TASR
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Toughest trade in the world: S & P 500?
- Thread starter stockfrosty
- Start date
TASR
Does the S n P future track the underlying stocks or do the underlying stocks track the S n P.
I think you'll find it is varying degrees of both. Hence when the S n P is manipulated by big S n P traders they are moving the underlying stocks also.
Where are the worst traders? Well of course "worst" is all a relative term. But I would argue that Mid cap stocks tend to have less experienced players. At Market Making firms the big cap stocks always have the most experieced market makers assigned to them. For example, if you are a rookie trader at Goldman it isn't likely that you are going to be assigned INTC until you've proved your skill over a number of years. It also stands to reason that the most liquid big caps also have more players. More players equates to better price efficiency. Whereas in a mid cap, often one institutional trader will be trending a stock higher as he accumulates it more aggressively than is necessary. Jump in front of him and you've got yourself a good trade. Ya don't get that often in the big caps because with so many players it is difficult to put together a clear picture of what is going on. (Specifically here I'm making referrence to tape reading)
Anyhow...think what you'd like to think. These are just my observations.
I think you'll find it is varying degrees of both. Hence when the S n P is manipulated by big S n P traders they are moving the underlying stocks also.
Where are the worst traders? Well of course "worst" is all a relative term. But I would argue that Mid cap stocks tend to have less experienced players. At Market Making firms the big cap stocks always have the most experieced market makers assigned to them. For example, if you are a rookie trader at Goldman it isn't likely that you are going to be assigned INTC until you've proved your skill over a number of years. It also stands to reason that the most liquid big caps also have more players. More players equates to better price efficiency. Whereas in a mid cap, often one institutional trader will be trending a stock higher as he accumulates it more aggressively than is necessary. Jump in front of him and you've got yourself a good trade. Ya don't get that often in the big caps because with so many players it is difficult to put together a clear picture of what is going on. (Specifically here I'm making referrence to tape reading)
Anyhow...think what you'd like to think. These are just my observations.
Quote from stockfrosty:
Whether you trade the mini, the big contract or the SPY, you are trading in the most competitive trading arena in the world. Why trade such a difficult instrument? The odds are againts you because you are trading againts the best traders in the world. If you want a challenge, climb a mountain or run a marathon. If you want to make cash as easily and consistently as possible, trade something other than the S & P.
Reasons why the S & P is the toughest trade include:
1) No leading indicator (especially if you trade the e mini)
2) Time and sales is useless because it is too thick and volume is mostly arb/program related anyway.
3) No NYSE Open book to establish risk levels
4) Intraday price action is close to random (it rarely trends cleanly and false breakouts are prevalent)
5) In the absence of news the S & P is dominated by a few large speculators who manipulate the market exceptionally well, which essentially adds up to one big cash grab)
6) Market is affected by a practically endless number of variables which make intraday price action as close to random as I've every seen in any market.
It all adds up to a very difficult trade. So what I'm asking is, again, why do so many insexperienced small time traders trade it? It is a recipe for loss.
This is just my opinion so take it as such.I ONLY trade ES
1) Leading indicator? Don't think there really is such a thing for any instrument traded.
2) Time and Sales does have patterns. Fear can be seen when size goes through. You have to make sure pure time/sales trades go through and not aggregated time/sales. And fear goes both ways, fear in getting out and not having enough.
3) The depth can be used to your advantage. When stops are run, through a S/R level, then the depth is very thin. When it thickens up you see people willing to take risk NOW. True they may cancel but at least they will put something out there. They are at risk to having the book swept and it tells me risk levels are flattening out.
4) Intraday price isn't random. If it was price cycles (yes price cycles not time cycles) wouldn't be possible. An example of that is here http://www.ttrader.com/mycharts/display.php?p=21168&u=theplumber&a=theplumber's%20charts&id=889 where the sequence from 9 to 5 is nothing more than a completed cycle, with 5 ending the price cycles. This one http://www.ttrader.com/mycharts/display.php?p=21401&u=theplumber&a=theplumber\'s charts&id=889 shows the Pesavento Map (that comes with Ensign) in blue and mine in yellow overlayed on the chart. Mine is a z-score of single and cross spectrum analysis of time series (no I'm not trying to pimp my model like Harrytrader).
