July Trading Journals

Turok:

It takes a lot more than talk to get into those lucrative positions. Sometimes I feel like we at home traders are more or less, Robinhoods, trying to take money out of the hands of institutional traders, specialists and market makers. For anyone to get into either one of those positions mentioned above, (there are exceptions, of course, but we are talking about the vast majorities), you will have to have an Ivy League degree and several year's worth of dues in assistant positions and one hell of a corporate ladder to climb.

A lot of us who are into day trading is probably because this is the only place where we can make incredible amount of money without climbing that corporate ladder. Yet given a choice of working at a major institution trading desk versus prop. trading gig I would take the former in a heart beat. There are just way too many advantages they have.

Anyone who is managing a 2.4 billion account went through A LOT and he/she probably deserves what they get paid for. Besides, we are talking traders, not investors . . .

Steven:

I am talking about income generated from trading. Interest income is about as relevant to trading income as professional atheletes / actors / singers income . . .

Before anyone brings up the subject of inheritance I will be the first one to admit that while the owner of my company is in his 30's, his family has been on Wall Street for 3 generations, and that's a huge edge a lot of us don't have, even if he still worked as hard as anyone to get to where he is. Someone like Rtharp will obviously have an edge over most people with his legendary father being a *potential* supporter/mentor, and he must got some of that killer instinct in his blood too :-)

As in any profession the best comparison would be two traders who both started with nothing, of course it is not always possible to have such an comparison and I always believe the end justifies the means . . .
 
My two cents in this totally subjective discussion. I believe dollars alone does not make one better than another. I believe in percentages...but ther must be some money behind it. It is very easy to double $1,000 in a year...but doubling 1 billion dollars truly is a skill. I remember reading about Steve Cohen from SAC Capital Mangement who does both 1)managing size and 2) great returns. "Started in 1992, it has $1.3 billion in assets. Its worst year in the past five was 1996 -- when it was up 42 percent." If you never read about this guy I believe he is in "Stock Market Wizards." Check out this article:

http://www.newyorkmag.com/page.cfm?page_id=1842

Trading with billions is definitley a totally different ballgame.
 
For the record, I believe that those who never saw BIG money will never know how success is defined to those who have.

JB, let me be redundant. As I said before, I like you more and more with every post you make.

candletrader said:

>"I make a decent living trading, have a great lifestyle and have a caring family and have time to spend with them."<

Absolutely priceless!

Hitman, you fell in the trap. Check this out:

>"Traders: (all from the year 2000)

B: Manages a hedge fund worth $15 million and provides a return of 36% over the year. ($5 million, four hundred thousand) She has a staff of two.

C: Never has more than $100k in the market at any one time during the year, only goes long (yes, you heard right...only long in 2000), makes 23,000+ trades during that year in only ONE STOCK. Works alone with his eyes glued to the screen and fingers to the board during every minute of every trading day of the year. Pulls $1.7 million out of that one stock for a return of %1,700"<

You say, " trader B without a doubt gets the nod over the trader C ...it all comes down to $$$ value"

Forgot something there, Trader B only gets 20% of the profits, so that would be 540K. Consequently, he pocketed less money. Now! Who is the better trader? ;)

lol.

Have a great weekend everyone,

Hitman, thanks for writing this great journal. I am enjoying it and learning from it at the same time.

Bill
 
Sniper,

That quote (>"I make a decent living trading, have a great lifestyle and have a caring family and have time to spend with them."<) was from me, not from JB.

 
Originally posted by Magna
I guess it depends on how you interpret orderly and I've never seen a definition that didn't include the concept of discrete steps as opposed to mid-day gapping. And, no I didn't think he was there to play good samaritan, but I've been told over and over that when there are no buyers that's his job. Part of maintaining an orderly market and all that...
More...

Fairness and orderliness are not judged based on specific absolute price increments but based on supply and demand and market conditions at the time (see NYSE rule 104.10). Unlike the Nasdaq where MMs are not bound by any rules the NYSE has share depth guidelines for each stock that specify the minimum share volume the specialist has to take on with his account per point change in price. You can be sure that the specialist took on the vast majority of DST stock that was sold on the way down from 56 to 48.

Price gaps are inherent to the way an auction-style price discovery mechanism works and you have to learn to live with it and take advantage of it when you trade listed stocks. Check out NBR on 7/25 around 14:00 for another example.

