Shorts: get over it. The government won't shut down. It never does.

[Topsurfi]

Maverick, I completely agree.
Was trading TSLA all day and had lots of fun.
I also trade Fdax and it still is a very good instrument to trade. The environment changes and you have to adopt. FDax also trades different from a few years ago.

 

[cmdtytrdr]

Quote from Maverick74:

Wow, you sound like a pretty angry trader. Debating you is quite a challenge as I have to sidestep around your anger and listen to you rant about the FED endlessly. This is why you should not trade what you think, but trade what you see. Blaming the Fed for your trading is not going to make you money. The Fed absolutely has increased vol. No, that is not their intention but rather a byproduct of their monetary policy. They create the bubbles that give us vol and then when the bubbles pop, we get even more vol. Yes, there are troughs in between. They are called cycles. This is nothing new. Honestly, I think people who can't separate their politics, their ideologies and their emotions should not be trading. Shorting the market because you hate Obama or buying Gold because you love Ron Paul or ranting about the Fed because you can't tick fuck the spoos anymore is not healthy.

The funny thing is, if you were to debate me down in P&R we would probably agree on most everything you said. I've ranted enough about the Fed down there as well as the government, regulations and everything else. But when it comes to trading, none of those things is an input. I look at data, analyze it the best I can and formulate a risk plan.

I never understand this retort of saying one is either a active tick scalper or long term buy and hold investor. Is there really no in between? I can't even keep track of all the large moves I see every day. Granted I follow everything and I keep obscene amounts of data, but there is a lot going on out there. If you can't pull money out of this tape, I'm not sure how to respond. Hell, we just had TSLA drop 15 pts in a straight line. Oh wait, that's just Goldman manipulating the stock, I forgot.

Honestly, I've said this over and over on ET. If guys put half the time into good old fashioned data analysis as they do to ranting about HFT or the Fed they would be much better traders. I'm being serious here. I can rant with the best of them and have. But at some point I have to get down to brass tax and roll up the sleeves and get a little dirty with some grunt work.

Oh and btw, a little correction here. The reason prop shops have been shutting down is because of market regulations for the most part. As someone who spent a decade in the Chicago prop firm community I can tell you that most firms operating on the margin are no longer able to cover the incidental marginal regulation costs. So many firms either cut back, shut down or changed the structure of their firm. My firm got completely out of the JBO business because the annual costs to maintain it did not justify all the other risks.

Hmmm. Well, maybe we don't disagree on too much. Here's a big problem on ET, and maybe I can clarify how I feel about it personally:

When I write something for the betterment of the community of traders, or to honestly express a reality that exists, for some reason everyone here thinks that that's indistinguishable from my trading tactics. Not so.

I'm also able to find small pockets of stocks or interesting industries (like coal and iron ore) where there has been a bunch of volatility and not too much fake bs. I'm able to make a living and get by.

Still, it's good to speak up from time to time about things that will eventually affect all of us. If things continue the way they've been going they might get even worse than they are now.

Our industry is crumbling. If a few of us have found ways to make a couple bucks should we just shut up about it? There's no faith in retail community anymore in the stock market. That lack of paper makes all traders suffer.

A person can be objective in his analysis and thoughts and philosophies and trade in a way that is contrary to all that because he recognizes that things are fradulent. It still is worthwhile to speak about things that are bs in this Country. That's the essence of free speech. If we want things to change, we have to speak up. Ahhh...screw it.

 

[Maverick74]

Quote from cmdtytrdr:

More like, Gov't does shut down and the market will drop about .6% tomorrow or maybe even go up.

A week later a meteor will hit Texas and the whole state will be wiped out. The market will drop 1.1% that day and make a full recovery within a week.

It's not that bad events aren't happening - they are. It's just that all the volatility and volume have been sucked out of the market and it's very easy to manipulate it.

(e.g., company revises quarterly guidance down 30% lower on their revs - the day that comes out the stock drops 3%. Within 2 days, the stock has fully recovered back to its high. 2 weeks later the company releases earnings and they're ONLY down 20% yoy - guess what, they beat guidance - stock goes up another 5% to a new all time high.)

GDP #s, mark-to-market, NFP #s, etc...you starting to see a pattern here?

