CME Group: Dark Order Book
- Thread starter PocketChange
- Start date
Well, by "retail sentiment" I mean all market participants who are not themselves Market Makers.
Yes, the single contract trader is of no concern but contributes incrementally to trade activity.
Obviously analysis exposes that huge block trades have a greater influence on market direction.
A 500 lot sell is bought by the Market Maker. So don't you think the price is going to rise so MM can sell higher?
Trading is simply a very unfair battle between big money and the rest of us. Big money moves markets, etc. MM's have access to Big money.
Yes, the single contract trader is of no concern but contributes incrementally to trade activity.
Obviously analysis exposes that huge block trades have a greater influence on market direction.
A 500 lot sell is bought by the Market Maker. So don't you think the price is going to rise so MM can sell higher?
Trading is simply a very unfair battle between big money and the rest of us. Big money moves markets, etc. MM's have access to Big money.
And what is stopping you from inferring this yourself by looking at the tape?
That is precisely one of the major scalping strategies, but the tape has to be *calculated* and not simply watched...
MM's accumulate and distribute both at the sub-second level, as well as over longer periods of time.
MM's in fact take positions against all the rest of the market, and are able to move markets.
So what happens is that we are reacting to movements, whereas they are purposefully creating market movements. Because they know where they're going (and most of us do not) they have an advantage of surprise as against the bulk of market participants.
Anyway, very interesting, I think.
MM's accumulate and distribute both at the sub-second level, as well as over longer periods of time.
MM's in fact take positions against all the rest of the market, and are able to move markets.
So what happens is that we are reacting to movements, whereas they are purposefully creating market movements. Because they know where they're going (and most of us do not) they have an advantage of surprise as against the bulk of market participants.
Anyway, very interesting, I think.
"Trading is simply a very unfair battle between big money and the rest of us. Big money moves markets, etc. MM's have access to Big money."
Pure unadulterated BS and naivety. What a steaming load of crap. Trading is an unfair game if the trader lacks the sophistication and knowledge to develop a trading strategy that does not compete in the realm of HF and Market-Making. And this website is certainly overpopulated with and dominated by trolls and bomb-throwers who do not know any better, and are eternally pissed off at the world because they were stupid and naive enough to piss away their $10K or $15K trying in vain from day one to compete in that domain. Trading is a business, not a boys club for bored video gamers or poker players or chess players. I can appreciate starting out small - I started out with $15K. So treat it like a business, and make smart business decisions. And the very first place to start is to maximize your risk/reward skew to the very best of your abilities before you risk dollar number one. Personally, I wouldn't have lasted six months if I had to mix it up with HF and MM's. Hells Bells, I interact with people every day who make very consistent money trading - and seven of them have IB retail accounts and use the TWS spreading tool.
The markets are incredibly efficient wealth redistribution tools for stupid and naive humans. Lemmings over the cliff. Take your six grand and go mix it up with DE Shaw, Rennaisance, Citadel or Knight. Cry like a bitch when it's gone in nine weeks. Become an ET bombthrower for the next nine years. Oh, it's the dark pools and the automation and the purchased order flow. Boo-hoo-hoo.
What if your strategy was fatally flawed from the start?
Pure unadulterated BS and naivety. What a steaming load of crap. Trading is an unfair game if the trader lacks the sophistication and knowledge to develop a trading strategy that does not compete in the realm of HF and Market-Making. And this website is certainly overpopulated with and dominated by trolls and bomb-throwers who do not know any better, and are eternally pissed off at the world because they were stupid and naive enough to piss away their $10K or $15K trying in vain from day one to compete in that domain. Trading is a business, not a boys club for bored video gamers or poker players or chess players. I can appreciate starting out small - I started out with $15K. So treat it like a business, and make smart business decisions. And the very first place to start is to maximize your risk/reward skew to the very best of your abilities before you risk dollar number one. Personally, I wouldn't have lasted six months if I had to mix it up with HF and MM's. Hells Bells, I interact with people every day who make very consistent money trading - and seven of them have IB retail accounts and use the TWS spreading tool.
