can price action predict market moves
- Thread starter geth03
- Start date
I see gamblers at the casino putting up lots of money too. Their strategy isn’t a winning strategy is what I’m getting at. And that’s why they didn’t make it (and is why other firms have — such as IBKR, Susquehanna, Jane St, Virtu, Citadel, and the banks).
What kind of ongoing work and analysis would you do to find out where institutions are placing stops? Also what institutions are you talking about?
Agreed
@bone I am aware of stop running, denying it is one thing, accepting it as part of 'doing business' is different. There isn't just big fish in the sea. Adapt and survive. You have to keep your eye on the ball, which for them isn't primarily making money running stops, but proper positioning for longer term market moves. My intention is to follow the herd.
You have a bias that is severely coloring your perception.
I can think of dozens of locals off the top of my head who made fortunes on the floor and they chose to walk away and not bother with screen trading. You had about a half second to full second speed advantage in the pit. Which was enough time to pick off the paper orders held by brokers. Think about it from their perspective: they had an edge that worked for them and it made them very wealthy. If the edge is no longer there - go do something else with your life.
I personally was a large electronic proprietary trader (spread trader) and I knew (and know) a fair number of large electronic market speculators. They're not buying support and selling resistance. They could care less about a MACD. Their edges are more refined and sensible.
Banks make their money making OTC markets for institutional clients and syndicating private equity offerings and public offerings. It's a delusion to think that Goldman Sachs is scalping ES. Truly. There are easier ways for them to make far more money.
I can think of dozens of locals off the top of my head who made fortunes on the floor and they chose to walk away and not bother with screen trading. You had about a half second to full second speed advantage in the pit. Which was enough time to pick off the paper orders held by brokers. Think about it from their perspective: they had an edge that worked for them and it made them very wealthy. If the edge is no longer there - go do something else with your life.
I personally was a large electronic proprietary trader (spread trader) and I knew (and know) a fair number of large electronic market speculators. They're not buying support and selling resistance. They could care less about a MACD. Their edges are more refined and sensible.
Banks make their money making OTC markets for institutional clients and syndicating private equity offerings and public offerings. It's a delusion to think that Goldman Sachs is scalping ES. Truly. There are easier ways for them to make far more money.
That’s a long winded way to say I’m right.
Why are you suggesting using a style of trading that you know, and admit, does not work. Personally, I find it unethical to suggest that people can make money in the markets using clearly outdated tech/theory and with limited knowledge.
By the way, I didn’t say that no one on the floor made money. The ones that didn’t adapt and refine their game went bust (or walked away). The ones that stayed and won built the systems we use today.
I'm a day trader but the ideas can be extrapolated to wider time frames. For a beginner, I would recommend doing nothing but observing price behavior for at least a month (few will do this). You can test setups based on your observations or take conventional ideas and test them by back and forward testing. You quantify MFE and MAE from setup entries and you want to see where the inflection points occur going forward. My group of retail traders will not cause such points on a market like the ES but institutions can and will. They do not all agree, all you can learn is tendencies which can give you a basis for an edge, not just on where to put stops but where to consider targets.
No one thread can teach someone to trade or precisely what work to do to be successful, just know that it will be likely more challenging than anticipated....and ignore the trolls, let them stew in their toxicity.
Risk Management is not part of the Expectancy formula below. Lol, I can risk 0.5% of my trading capital per trade, per the formula below, does not mean I have a trading edge. I will simpler be a good risk manager trading without an proven edge and losing money eventually.
To calculate your trading expectancy, you need to know three things - your win percentage, your average win, and your average loss. The calculation is as follows:
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)
In my simple opinion, risk management is pure bullshit. It is only 0.0005% of the journey trading to consistent profitable.
The usefulness in risk management is that it lets you stay in the game. But you’re right in that if a trader doesn’t have an edge it doesn’t matter if they manage risk.