ever that I know of....sure, supply and demand might cause short covering, etc. - but because most professional traders are hedged or flat most the time (as most Specialists try to be at least crossing the zero line daily or weekly). Time frame doesn't matter that much when hedging, of course.

Don
 
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