I agree it's difficult/dumb to be short here, but not for the reason you describe.

If you want to speak out against that stuff, do so on another thread where it's more applicable. You were "speaking out" as you put it while bringing the market into it. The reason I posted on this thread was to respond to the absurdity that anyone would simply get short the market because of some event that means absolutely nothing over the long term. I have to admit these types of threads annoy me because they really do not belong on a serious forum.

But then you ranted about some stocks that keep going up despite bad earnings or bad guidance or whatever. Look, this has been the case since I started trading in 1995. Hell, we had internet stocks rally for 300 days straight trading at 1k times forward revenues! Companies would come out and say they saw no signs of profitability for the next 5 years and they still went up every day. That was 15 years ago! Look, nothing has changed. It was like this in the 80's, the 1920's the late 1800's. If trading were so easy that you could just get long good companies and sell the crap ones we would all be billionaires. It's all about game theory. Dealing with imperfect and incomplete information and trying to out think the other guy.

Nassim Taleb had a great way of describing the markets. He said it's like being a judge at a beauty contest. Only instead of picking who you thought should win, you had to pick the girl other people thought would win. And THAT is what changes everything. That is the function that makes trading difficult for most people. Because most of us could easily pick the prettiest girl, but what if you had to bet on everyone else? And what if they had to bet on who you thought that they thought....and this is the essence of game theory.

I'm not trying to berate you. As I said before, we probably agree on the politics. I get a little annoyed when people say there is no opportunity or there is no movement or the market is dead. All I see is movement and volatility. Then you ask the guy what he trades and he says the spoos. LOL. Well then OK. That is part of the problem. There is a whole world out there of trading products from 10k stock, to over 50 different futures. And every combination of the two. Hell is anyone watching rbob? Did you know it came in 50 cents in the last 4 weeks? That's over 20k per one contract. That's a sizeable move. And all the corresponding crack spreads moved accordingly. But one has to put in the work to learn and study these things. Just getting lazy and trading the spoos everyday is not going to cut it. And I'm not saying "you" are doing that, but many here are and they are many of the ones who bitch that the market is dead. Well, they are trading a derivative of large cap stocks. Not even sure they realize that. Anyway, I'm off my soap box.

 

[cmdtytrdr]

Quote from Maverick74:

If you want to speak out against that stuff, do so on another thread where it's more applicable. You were "speaking out" as you put it while bringing the market into it. The reason I posted on this thread was to respond to the absurdity that anyone would simply get short the market because of some event that means absolutely nothing over the long term. I have to admit these types of threads annoy me because they really do not belong on a serious forum.

But then you ranted about some stocks that keep going up despite bad earnings or bad guidance or whatever. Look, this has been the case since I started trading in 1995. Hell, we had internet stocks rally for 300 days straight trading at 1k times forward revenues! Companies would come out and say they saw no signs of profitability for the next 5 years and they still went up every day. That was 15 years ago! Look, nothing has changed. It was like this in the 80's, the 1920's the late 1800's. If trading were so easy that you could just get long good companies and sell the crap ones we would all be billionaires. It's all about game theory. Dealing with imperfect and incomplete information and trying to out think the other guy.

Nassim Taleb had a great way of describing the markets. He said it's like being a judge at a beauty contest. Only instead of picking who you thought should win, you had to pick the girl other people thought would win. And THAT is what changes everything. That is the function that makes trading difficult for most people. Because most of us could easily pick the prettiest girl, but what if you had to bet on everyone else? And what if they had to bet on who you thought that they thought....and this is the essence of game theory.

I'm not trying to berate you. As I said before, we probably agree on the politics. I get a little annoyed when people say there is no opportunity or there is no movement or the market is dead. All I see is movement and volatility. Then you ask the guy what he trades and he says the spoos. LOL. Well then OK. That is part of the problem. There is a whole world out there of trading products from 10k stock, to over 50 different futures. And every combination of the two. Hell is anyone watching rbob? Did you know it came in 50 cents in the last 4 weeks? That's over 20k per one contract. That's a sizeable move. And all the corresponding crack spreads moved accordingly. But one has to put in the work to learn and study these things. Just getting lazy and trading the spoos everyday is not going to cut it. And I'm not saying "you" are doing that, but many here are and they are many of the ones who bitch that the market is dead. Well, they are trading a derivative of large cap stocks. Not even sure they realize that. Anyway, I'm off my soap box.

