ES "Too Efficient"

[steve46]

Quote from brownsfan019:

Crast - you have to listen to SOME poker players out there, it has been stated before and makes perfect sense.

I admit I am not a poker player. I happen to know a few however and they don't like to play with amateurs. They tell me that an amateur is unpredictable and likely to do just about anything. Because they are inconsistent, they are often hard to read. They prefer to play with people whose game they know, either from previous experience or from watching in other games.

As I said I am not a player so I can't respond with a personal opinion.

 

[brownsfan019]

Quote from steve46:

I admit I am not a poker player. I happen to know a few however and they don't like to play with amateurs. They tell me that an amateur is unpredictable and likely to do just about anything. Because they are inconsistent, they are often hard to read. They prefer to play with people whose game they know, either from previous experience or from watching in other games.

As I said I am not a player so I can't respond with a personal opinion.

EXACTLY MY POINT STEVE!!!!!!!!!!!

Since we know that the big professionals are trading the ES and we know the little guys want a piece of goliath, that can be reasoning for the movements on the ES.

I understand the OP completely. Let's look at it like this: pull up intraday charts of the ES, ER2 and NQ. Find what you define as a 'move'. See what this 'move' did on all 3 charts. Odds are that ES provided the smallest 'move'. Now, the question becomes, why? Why is the ES currently providing smaller 'moves' when compared to other trading instruments that move in similar fashion? What is different about the ES? How about the volume on the ES is approx 1 million contracts per day. The NQ is about 1/4 and the ER2 is about 1/10.

So, the question that needs answered is - can markets become "too efficient" when there are too many hands in the cookie jar?

Regardless of the answer to that question, what the OP and amateurs like myself need to understand is that when you are going up against pro's like Steve here, you need to know your markets and understand how they react in current market conditions. Obviously market conditions change over time and you need to stay in tune with your market(s). I personally focus the vast majority of my time on 3 markets and those can change from time to time. I role with the punches and find where my trading methodologies can best be exploited.

 

[steve46]

Well I think there is a little more to it than that

The "moves" you mention are often generated by institutions using program execution. In general they attempt to move the market in a way that "strands" the retail crowd. That is why you sometimes see what we call reversal spikes (wide range bars side by side). If you were to scroll to the left, and look up or down you would then see the "stranded" positions that some call "congestion". Often these congestions areas are connected by a series of wide range bars. These "stranded" players are left holding the bag, hoping that the market will come back to them.

With that I think I will stand aside. I am sure you will have questions at some point.

Best Regards,
Steve

 

[stock777]

imo there are more people taking small unneeded losses , than mobs of stranded prayerful newbies.

one of the great myths is taking a small quick loss as the smart thing to do. feels and sounds good.

 

[salvar]

True, but there is a fine line between waiting for a reasonable expectancy and getting your butt handed to you.

That's what makes a pro.

Edward

 

[brownsfan019]

Quote from steve46:

Well I think there is a little more to it than that

The "moves" you mention are often generated by institutions using program execution. In general they attempt to move the market in a way that "strands" the retail crowd. That is why you sometimes see what we call reversal spikes (wide range bars side by side). If you were to scroll to the left, and look up or down you would then see the "stranded" positions that some call "congestion". Often these congestions areas are connected by a series of wide range bars. These "stranded" players are left holding the bag, hoping that the market will come back to them.

With that I think I will stand aside. I am sure you will have questions at some point.

Best Regards,
Steve

That makes sense Steve, but my argument to that is you will not see that type of price action as often on the NQ, ER2 or EC. Which is why the ES can be said it is 'too efficient'.

 

[StreamlineTrade]

Quote from brownsfan019:

Well, all hail King Trader Steve46 b/c apparently on an anonymous message board it's very easy to call people out. I have to assume that you are referring to my post.

So, if someone posts something that you disagree with, that person is an 'amateur'. Please, do explain what exactly an amateur is and I will let you know if I fit the profile.

LOL.

An 'amateur' is someone who lacks objectivity, understanding and empathy in life and thus the market.

Market Profile is just another way to display price history. A bar chart is another. Time & Sales print out yet another. There is no hidden magic like some internet guru's or 'amateurs' believe.

On the positive side, too much liquidity would indeed seem to hamper volatility, but then again, so does too little. It is dangerous to assume this is always the case IMHO. Here we are - back to objectivity!

Although the liquidity would seem to flatten vol in ES. ES does have other characteristics which a trader can use to more than make up for this. Such characteristics are why IMO ES is so popular for both newbie and pro

 

[brownsfan019]

Quote from StreamlineTrade:

On the positive side, too much liquidity would indeed seem to hamper volatility, but then again, so does too little. It is dangerous to assume this is always the case IMHO. Here we are - back to objectivity!

Although the liquidity would seem to flatten vol in ES. ES does have other characteristics which a trader can use to more than make up for this. Such characteristics are why IMO ES is so popular for both newbie and pro

Streamline - excellent points. It can be argued that there is such a thing that there could be 'too much' liquidity as well as 'too little' even if one is counterintuitive.

 

[tradertony76]

Quote from steve46:

Well I think there is a little more to it than that

The "moves" you mention are often generated by institutions using program execution. In general they attempt to move the market in a way that "strands" the retail crowd.

Right, it creates the phenomenon of "Dammit, I was right on direction but lost money all day !"

To be successful trading ES as a small trader, it seems like you almost have to be reactionary.

It reminds me of playing Shadow of the Colossus for PS2. In that game, you're a warrior and you're tasked with slaying 16 giant beasts in the game. Sure, you could run up to the beast with your sword out, but its just going to squash you underfoot. Rather, you have to time it, wait for it to attack, dodge, then counterattack, exploiting it while its vulnerable and exposed.

Its usually the same in the ES. Say we bottomed out at 1430, we rallied to 1432, and you think we're going to 1434. Chances are, you want to buy. Its really hard to restrain yourself as you watch it go up one tick at a time.

But you know whats probably going to happen is that some big player or automated program is going to give the crowd the jam job down, making the best trade sitting on your hands until the market has been pushed down to a more advantageous price.

Failure to wait means you're often stuck in a trade taking heat on something that you're *probably* right on, but if you're wrong you're now looking at a 6-8 tick loser because you were stranded.

 

[stock777]

It's the business of the market to make everyone , right or wrong , long or short, suffer pain before profits are bequeathed.

97% of traders would be flogging themselves if not for the release of the markets.