A Retail's Day Trading Experiment

Two things I would like you to answer. Paper trading is not real...You REALLY need to look at the market makers.

Every time you put in your bid/ask, MMs will jump in front of you. You know that is a given. If you don't know, you have a problem...A big problem. They have the ability to jump you by about .0001 seconds, to be in front of your bid/ask (and they will). That is the biggest thing you are not seeing.

I deal with MMs all the time, buying and selling stocks and options (manually). I (as a retail investor), have to drop below/above them to get my fills. I don't think you see this.

Could you please give us two paragraphs of how market makers work. That will tell us truly where you are in trading.

The other question is a Black Swan event. Please tell us what you know about them and how you would handle them, when (they will happen) it occurs. If a option (or stock) drops 20% in a second (market halted for some reason), how would you handle it? Thanks...Cabin

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwi-kqvXxLyBAxWlOTQIHRW4AMEQFnoECA4QAQ&url=https://www.investopedia.com/terms/b/blackswan.asp&usg=AOvVaw31Wpbicxm-tZIjHp-gM_Ve&opi=89978449
 
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Cabin111 said:
Two things I would like you to answer. Paper trading is not real...You REALLY need to look at the market makers.

Every time you put in your bid/ask, MMs will jump in front of you. You know that is a given. If you don't know, you have a problem...A big problem. They have the ability to jump you by about .0001 seconds, to be in front of your bid/ask (and they will). That is the biggest thing you are not seeing.

I deal with MMs all the time, buying and selling stocks and options (manually). I (as a retail investor), have to drop below/above them to get my fills. I don't think you see this.

Could you please give us two paragraphs of how market makers work. That will tell us truly where you are in trading.

The other question is a Black Swan event. Please tell us what you know about them and how you would handle them, when (they will happen) it occurs. If a option (or stock) drops 20% in a second (market halted for some reason), how would you handle it? Thanks...Cabin

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwi-kqvXxLyBAxWlOTQIHRW4AMEQFnoECA4QAQ&url=https://www.investopedia.com/terms/b/blackswan.asp&usg=AOvVaw31Wpbicxm-tZIjHp-gM_Ve&opi=89978449
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Good to hear from you @Cabin111.

1. Someone told me we retails do have an advantage when there are two orders of the same price. Exchanges dictate that retails got filled first? You tell me. I don't know much about market makers except they are the middlemen like specialists on the NYSE.

2. As for my trades real or paper, once I decided to trade, I always used market order and assumed the risk of a sudden price move in order to always got executed. I don't want to lose a trade because of a few cents. With Schwab on every real trade, once I clicked market and it displayed a price, invariably I always got the quote or a better price, never a worse than price. For me, that is OK and that was what I used in my paper trade.

3. As for options, I always used limit order, never market. Black Swans and special situations? I love special situations, have been hunting them for a few years now but I won't comment. What I can say is I never wrote any options after about 2015, always longed, single leg, directional. I like my risks to be well defined and bounded but profit unbounded.

4. I did try to learn how to trade butterfly from @destriero, @TheBigShort, @taowave... but outcome wasn't satisfactory so it is still WIP. I will go back to butterfly after I finish my day trading experiment. To me butterfly is a very elegant instrument requiring lots of skills and I like that.

Best wishes.
 
ironchef said:
Good to hear from you @Cabin111.

1. Someone told me we retails do have an advantage when there are two orders of the same price. Exchanges dictate that retails got filled first? You tell me. I don't know much about market makers except they are the middlemen like specialists on the NYSE.

2. As for my trades real or paper, once I decided to trade, I always used market order and assumed the risk of a sudden price move in order to always got executed. I don't want to lose a trade because of a few cents. With Schwab on every real trade, once I clicked market and it displayed a price, invariably I always got the quote or a better price, never a worse than price. For me, that is OK and that was what I used in my paper trade.

3. As for options, I always used limit order, never market. Black Swans and special situations? I love special situations, have been hunting them for a few years now but I won't comment. What I can say is I never wrote any options after about 2015, always longed, single leg, directional. I like my risks to be well defined and bounded but profit unbounded.

4. I did try to learn how to trade butterfly from @destriero, @TheBigShort, @taowave... but outcome wasn't satisfactory so it is still WIP. I will go back to butterfly after I finish my day trading experiment. To me butterfly is a very elegant instrument requiring lots of skills and I like that.

Best wishes.
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The MM's computers will jump in front of you because they see you (retail investors) coming in.

I believe they will also jump in front of you during a black swan event.

Eyes wide open...
 
Schwab sells customers order flow info to offset zero commission for online equity trading. It’s not really free. We pay with our orders being visible to MMers, etc.

The real test has to be trading in real $. There’s no other way around it.
 
Jzwu2017 said:
Schwab sells customers order flow info to offset zero commission for online equity trading. It’s not really free. We pay with our orders being visible to MMers, etc.

The real test has to be trading in real $. There’s no other way around it.
More...

If I could put up 10 likes I would!!!

Also...A market order and a black swan event?? It is real...We don't know when they will happen, hence black swan. In about 25 years of trading online, I may have done about 5 market orders during that time. Both my brother (who was a trader) and my dad, advised against it...

PS I'm laughing...Oil futures going negative!!
 
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ironchef said:
It is tricky.

Every day my stocks typically have a couple of "moves" but I don't know when they are going to move. As you know they don't tell you hey I am going to go straight up, come join in.

As a trend follower with strict capital preservation rules, it is a difficult balancing act. Most days I could find one (or two) without been stopped out but there is no guarantee. Today, I reentered the market an hour ago, found one decent move and booked another $500, on paper.
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you do have to have a pattern to enter and i use the simplest oldest one known to mankind or sorry, traderkind,: double bottom or double top.
you do not any great secret technique or strategy to trade......i have found that most people over complicate trading to ridiculous levels and idiots like me actually try to emulate them
 
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Cabin111 said:
The MM's computers will jump in front of you because they see you (retail investors) coming in.

I believe they will also jump in front of you during a black swan event.

Eyes wide open...
More...
Thank you for the coaching. Appreciate it sir.
 
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