Going for prop money

Quote from foible:



Does anyone have any tips on how they vary their position sizing with volatility, confirmation, and confidence?



I'm also finding a disturbing tendency to want to catch falling knives. When a stock is down or up, I keep imagining it will stop and reverse and I keep wanting to call a top or bottom. It's dangerous and gets me hurt - maybe best to wait for a confirmed move or some obvious resistance/support points.
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Since everybody never talks about trading because most of the posters are dumb as a door nail and will never tell you anything trading related informative in your journal . I'll give you some tips



Does anyone have any tips on how they vary their position sizing with volatility, confirmation, and confidence?
volatility - crazy large bar movements = higher risk , lower position size


position size - wider stops - smaller size
confidence - developed after you see the same setups 3000 times.


I'm also finding a disturbing tendency to want to catch falling knives.

Thats ok, after you get cut a few times the tendancy will go away.
 
Credit trading is gay, but you can make a lot of money doing it. Given that fact, you will enevitably get smashed every so often from either news, or a big move when you have too many shares, its more than possible to grind out 1000 in credits per day.


Foible - Ive been meaning to reply to you sorry.

When i said flat auto ex to the spec i meant that when you have shares at the bid or offer its easy and cheap to just flat your shares in front of a big cross up/down on the NYB or ARCA (on ewj im talking) to the specialist and look to re enter. I personally think its quite easy to make a few hundred bucks a day on EWJ fagging credits on BRUT and making the spread on island/arca/spec.

Using the spec to flat isnt the be all end all rule that you must follow. Make sure you know the gateway fees and see if you can hit isld first, but normally isld is gone first because of the small credit, and brut is gone last because it costs the most (sorry if this is obvious i didnt read the whole thread).

The great thing about EWJ is that you can auto ex 5k lots instead of 1k on regulat listed stocks, so sometimes when im bored ill look at EWJ if its doing volume and watch the tas to see whats printing. THe more you stare at it the more you will find what is printing fastest that day. Lots of time there will be an ARCA buyer, or maybe ISLD seller (just as an example), and you list there to get fast fills and work on exploited an obviuos buyer/seller. On 5k share lots brut fags (credit trades) net you about $8, so when the stock isnt moving and backing over itself you will see 20-30k fagging these levels. Its easy (and small) money to join them, but it all adds up if you dont take gross losses.

When you get up to 5k lots, a few spreads and a couple fags net you a few hundred bucks. Then you can find those great days when someone is crazy crossing up the spec and get a few more spreads or a couple few cent arbs. Just stick with it youll get it.
 
I actually took some positions in the early morning, which I normally don't do. It was to gain some experience during this time, as there seems to be a lot of money which might be made. Not today, however. With that, and getting stopped out in CDE as it churned over lunch, I was down $20 and had to dig myself out to end up marginally positive. Not that $20 is a big deal, but if I go negative, then I have to start at the beginning of my current milestone, which would suck.

At least I am getting a grip on the credit trading so I can make up a couple bucks when I need to. *shrug* Good or bad, it is making some profits which I can use to help me learn other techniques.

#trades: 49
#shares: 21600
adj net: $2.60
gross: -$12.00
 
Last day of my 25's, so tomorrow I get more buying power, and the chance to try different stuff without fearing that a loss will set me back a long way. Personally, I'd like to try CHK. Crazy volatile, so we'll see if I can make any money.

Today, almost all of my profits came from one trade in F. I tried a few other small trades - some went in my favour, some didn't. Mostly I lost money because of double or tripple fills, so I need to be more careful when placing multiple orders.

#shares: 7200
#trades: 38
adjusted net: $25.61
gross: $27.00
 
Got schooled today! Since I was starting with a clean slate for the next milestone, I figured I'd do some experimenting on VLO. I'd watched it before and it seemed crazy volatile, but it gave good signals and would have relatively long-running, clear trends that I wanted to try to capture.

A few problems:
* it chopped heavily today and I didn't bother to look for this
* my daily stop-loss is still $50 for the day and $25 for each half-day meaning that I had to set stop losses that were unreasonably tight given the volatility
* and because of the volatility, when I hit my stoploss point, it was very difficult to get out, often slipping several cents past my target

Ugh.

I'm thinking that it may be worth exploring ways to capture some money based on the volatility by shooting for 10-20 cent moves over a few seconds or minutes. And I'm thinking that I need to wait for later to try to capture the bigger moves, when I have a bigger stoploss and some more skill to respond.

Sometimes a minor singe helps to reinforce an idea, and this definately got me thinking.

#shares: 11800
#trades: 42
adjusted net: -25.41
gross: -33.00
 
Just heard that my shop is closing at noon tomorrow, which means that there's virtually no hope of me hitting my next milestone. Which means that I will get to try some more experimenting. And since I know I won't have the opportunity (or the courage) to try VLO again, I think I'd like to try VLO again.