5) The S&P futures market is way too big to be manipulated so don't even go there. Leaked info like last Friday yes, manipulated for "one big cash grab"? Get real.
6) See #4
The bottom line is you have to find what financial instrument fits you, that's all that matters. Some can't trade ES, they say it's too fast intraday starting with cash and ending with cash. Some swing trade instead, so be it. Some can only handle, or have a talent for stocks instead. Others options. Knowing yourself is more important than ANYTHING else in the financial world. Once you know your strengths and weakneses then you will find what fits you and you personality.
Mr. Plumber, I hope we can reach an understanding here.
1) Every stock trader I know uses the the ES as a leading indicator when they are trading NYSE stocks. When the ES sell off heavily, stocks tend to downtick. That is why we call it a leading indicator. But since you trade "ONLY" the ES I can understand where your ignorance on this particular point stems from.
2) The thicker the market/stock the harder it is to tape read. Perhaps you have no basis for comparison since you only trade the ES. But just ask a tape reader who trades both thick and thin stocks and I'm sure he'll agree. A block print for 25,000 doesn't mean much on MSFT. But in a mid cap stock it often signals the beginning or end of a move. I can tell you from experience that when I trade the SPY I haven't found much correlation between block prints and price action. Many of the prints on the ES and SPY are simply due to index arbitrage. HOw you tell the difference between actual speculative buying and arbing, I don't know. But on a product that thick, the picture on the tape can't be all that clear.
3) I can't comment on the ES depth since I haven't traded them.
4) I didn't say intraday price action was random....I said it was CLOSE to random. Which is why it is a tough trade. If you want evidence just look at the number of losers. If it was anything but close to random, we'd all be making money. You'll find moments of non random price action and if you've got enough experience, skill and patience you'll be able to recognize these moments. If you are one of those skilled S n P traders, again my hat goes of to you. But I would contend that unless you are trading so much size that you need the liquidity that the ES offer, you are challenging yourself unnesessarily.
5) No market is too big to be manipulated in the short term. Numerous S n P traders readily admit to manipulating the market in the short term. Tudor Jones said he can do it for up to a period of weeks. Monroe Trout says he does it all the time intraday. What do think stop gunning is. Answer, it is a form of price manipulation. If Soros steps in to sell 5000 big contracts at the market...what do you think would happen to the S n P. (In 87 Soros did sell 3000 contracts at the market and sent it crashing (this was the second wave of selling, not to be confused with the actual crash of 87.) There are plenty of big traders that can move the market. Sorry to burst your bubble.
I know traders who do 1000% a year on their money trading stocks. Their edge is that good. The catch is that they are trading positions of no more than 1500 shares. Large institutional accounts can't get these returns because they are trading so much size. For those with allot of money to move, the liquidity of the S n P or a big cap is necessary. But anyone trading the S n P or big cap isn't going to get these kind of returns because their edge is diminished by the number of skillfull traders. If you have a smaller amount of money and therefore do not need liquidity, trade something that is inefficient and trends well. All the experienced traders I know have told me point blank that the S n P is the hardest trade in the world. I've traded 1000's of symbls and my experience is consistent with this view.
1) Every stock trader I know uses the the ES as a leading indicator when they are trading NYSE stocks. When the ES sell off heavily, stocks tend to downtick. That is why we call it a leading indicator. But since you trade "ONLY" the ES I can understand where your ignorance on this particular point stems from.
2) The thicker the market/stock the harder it is to tape read. Perhaps you have no basis for comparison since you only trade the ES. But just ask a tape reader who trades both thick and thin stocks and I'm sure he'll agree. A block print for 25,000 doesn't mean much on MSFT. But in a mid cap stock it often signals the beginning or end of a move. I can tell you from experience that when I trade the SPY I haven't found much correlation between block prints and price action. Many of the prints on the ES and SPY are simply due to index arbitrage. HOw you tell the difference between actual speculative buying and arbing, I don't know. But on a product that thick, the picture on the tape can't be all that clear.
