On Don Bright & his trading methods
- Thread starter Lucias
- Start date
Quote from Maverick74:
Don, one could say this about anything. Take a position....if it shows a profit, take it off. Don, I have not been in this business as long as you have, but it's my understanding, at least here in Chicago, the majority of spectacular blowouts have been from guys in spread trades, not directional. Especially yield curve trades. There was a time for years here where prop firms were doing massive size in mean reversion stat correlation crap and everyone was on the same side of the market. When the curve would blow out, due to the massive size these guys had on, firms could get destroyed. The funny thing is of course they were just trying to make a few ticks, hence the reason they had huge size on. Usually, directional guys trade much smaller and are more nimble.
Now retail traders I would agree with you. I know many guys who are dogmatic in their directional views and they will refuse to cover a loss and will blow out their accounts. But that is in the retail world. In the professional world that is much less common.
As a side note Don, most the guys that have blown out at option firms for that matter are market neutral guys, not directional guys. The problem with being "hedged" or "neutral" or whatever buzz word you want to use, is it causes traders to let their guard down as they think they are "safe and hedged". It also causes one to trade bigger then perhaps they should because they are "hedged". Anyway, just wanted to take a few minutes to disagree with you. It's part of my daily diet you know. LOL. Also, your doctors said it was OK for me to throw some light punches now.
I don't get how these yield curve guys are still around. I know guys at different firms who trade the yield curve...and they all do the same exact thing. They have 60 guys at one firm...they all have on the same exact position. The guys at a competing firm also have the same exact trade on. It must be tough when the spread starts blowing out and they are all stepping on each other trying to get out.
The ones that I know of will make money 6 straight months..then have a 3-5 day period where they lose their whole year.
My typo, I was referring to the Russell Re-balance.....but, of course, we use the MOC imbalance numbers every day to see where the market will be likely closing or heading.
Don
I don't get it either. They basically have a p&l profile of a premium seller in options. They all are trying to lean on the edge they are getting in the cash market, but that edge is just a few ticks. Believe me, that trade has dried up hence why most of these firms expanded into energy and metals spreads.
Don, people use to do that in 1998. You really believe you can tell market direction by the MOC imbalances? Really? I'm not sure I buy that. That technique went out the door with reading the level 2 quotes. LOL.
To me it's a disaster strategy. They put on huge positions to make a half tick or a tick. Then as it goes against them they put on bigger and bigger positions. If they get bailed out great...they make a small profit. But the one time the spread blows out they are screwed and blow out their accounts.
I have heard that some of the firms up there tried going into Crude, Gold, stock indexes....but got absolutely murdered trying to use the same strategy.
Yeah I heard the same. most of these firms have scaled back big time in their hiring and got rid of all their dead weight. You know it's funny, there was a lawsuit awhile back that many of the prop firms had against Bill Gross at Pimco when he squeezed the shit out of these guys on a delivery. He bought up all the CTD's in the cash leaving nothing for the prop firms and they were all scrambling around like a chicken with their heads cut off. Incidentally, I think they won the lawsuit.
MOC imbalances used to be free money. Man...back in the 90's when you could put in MOC's whenever you wanted and cancelled whenever you wanted it was like going to an ATM. Especially the last day of a quarter.....hell...Dec 31 each year used to be a huge day for us. Just wait until the imbalances came out...position yourself on the same side....put in an MOC and wait for the print on the close. And if for some reason the imbalance changed, cancel your order and just hit the market at that time.
There were always a bunch of stocks with big imbalances that you could make 2-6 points in.
But the imbalance trade ended (I believe) when they put in the rule that MOC's had to be in by 3:30 and could not be cancelled. I haven't heard of anyone using that strategy in a long time. From what I an tell imbalances really mean nothing anymore.
Another one of my old favorite trades was watching the bond futures close to determine the last hour's trading. If they went out on their highs (and in a screaming way) you could buy bank stocks recklessly. Chase, Chemical,Citi,.....any stock with the word bank in it. God was trading easy back then. Now you actually have to work to make money.....