Newbie Entering the Lions Cage

Quote from youngtrader:

Spreader

Thanks a lot for the advice. I do have a question about the algorithm traders. You mentioned that I should give it a few weeks and then see how a 3-4 tick stop works. I have only been trading the bund since 3am (not nearly a few weeks) but im using a 4 tick stop and I don't see anything wrong with that. Do the algorithm traders try to run the market for 3-4 ticks usually and that is why you wouldn't want to have a 3-4 tick stop? If not what is the reason?

I also would like to know the "games" these traders try to pull on locals if you know of any.

Thanks for all the help

YT
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Everyone's got their own style,if you're using a 4 tick stop(disciplined) versus a 4 tick profit and are getting it more right than wrong then stick with it.I've heard so many stories of people with models designed to do just about anything to get money from your account to theirs and the perfect material for them is someone scalping/watching the size with a tight stop.I've heard of models monitoring clip sizes that trade against clip sizes resting around the market to 'profile' locals positions.I've even heard of models monitoring what other jerk-off's models are doing!

To be honest it's all a bit of a joke.If you can see through it and do your own thing then you might just make a bit of money.You seem pretty determined to give it a go,just re-read the pitfalls people have pointed out.It won't be easy but whoever said it would be?
 
Quote from $preader:

Everyone's got their own style,if you're using a 4 tick stop(disciplined) versus a 4 tick profit and are getting it more right than wrong then stick with it.I've heard so many stories of people with models designed to do just about anything to get money from your account to theirs and the perfect material for them is someone scalping/watching the size with a tight stop.I've heard of models monitoring clip sizes that trade against clip sizes resting around the market to 'profile' locals positions.I've even heard of models monitoring what other jerk-off's models are doing!

To be honest it's all a bit of a joke.If you can see through it and do your own thing then you might just make a bit of money.You seem pretty determined to give it a go,just re-read the pitfalls people have pointed out.It won't be easy but whoever said it would be?
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Spreader

Thanks for pointing those things out. Yesterday with all the added volatility in the financial markets I believe that they turned off the machines (at least in the bund) because it appeared that all of the bid/offer traded and no spoofing was happening. It seemed like a great day to watch the orderbook.

One thing I noticed yesterday was when we were running up against new highs for the day on the bund and there were two big 1000 lot offers waiting up there and as price moved toward them they didn't budge and even got a little stronger. So I went to go to lean on that size and they got me filled and they took both of those 1000 lots that were offered. I had my stop 4 ticks above were I sold and was stopped out for $43 or whatever it was.

A few ticks later I think I saw those same guys that got stuck short a few 1000 contracts puke them all at the market.

Are these locals that got squeezed or are they bigger players that decided to change there mind quickly? I imagine they are locals because I can't imagine any big bank or fund just puking the contracts instead of working the order.

Also are locals usually making the bid/offer or are they taking it? I think this would be benificial to know as you can see if big size is bid/offered and you can make a good guess that its a local. Then say he gets taken on all of the bid/offer and the market starts to move against him. If you can find out what the average risk appitite for some of the bigger locals you would be able to find out when they would puke the contracts if they get stuck.

I think that would be really benificial because although the programs can manipulate the bid/offer they can't manipulate the actual transactions that occur....those will always be pure.

Sorry for the long post but I figured I would ask because I believe this could be a huge advantage in trading eurex.

Also anybody have any info on trading the euribor? I have started to trade that for a few ticks along with trading the bund. I am interested in learning a little more about that contract and how it trades. Also learning how to spread it would be cool. I currently am just scalping the front month but I see that the sep contract has even more volume and volatility than march and dec has about the same volume as march and way more volatility? In that case why would anybody want to scalp the front month?

Thanks

YT
 
Quote from youngtrader:



One thing I noticed yesterday was when we were running up against new highs for the day on the bund and there were two big 1000 lot offers waiting up there and as price moved toward them they didn't budge and even got a little stronger. So I went to go to lean on that size and they got me filled and they took both of those 1000 lots that were offered. I had my stop 4 ticks above were I sold and was stopped out for $43 or whatever it was.

A few ticks later I think I saw those same guys that got stuck short a few 1000 contracts puke them all at the market.

Are these locals that got squeezed or are they bigger players that decided to change there mind quickly? I imagine they are locals because I can't imagine any big bank or fund just puking the contracts instead of working the order.

YT
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They probably werent locals, and there is a chance they werent the same guys. One thing that you have to remember is apart from the algos, black boxes, there are A LOT of massive players in these markets; pension funds, hedge funds, big banks, even countries central banks, and then there are the locals, who are nothing compared to those players. So, the big guys, could be trading the bund for lots of reasons, to hedge against the swaps markets, cash, maybe they want to take delivery, then to spread against various other instruments, then are the outrights, who could be trading very long term or short term. So, the "one guy" does not exist, if one guy tries to manipulate it, he wont last long in there.
So, I recommend u not to worry too much about who is flipping who, or the size of the bids and offers, cause that might put u off some good trades, and it might drive u mad. Focus on the technicals and fundamentals, and there u'll find the opportunities.
Good luck.
 
Quote from rosy2:

agreed. the early morning US hours seem good. keep in mind eurex fixed income has some of the most active automated programs trading it.
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but the Bund and Dax trade until 4:00pm New York EST time...so follows te US market action...trading opps up until 4pm NY close...
 
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