3) I can't comment on the ES depth since I haven't traded them.
4) I didn't say intraday price action was random....I said it was CLOSE to random. Which is why it is a tough trade. If you want evidence just look at the number of losers. If it was anything but close to random, we'd all be making money. You'll find moments of non random price action and if you've got enough experience, skill and patience you'll be able to recognize these moments. If you are one of those skilled S n P traders, again my hat goes of to you. But I would contend that unless you are trading so much size that you need the liquidity that the ES offer, you are challenging yourself unnesessarily.
5) No market is too big to be manipulated in the short term. Numerous S n P traders readily admit to manipulating the market in the short term. Tudor Jones said he can do it for up to a period of weeks. Monroe Trout says he does it all the time intraday. What do think stop gunning is. Answer, it is a form of price manipulation. If Soros steps in to sell 5000 big contracts at the market...what do you think would happen to the S n P. (In 87 Soros did sell 3000 contracts at the market and sent it crashing (this was the second wave of selling, not to be confused with the actual crash of 87.) There are plenty of big traders that can move the market. Sorry to burst your bubble.
I know traders who do 1000% a year on their money trading stocks. Their edge is that good. The catch is that they are trading positions of no more than 1500 shares. Large institutional accounts can't get these returns because they are trading so much size. For those with allot of money to move, the liquidity of the S n P or a big cap is necessary. But anyone trading the S n P or big cap isn't going to get these kind of returns because their edge is diminished by the number of skillfull traders. If you have a smaller amount of money and therefore do not need liquidity, trade something that is inefficient and trends well. All the experienced traders I know have told me point blank that the S n P is the hardest trade in the world. I've traded 1000's of symbls and my experience is consistent with this view.
I would suggest that if you are using the ES as a "leading" indicator that you might be sadly mistaken on how leading those S&P futures quotes really are.
Most stock-trading platforms that I have used, including the ever-so-speedy Hammer Platform at Assent have futures quotes that are totally for the birds . . . They miss prints, don't update quick enough, and by and large are a couple, if not 4-5 seconds behind the bmajority of the time, especially compared to the quotes that one receives off a futures trading platform.
Something to consider.
Most stock-trading platforms that I have used, including the ever-so-speedy Hammer Platform at Assent have futures quotes that are totally for the birds . . . They miss prints, don't update quick enough, and by and large are a couple, if not 4-5 seconds behind the bmajority of the time, especially compared to the quotes that one receives off a futures trading platform.
Something to consider.
Quote from waggie945:
I would suggest that if you are using the ES as a "leading" indicator that you might be sadly mistaken on how leading those S&P futures quotes really are.
Most stock-trading platforms that I have used, including the ever-so-speedy Hammer Platform at Assent have futures quotes that are totally for the birds . . . They miss prints, don't update quick enough, and by and large are a couple, if not 4-5 seconds behind the bmajority of the time, especially compared to the quotes that one receives off a futures trading platform.
Something to consider.
I am testing my system on S&P futures - yesterday I made 7 poins in one trade (short).
the ES quotes from Echo pro (sterling) are right on point and rock solid. I have no complaints.
Quote from stockfrosty:
Mr. Plumber, I hope we can reach an understanding here.
1) Every stock trader I know uses the the ES as a leading indicator when they are trading NYSE stocks. When the ES sell off heavily, stocks tend to downtick. That is why we call it a leading indicator. But since you trade "ONLY" the ES I can understand where your ignorance on this particular point stems from.
2) The thicker the market/stock the harder it is to tape read. Perhaps you have no basis for comparison since you only trade the ES. But just ask a tape reader who trades both thick and thin stocks and I'm sure he'll agree. A block print for 25,000 doesn't mean much on MSFT. But in a mid cap stock it often signals the beginning or end of a move. I can tell you from experience that when I trade the SPY I haven't found much correlation between block prints and price action. Many of the prints on the ES and SPY are simply due to index arbitrage. HOw you tell the difference between actual speculative buying and arbing, I don't know. But on a product that thick, the picture on the tape can't be all that clear.