 
Sniper_Trader1,

why deride listed trading just because you've been unable to make any money at it? There's lots of people making good money trading listed and personally I enjoy trading both listed and Nasdaq. While when trading larger timeframes there's not much of a difference, for very short-term trading there's advantages as well as disadvantages to both markets and somewhat different skill sets are required. In the end it all boils down to personal preferences.

While average daily ranges are smaller on the NYSE, trends are often cleaner with fewer and more shallow retracements, whereas on the Nasdaq things are often trading all over the place. That's fine if you're looking to scalp but taking three points out of say RIG tends to be much more relaxing than doing the same with BRCM. And because RIG allows for a smaller stop since it doesn't wiggle as much you can take on more size while maintaining the same level of risk.

In highly liquid stocks like AOL that primarily key off the NDX futures the impact of the specialist is highly overrated by many. In terms of overall trading volume the specialist participates very little with his own account. It's kind of stupid to blame your losses on the specialist there. Price gaps are inherent to the way price discovery works on the listed exchanges since when there's sudden shifts in the supply/demand balance the market clearing price will change just as fast.

As for DST, trying to bottomfish in a thin illiquid stock that is clearly in free fall is a stupid idea regardless if it trades on the NYSE or Nasdaq. I doubt Hitman's results would have been much different had this taken place on the Nasdaq.

Concerning the increased frontrunning by many specialists with decimalization I have to agree with you. I had to drop quite a few of the thinner stocks I used to trade because it became increasingly difficult to get limit orders filled.


 
Since there is one specialist per stock the buck stops at him. He is forced to be more responsible than MM. DST was not a big deal...I am sure we all remeber what happened with EMLX last year. For those of you who don't it dropped 40 dollars before someone at NASDAQ decide to halt the thing. Mucho lawsuits followed. This COULD NOT happen on the NYSE.

NYSE Rules an Procedures:
"One or two point sales: All trades made at the active posts which are one point or more away from a last sale under $20 or two points or more away from a last sale of a $20 or over may NOT BE PUBLISHED ON THE TAPE WITHOUT PRIOR APPROVAL OF A FLOOR OFFICIAL."

There are floor officials and floor governors on the floor of the exchange which must approve large price moves and trading halts. Market makers do not feel as obligated as a Specialist.
 
Hitman - OK no interest income. I take $100,000,000 and trade like a banchee, and at the end of the year I've made $5,000,000. You've taken $100,000 and turned it into $200,000. I made a lot more money than you did. Am I the better trader?
 
dlincke,

If DST happen to be on Nasdaq, the Level II will tell you a bigger picture of who is dumping.

Just like PDII during last week free fall of $20 point, this is where Level II come to use.


 
candletrader,

I edited my post. Your name is there. It should have been there from the start, but I messed up, sorry :) I love the quote.

dlincke,

This is a no win argument. Everyone should trade his/her own way, period! No one way is better than the other one.

As to AOL, the reports of fills and cancels were taking as long as 5-7 minutes. In which case I buy AOL at 92.25 the stock goes to 94.50. It then goes down to 91 (all in a matter of 5 minutes), I finally get my confirm that I bought it at 92.25. Instead of making a possible 2.25, I am now in a losing position. It happened many times with AOL.

In one case, I was long the stock at 111.50. The stock went up to 123. I entered a limit sell order at 120. The stock started falling down hard about 60 seconds after I entered my order. However, the NYS bid was higher than 120 for FIVE minutes. The stock traded down through that level, and I did not get a fill. The bitch was that the specialist did not let me cancel my order for another four minutes. When I finally was able to cancel my order, I entered a market sell order and got filled at 112.75, which was 1/16 higher than the low of the day.

Following my lovely experiences with the AOL specialist, I decided to stay away from NYSE stocks.

The meat of my post was, "It is safer only for the broker. The entire bull that is being sold out there is what used to be sold by Block Trading on Nasdaq stocks, (later it was repackaged by outfits such as Online Trading Academy and Pristine.com)."

If you read between the lines, I was talking about today's prop firms that restrict you from trading certain stocks, because it is in their best interest to keep you there longer.


Think about it, if you run a business like that, your only concern is to try and take as much money from your customer as possible. And the best customer is the one that makes just enough money to pay for commissions on a daily basis.

Did you notice all the hyping (and potentially spam) by prop firms on these boards lately? Business is down everywhere in the industry and businesses are trying to exploit any available advertising avenue to lure customers. This board is definitely one of them.

Anyhow, be careful out there.

Bill
 
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