What kind of techniques do heavy scalpers use?

[jack hershey]

Quote from steenbab:

Hi Jack,

Great suggestion re: studying the "games" played on the DOM screen. There are patterns worth noting for high frequency traders, but that trade has gotten increasingly challenging due to the way the computers (trading their algorithms) enter orders.

One clarification. I conducted some of the research with Andrew Lo and Dmitry Repin at MIT and do not believe that they recommend therapy for dealing with the emotional challenges of trading faced by newbies. Indeed, there are sound psychological reasons for questioning the value of verbal therapies for aiding rapid, automatized performance skills. If you examine most similar performance domains, from the training of fighter pilots to the development of SWAT teams and Olympic athletes, you'll find that structured performance exercises--not "therapy"--are typically employed to reduce stress, build familiarity, and enhance performance.

I'm a psychologist as well as a trader; I respect the many areas in which therapy can help traders. Enhancing high speed performance, on balance, is not one of them.

Here, BTW, is one of the MIT papers:

http://web.mit.edu/alo/www/Papers/lorepsteen4.pdf

Thanks for the stimulating post--

Brett

I miscommunicated to you. Sorry.

High velocity, as I used the term,was meant to refer to a trader's rate of capital acquisition. I must have implied that some trading frequency characteristic was being put on the table.

I commented elsewhere on the more recent practice of substitution of therapy in lieu of sports oriented remedies.

 

[jem]

Jack your mistake seems be indicative of a person who has never faced the pressure of trading profitably or playing a sport of a living. If you really had been subjecting yourself to the process of attempting to trade profitably you would know that...

It is not a "substitution of therapy" in favor of remedies jack.

I would argue it is not a remedy at all. It is a honing of your game or your approach during the game.

It is the creation of a routine that you go through every time. Your routine helps you execute. Over time time you know that you will execute even under intense pressure. You acknowledge the pressure - you feel the pressure - you execute anyway. It can be as simple as bouncing the ball four times when you serve and knowing that you will kick it wide to the back hand side until you get beaten three times in row.

There is pressure faced by people when trading for real money or playing sports for real money or flying combat missions. If you actually traded the S&Ps profitably you would not have made the mistake you made.

People who make money in the markets operate on a higher level. It is not the same as make believe.

 

[steenbab]

Very. very insightful, Jem. You said it better than I could. Expertise results from a developmental process that tackles progressively difficult challenges and makes them routine. As a psychologist and a trader, I have profound difficulty with the view that "90% of trading is mental". We would never say that of other performance disciplines (surgery, ballet, the teamwork of a NASCAR pit crew). Once skills are honed and made routine, *then* psychology plays a role in sustaining consistency. But having a proper frame of mind can never substitute for those skills.

Brett

 

[Spydertrader]

Quote from jem:

It is the creation of a routine that you go through every time. Your routine helps you execute.

Quote from steenbab:

Expertise results from a developmental process that tackles progressively difficult challenges and makes them routine.

Either you two have misinterpreted a post, or you've chosen to take one comment out of context. The above two quotes summarize what Jack has harped on and on about for years - the development of 'sports memory' in trading. Search Jack's posts and you'll often find him using the same words as you two did in your most recent posts. I find it highly ironic that you believed you were 'proving' he didn't trade, when in fact you proved his point.

Nicely done.

- Spydertrader

 

[steenbab]

Hi Spydertrader,

I'm very sorry if my post came across as a criticism of Jack. I was responding to Jem's point re: making skills routine and questioning the role of psychological methods in developing expertise. I am not at all familiar with Jack's work and would not presume to know anything about his trading. The term "sports memory", if it is synonymous with "muscle memory", is indeed a real phenomenon and quite relevant to high-speed trading. It is not so relevant to longer-term investing and portfolio management, particularly of a quantitative nature. One of the interesting aspects of trading is that it encompasses so many cognitive skill sets--and different ones based on the time frame being traded.

Thanks for the opportunity to clarify. My sincere apologies if my prior post came across as a flame; that was not my intention--

Brett

 

[Spydertrader]

Quote from steenbab:

Thanks for the opportunity to clarify. My sincere apologies if my prior post came across as a flame; that was not my intention--

No need for an apology. I simply wasn't sure either you or jem realized Jack had preached the sports / muscle memory phenomenon for many, many years.

- Spydertrader

 

[feb2865]

Quote from steenbab:

Hi Spydertrader,

I'm very sorry if my post came across as a criticism of Jack. I was responding to Jem's point re: making skills routine and questioning the role of psychological methods in developing expertise. I am not at all familiar with Jack's work and would not presume to know anything about his trading. The term "sports memory", if it is synonymous with "muscle memory", is indeed a real phenomenon and quite relevant to high-speed trading. It is not so relevant to longer-term investing and portfolio management, particularly of a quantitative nature. One of the interesting aspects of trading is that it encompasses so many cognitive skill sets--and different ones based on the time frame being traded.

Thanks for the opportunity to clarify. My sincere apologies if my prior post came across as a flame; that was not my intention--

Brett

I love your blog

I follow it everytime

Thanks for all the free info. Has been very helpful

Peace

 

[TSGannGalt]

Being a (former-)Chicago trader, I would have to mention that a lot of the Marc's success comes from Kingstree. I don't deny Marc's mentality, but humans are an adaptive animal.

You surround yourself with a "focused" group of people, along with Popeyes and Dunkin' Donuts across the street... you're bound for success...

You need fried chicken. I LOVE FRIED CHICKEN.

DO YOU LO----VE FRIED CHICKEN????

 

[JimmyJam]

Quote from steenbab:

making skills routine and questioning the role of psychological methods in developing expertise. I am not at all familiar with Jack's work and would not presume to know anything about his trading. The term "sports memory", if it is synonymous with "muscle memory", is indeed a real phenomenon and quite relevant to high-speed trading.

Thanks for the posts everyone.

Great ground laying information here.

As usual, it'll be up to the individual trader to interpret it and use it as they best see fit.

Good trading,

Jimmy Jam

 

[CFerret]

Quote from VSTscalper:

CFerret,

You and I corresponded thru several PM's....almost a year ago.

Yes I remember we talked and you even let me enter your room and see you trade. It was very informative and I really appreciate your efforts in helping me.

But one problem still remains: I don't understand the mechanics of interacting forces which cause these changes in DOM and more importantly cause market to move.

You're right when saying that "who cares what is it if it works", but as a psychologist and a man from scientific family I tend to analize and try to understand well every process I see.

Simply cannot believe in things until I understand how they work. Better to say: I believe YOU that it works exactly as you say, but I can't force myself to use this information for my own trading until I understand it well.

For example I understand why price moves: because balance between supply and demand changes (BTW, reading Dr. Brett's blog last weekend helped me to much better understand the dynamics of markets and a role of big players, information I will definately begin to use right from today).

Buying and selling activity displayed on tape in my system of perception of markets is that force which causes prices to move. I understand that too.

But I don't have a good understanding of DOM "games". Just accepting them as "games" is not enough for me to make my mind begin using this information.

Hence my search for "truth" of DOM.

Wish everyone a good trading week!
Janis