3) I can't comment on the ES depth since I haven't traded them.
4) I didn't say intraday price action was random....I said it was CLOSE to random. Which is why it is a tough trade. If you want evidence just look at the number of losers. If it was anything but close to random, we'd all be making money. You'll find moments of non random price action and if you've got enough experience, skill and patience you'll be able to recognize these moments. If you are one of those skilled S n P traders, again my hat goes of to you. But I would contend that unless you are trading so much size that you need the liquidity that the ES offer, you are challenging yourself unnesessarily.
5) No market is too big to be manipulated in the short term. Numerous S n P traders readily admit to manipulating the market in the short term. Tudor Jones said he can do it for up to a period of weeks. Monroe Trout says he does it all the time intraday. What do think stop gunning is. Answer, it is a form of price manipulation. If Soros steps in to sell 5000 big contracts at the market...what do you think would happen to the S n P. (In 87 Soros did sell 3000 contracts at the market and sent it crashing (this was the second wave of selling, not to be confused with the actual crash of 87.) There are plenty of big traders that can move the market. Sorry to burst your bubble.
I know traders who do 1000% a year on their money trading stocks. Their edge is that good. The catch is that they are trading positions of no more than 1500 shares. Large institutional accounts can't get these returns because they are trading so much size. For those with allot of money to move, the liquidity of the S n P or a big cap is necessary. But anyone trading the S n P or big cap isn't going to get these kind of returns because their edge is diminished by the number of skillfull traders. If you have a smaller amount of money and therefore do not need liquidity, trade something that is inefficient and trends well. All the experienced traders I know have told me point blank that the S n P is the hardest trade in the world. I've traded 1000's of symbls and my experience is consistent with this view.
If you noticed the disclaimer of only my opinion you shouldn't have made anything into a dick measuring contest. This is why I don't bother with Elite anymore.
1) Any fund can start to buy/sell any 1 stock and make the futures a non issue as a leading indicator, true or false? On the aggregate yes but isn't it possible for it also to be false, probability theory says yes so PLEASE excuse me for my pure ignorance.
2) I happen to know a few or the "arbs" who index arb and if you knew what they did exactly you would understand that you can read the tape for ES.
3) You don't trade ES or the big contract? But you've made assumptions about not being able to read the tape? Or is this someone else word your taking, don't trust ANYONE. Trade the dam thing and see IF you can see the patterns I speak of.
4)You said you never traded ES, but you know it's close to random. Based on someone elses opinion? I've never know any 2 traders to ever think alike on any issue of what to trade how to trade it or when to make the trade. Reminds me of who is the most beautiful woman is, get a different response from every single person.
5) Guerillas can't make the market go their way without everyone going with them. Yes I know the stories of said traders by word of mouth of this hedgie in Seattle I know and speak to regularly. You don't hear of the times they got squeezed, abeit a long squeeze or short squeeze, only the times they succeded.
And the last point of your doesn't make sense to me. Why brag about other traders making 1000%? Is this the point of the thread? I'm not a large institution but I do sleep in a Holiday Inn Monday through Friday slinging 1000 contracts around per trade with about 10-20K RT's a day. Make 1000%? I wish. Any less of a trader than those you brag about? I doubt it. Skillfulness of a trader is all about what suits them and their personality, I already said this once. ES (or the big contract doesn't matter to me) is my flavor. Stocks are someone elses, I never was a good stock trader, at least making 1000% a year trader I never was. Return 20%, you bet. Lets put this into perspective, make 1 million using 5 million on a fully margined futures account. I may just be small potatoes to you, so be it. My point was that your "skillfull" traders you know are a function of what suits them and their mental make up. Trade Es or the biggie and make your own decisions instead of believing others no matter how well you trust them. I was first told by someone I respected to not touch futures, they were wrong. I love it.