Want a straw man? It's Keynes. Not Taleb, Keynes.

You're blind, man. Since you started trading in 1995 the environment has never been worse for traders.

There's a reason props are all laying people off and banks and hedgies laying traders off. It's not just regulation. If there were so many great opportunities they would easily love to absorb those costs.

stat arb is a shell of its former self. Correlations have never been higher. bond trading - DEAD. yeah, it finally made a decent move this year over 5 months. Look at the chart over the last five years. DEAD. Fixed income correlations and all its attendant instruments have compressed into one giant clusterfuck that's all tied together. That's much, much bigger than stock market. Ditto for currencies mostly.

Wow, tesla dropped 15 points. Nice micro situation. Also, what's 15 points for a $180 stock?

Compared to 1995 through 2010 the stuff we're seeing today is peanuts.

When was the last time you heard the words, "limit down"? "limit up"?
Every wonder why?

 

[denner]

Quote from cmdtytrdr:

OK, you're seriously dumb or just dishonest. Let's make no straw man attacks. You're logic in this last point is TOTALLY BACKWARDS. Maybe if I can get you to see that, you might be more openminded to having possibly some holes in your overall theory. But, I probably won't succeed. I'll try anyway with you. Last time.

You think the Fed's "transparency" is intended to or will increase volatility??? You jackass. Used to be greenspan and volcker just acted. One day you'd wake up and read in the paper on the way to the floor that rates had just gone up 1% that morning. Total shock and you knew you were gonna be in for a wild and crazy day. The rest of the time as a trader you were totally on your own.

Now, they use their mouthpiece every second to "try" (it's working for the time being) and assure the public and the market that they're on top of everything and the market will be ok. Dude, they're going to smooth out all of this crazy volatility from john q public (or maybe just the 1% but who's counting).

Next, they're going to taper. What a huge fucin laugh. Seriously. The fed is going to taper based on data. Jobs # was kindv good but not sufficiently amazing - ok, just taper 7 bln/month. Jobs # after that was a lot worse than Fed thought? Ok, Fed will add 12 bln/month. This is a total joke and a nightmare for traders and everyone else who believes in free markets.

The Fed is trying to control every little godamn movement in the overall market. They say they tie their policy to economic data. I call BS. I remember starting in 2009 that everytime the market would crap out a bit they'd trot along the next new policy decision. And they were very transparent about it all - kindv like Carl Icahn is very transparent about his stock holdings from time to time. It's not intended to be nice for YOU - they don't give a damn about you. It's intended to move and tame the market. So, this "externality" is the overwhelming reason why things are moving the way they are. Not inputs in your little system. Don't be so arrogant. Your theories on mainstream public holding short ETFs is lol. There is no mainstream public with ANY etfs - long or short. The whole investor class is a tiny fraction of this country. The rest are stone broke.

Just btw, regarding PCLN, I said institutions. I capitalized it. Not insiders. There is a difference.

The PCLN thing is a bit of a stretch but it does look and trade sketchy to me. Regarding the overall stock market, bond market (yea, they're not dampening volatility or trying to manipulate that at all), etc the Fed has done plenty. They've killed volatility. Which is exactly what they wanted. If you're in the 1% and just sitting on assets it's great. If you're not or you're trying to trade around positions for a living you're screwed.

In addition to the Fed (which is like a totalitarian agency now, not one that supports a free market ) you also have HFT. This is the reality of the times for traders. It must be a total coincidence to you that 90% of trading shops have closed and prop traders have left the business. So btw have many large hedge fund managers (like John Arnold in nat gas) as they view this as a shitty market to make any alpha in. If you want returns now just buy and hold and pray this Fed bs continues. And it's fine if you want to call that trading.

Great post.

 

[denner]

Quote from Maverick74:

If you want to speak out against that stuff, do so on another thread where it's more applicable.

His posts are COMPLETELY on topic, in case you forgot the thread title.

You can tone down the arrogance a tad as well.

 

[Maverick74]

Quote from cmdtytrdr:

Want a straw man? It's Keynes. Not Taleb, Keynes.

You're blind, man. Since you started trading in 1995 the environment has never been worse for traders.