This time, instead of trying for a big move, I'll keep it simple. Try for 10 cent moves off the MAs, unless there are other obvious places to capture the micro moves.

I suspect the volatility will still wipe me out, but if I learn something, it'll be worth it.
 
Hi foible -

I've traded for over 35 years including on an exchange floor but I've never prop traded.

I'm a bit shocked at your posting #'s such as:

12-22-05 04:34 PM

#shares: 11800
#trades: 42
adjusted net: -25.41
gross: -33.00

Sounds like a lot of "churn" without a real trading strategy.

What gives?

What kind of help do you feel ypu need to do better?

Regards, blue
 
blue2and2,

Lack of strategy? Pretty close. The firm gives us one strategy - scalping LU and NT. If you want to do anything else, you have to find and develop it yourself.

I'm not that impressed by the prospects for LU. I know that some people make money off of it, but I would like to explore other alternatives.

So, today I tried trading a number of stocks that I'd never traded before, and with different entries than I'd used before. It meant that a number of times I flubbed it and flattened my position.

Part of the reason that the share size is so large is that, to prevent myself from being stopped out, I traded EWJ in large lots to get some credits or a few pennies to make some profits before going back and basically losing money in other stocks.


I'm trying to figure out a lot of things. How to set stoplosses, how to select stocks, how to time my entries and exits, how to deal with my fear of failure, what strategies are available and what is their long-term expectancy, how much of my failures are due to my inexperience and how much is inherient in my strategies... So quite a bit, really :)


I don't think I can tackle all of these simultaneously. So my immediate tasks are to study the different stocks available, develop strategies for a consolidating, bearish and bullish trend and be able to identify which is most relevant. As I grow more confident, I'm trying to up the number of shares and the number of stocks that I trade, and to get faster at entering and exiting.

But generally, I realize that I'm in this blind and try to humble myself before the markets and before experienced practitioners like yourself. I think I have many of the attributes to succeed, but I have a lot to learn.
 
Dear Fobile
I think you should look at stock like QQQQ intc msft dell csco orcl msft
See them check out their trend and u can make 1 or 2 trade and try to get 0.10 cent in every move. In that way u will be trading less and less amount of leverage less streets I think it is a waste of time patience and money to trade LU Jdsu
Neither am i telling you to trade volatile stocks like goog yahoo ebay tol vlo -XXXXXXXXXX
U r stressing your self out making so many trade and in the end you are either -12 or +25 that is BS
Not only u think u r learning i think you are wasting your times.
Look at other stock out
don't be a machine to generate commission for your prop firmXXXX
Good Luck 2 u in what ever u do :-
 
I do not know why your personal alarm bells are not going off. You are churning 15,000 shares to make $25. At $0.0075 a share, your firm has made $112 off of you.... does not the math scream to you what a scam this is. They tell you to only trade LU and NOK??? LU is what, $3.00 a share? They figure with that stock how much could you lose since the stock is so flat but you make them over $100 a day, $2,000 a month in 20 trading days. Did they hire like 10 of you together? $20,000 a month for you to burn $12.00 one day, make $30 the next?

And instead of training you they are telling you to just go ahead and trade these two stocks? I cannot see how you learn anything just churning LU over and over again day in and day out without studying a method, technical analysis, system, etc... After one week of making the firm $500 in commissions, can you look back and say you have learned something concrete to apply to any stock or market?

I am not sure why people here are not "slapping" you to wake up and realize that a firm that makes about $2,000 a month off of you while limiting you to $50 max a day risk management is dancing all the way to the bank and is no better than a Ponzi scam. You lose $50 and they cut you off but to do it you churned over $100 in commissions so they are still ahead day in and day out.

I am sorry, but trading is not just do and learn like riding a bike. If no one is teaching what indicators, tools, charts, patterns, etc to use and learn you are just a commission generator for a prop shop. Why would think this is good unless there is more I am not seeing, like you are being trained or they will take the handcuffs off at some point and let you trade big lots (scary thought given current level of trading).

Please tell me because I do not get this version of the prop shop experience. I am being 100% honest and curious, no slam intended but it cannot smell any worse than this. I would love to be that firm and hire 30 traders and take in $60,000 a month and pay out nothing to the traders...

You even said they pretty much limit your risk without teaching you anything and them make you do a credit trade or two to appease you into a profit while still making the profits. Funny that this is legal but let's exaggerate and say they hire 100 traders to do this day in and day out and keep replacing the ones that leave, they can take in $2,000 per trader in commissions and take in $200,000 per month while cutting your risk off real tight and only losing a tiny percentage of that in actual losses should all the traders crap out. Hmmm what a great business model LOL

AGAIN let me add I am not trying to be harsh or knock you fro trying but I want a sense of reality brought in for yourself. If they offer you no training and handcuff you, do you really expect to learn something valuable? What do you see there that will make you a better trader?
 
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