The markets are incredibly efficient wealth redistribution tools for stupid and naive humans. Lemmings over the cliff. Take your six grand and go mix it up with DE Shaw, Rennaisance, Citadel or Knight. Cry like a bitch when it's gone in nine weeks. Become an ET bombthrower for the next nine years. Oh, it's the dark pools and the automation and the purchased order flow. Boo-hoo-hoo.
What if your strategy was fatally flawed from the start?
Well, I'm not an ET sponsor so I can't advertise. Yes, trading is a business and only the analytically and technologically advanced technical trader can hope to gain and keep an edge.
What I said is neither BS nor naive. It is a fact. How to deal with the fact that we ordinary traders must REACTIVE and that MM's can be PROACTIVE is the fundamental problem of trading.
Where is the market headed next? That's the only question which governs trade decisions. Even though markets are "unfair" in the same sense that Casinos might be unfair because the House always has the advantage, nevertheless markets differ in that relevant technical analysis can provide me an Edge.
Any trader who does not have a consistent Edge will probably become bitter, cynical, etc.
It's best not to jump to conclusions about my naivete (or lack of it), as it doesn't contribute to the discussion.
Originally this thread discussed the possibility that MM's had knowledge of stops, etc. I think that's incorrect, as they simply don't need to have that knowledge in order to "know" where the bulk of market participants will panic.
MM executes trades against nearly everyone else in the market, and therefore, has her finger on the "pulse of the market" every second of every trading day.
The problem for traders is to anticipate where MM will move the market. Markets don't move themselves.
And that's the job of relevant technical analysis to provide that predictability and increase the trader's edge.
Which invalidates your original post, of course. It's rare to see an E'trader poster admit he was totally wrong, and so for that admission I congratulate you.
The idea that market makers move the market is absurd and in fact precisely counterfactual. By virtue of being liquidity providers they have to either be willing to accept that the market will go where the liquidity consumers drive it, or else be willing to take arbitrarily large positions to hold it where they want it. Given those two choices, they choose to let it move where it will.
Markets are moved by liquidity consumers, not liquidity providers.
Markets are moved by liquidity consumers, not liquidity providers.
Well, many share your view. However, I firmly believe MM's can and do willfully move markets. Discovering clues by technical analysis, as to where they are likely to move next, is the key to short term daytrading or scalping.
The MM is both a liquidity provider, as well as a trade participant. When MM's accumulate from retail sellers, they become relatively "long", relative to a "neutral" point in their inventory. This gives rise to support in the sense that MM's must sell what they have bought at a higher price (on average) just like all market participants.
So this "dual role" of MM as both liquidity provider and Trader is, in my humble opinion, not very well recognized.
As you say, it seems absurd, impossible, etc., but the evidence in my view points to the contrary.
Consider this: Why do ALL markets have a fundamental "sawtooth" movement? Because MM's take risk, then pullback to take slight profits and partially neutralize risk, before continuing a trend. This sawtooth behavior is only the "tip of the iceberg" as a clue to how MM's affect price movement. IMHO.
This is a complex topic probably best put in a separate thread.
The sawtooth pattern is caused by the behavior patterns of the liquidity consumers, not the providers. When scalping (from the liquidity consuming side, just to be clear), you're primarily trying to predict incoming MKT/STOP order flow. Now this indirectly predicts how the MMs will change their prices, but let's not confuse the tail with the dog.
Now depending on the rules of a given market, it's possible that certain "market makers" can turn around and become liquidity consumers temporarily. But ultimately as long as orderly trading persists there's some bigger MM who gets left holding the bag, and price moves as I described.
Now depending on the rules of a given market, it's possible that certain "market makers" can turn around and become liquidity consumers temporarily. But ultimately as long as orderly trading persists there's some bigger MM who gets left holding the bag, and price moves as I described.