There's a reason props are all laying people off and banks and hedgies laying traders off. It's not just regulation. If there were so many great opportunities they would easily love to absorb those costs.

stat arb is a shell of its former self. Correlations have never been higher. bond trading - DEAD. yeah, it finally made a decent move this year over 5 months. Look at the chart over the last five years. DEAD. Fixed income correlations and all its attendant instruments have compressed into one giant clusterfuck that's all tied together. That's much, much bigger than stock market. Ditto for currencies mostly.

Wow, tesla dropped 15 points. Nice micro situation. Also, what's 15 points for a $180 stock?

Compared to 1995 through 2010 the stuff we're seeing today is peanuts.

When was the last time you heard the words, "limit down"? "limit up"?
Every wonder why?

I'm sorry man, I just can't agree with anything you said. In fact we had limit markets all during last year and the year before. Did you not watch corn and soybeans and wheat trade up to record levels? Dude where were you went cotton went limit up almost every single day on it's move from 40 to over 200! And bonds dead the last 5 years? We trade up to record highs!!!! Dude, we set record lows in rates (highs in price). And we had moves in crude oil from 75 to 115 back down to 75 again. Honestly man, I just have to disagree with every single one of your points.

And again, you continue to make the mistake of using outliers as your baseline for volatility. That would be like me comparing Joe Montana of 1984 to Peyton Manning's numbers this year. If we use Manning's numbers as our baseline Joe Montana had no right playing professional football. LOL. You need to look at the long term averages and if you do, you will see the markets are no different now then their long term averages.

 

[pfranz]

Quote from Maverick74:

Your confusing ideology with markets. Don't do that. I'm a hardcore libertarian and I have no love for the Fed but that does not cloud my understanding of how markets function. It makes no difference what you think value is or what mom and pop are forced to buy. These are all inputs into the overall market equation. And when one input changes, it usually has an inverse effect on another input.


You are really over thinking the effect the Fed has.

But aside from all that, if you look back over the last 100 years, markets are doing now what they always have done. And people are responding in the same predictable manner. Not much really changes.

Again.
People read what I don't write and think.
I don't have ideology or ideas on how markets should be. Markets have always been manipulated, that's a matter of fact.
Difference now is how and how much central banks manipulate markets. It's not only the FED. Actually, I believe they made an agreement with standard manipulators (market makers,big speculators) and governments to move the markets all together.
I don't judge what they are doing, I believe they're doing the only possible things and probably I'd do the same were I in their shoes.
I surely don't blame them for my trading errors which come out from my absurd behaviour and novice silly mistakes (though I'm not a novice).
Had I followed my method and some basic,simple observations(which me myself made),I would have never had any problem,neither in this market,nor in previous ones: me too don't see any real differences with what markets have always been.

It makes no difference what I think about value, but it does what hedge funds managers think. As a whole they are big enough to make a difference, and many of them are angry with the FED as they wait for prices to "clear" to step in, but FED doesn't allow this.
So they don't step in, and remain out of the market.

What really lowers prices in current stock markets valuation is factoring in the risk that something goes wrong given that this system is completely rotten. And this factor is not really subjective.

 

[Bob111]

couldn't agree more with cmdtytrdr.
from my experience-chaos,uncertainty,high volatility are best times for trader to make a killing. we don't have that anymore. every day(like today)-flat open,low volume. news or no news-flat.
but saying that this is partially because public is over hedged? common..95%+ of US population probably doesn't even know what the word means

 

[Bob111]

Quote from achilles28:

The deficit and QE don't count as "manipulation". Therefore, there is no manipulation. We can play these semantical games until the market lays down the law. Which will also happen, at some point.

keeping the rate ARTIFICIALLY low.
i can repeat this one more time-money have no other place to go,but the stock market. and FED is the one and single force,who propping it.

http://finance.yahoo.com/blogs/brea...d-fed-real-challenge-says-funk-113125348.html

Of course, the wind-down of QE3 is only one part of the extraordinary measures currently in place, and Funk says when the time comes to actually increase, or normalize, interest rates, it is going to be much harder.

"It is a large challenge," he says. "I think it is going to be a long-term process to get [rates] back to what we used to call neutral, which is 3.5% to 4.5%."