What Moves a Market?

[wrbtrader]

Quote from etfarb:

Probably makes sense why Macro trading is such a hard thing to actually wrap your head around

There's already an active journal on this topic here at ET called Global Macro Trading for a Living by Daal. You probably want to just participate in that journal just as many others have been doing since 2011.

In addition, there's other active social resources (long term traders sharing their thoughts and resources) about the same topic that can easily be found on Google.

 

[spdracer]

Quote from etfarb:

Thing is i'm not talking about this from the perspective of an intraday trader

I'm taking about this from the perspective of relative value of assets over a week to month time frame

Many major events trigger a reaction which translates to booking of profit or exiting at a loss by market participants , sending the prices up or down.

Most of this can be calculated by checking the impact of it on the market/sector or % of correction over all in that impact period.

But Biggest impact will be by a major event from news of Economy/Currency/Etc.. which will lead to a major correction , and the whole correction happens for that very sole reason regarding that event.

 

[Swan Noir]

Some years ago the legendary bond floor trader Tom Balwin gave an example of the type of buying that moves markets. Like Baldwin, many savvy traders believe explosive moves come not from winners pressing their bets but from those stuck in a trade going against them having a better feel for the lack of liquidity that will enable them to "sweep" the market creating the imbalance that attracts aggresive money. While most floors are ancient history my bet is there is a "type" of trader that still thinks this way ... electronic or not. That is my bet but in fact I do not know if that is accurate. Here is Baldwin's take:

If the initial trade is wrong and I lose money I don’t, like a CTA, go well OK I’m short 900 and its 5 ticks against me, I’m going to buy my 900, count up my losses and start over. What I do from a floor point of view is trade the position. That might be buying 3000 @ what ever price I can get out, carry the market with me and sell it higher. You have a lot of gunpowder when you are wrong. You are going to make the market move, people who are wrong generally move markets. You don’t have that kind of liquidity with that size. So, what’s the point of me just getting out of my position. I might as well, if I’m going to buy 900, I might as well buy all I can, it’s only going to be probably 1500 and in the process its going to move the market and then I’ll make money on what I end up being long and then if I get reinforced by the rest of the world and they continue to buy it, well then I’ll continue to buy it. And then it will keep going. So, what started out being a losing proposition, short 900 and 5 ticks against me, turns out to be a big winner. From the floor point of view, its what you do with the trade when you get it, how you make money. Versus being upstairs where you tend to be more analytical with money management principles and systems because its more difficult to move the market in ways that I do.

 

[tradingjournals]

Quote from Swan Noir:

Some years ago the legendary bond floor trader Tom Balwin gave an example of the type of buying that moves markets. Like Baldwin, many savvy traders believe explosive moves come not from winners pressing their bets but from those stuck in a trade going against them having a better feel for the lack of liquidity that will enable them to "sweep" the market creating the imbalance that attracts aggresive money. While most floors are ancient history my bet is there is a "type" of trader that still thinks this way ... electronic or not. That is my bet but in fact I do not know if that is accurate. Here is Baldwin's take:

If the initial trade is wrong and I lose money I don’t, like a CTA, go well OK I’m short 900 and its 5 ticks against me, I’m going to buy my 900, count up my losses and start over. What I do from a floor point of view is trade the position. That might be buying 3000 @ what ever price I can get out, carry the market with me and sell it higher. You have a lot of gunpowder when you are wrong. You are going to make the market move, people who are wrong generally move markets. You don’t have that kind of liquidity with that size. So, what’s the point of me just getting out of my position. I might as well, if I’m going to buy 900, I might as well buy all I can, it’s only going to be probably 1500 and in the process its going to move the market and then I’ll make money on what I end up being long and then if I get reinforced by the rest of the world and they continue to buy it, well then I’ll continue to buy it. And then it will keep going. So, what started out being a losing proposition, short 900 and 5 ticks against me, turns out to be a big winner. From the floor point of view, its what you do with the trade when you get it, how you make money. Versus being upstairs where you tend to be more analytical with money management principles and systems because its more difficult to move the market in ways that I do.

Does he mean (in 3 words): the losers stops? Your first 2 sentences explained it 100 times better than him.

 

[Rorschach_test]

Quote from Swan Noir:

Here is Baldwin's take:

If the initial trade is wrong and I lose money I don’t, like a CTA, go well OK I’m short 900 and its 5 ticks against me, I’m going to buy my 900, count up my losses and start over. What I do from a floor point of view is trade the position. That might be buying 3000 @ what ever price I can get out, carry the market with me and sell it higher.

'And then i`m gonna get whipsawed to death',Baldwin continues

 

[Swan Noir]

Well, I assume he got to be the world's largest T-Bond futures trader in the world starting with a modest stake by not getting whipsawed to death too often.

Quote from Rorschach_test:

'And then i`m gonna get whipsawed to death',Baldwin continues

 

[Swan Noir]

I think if he meant that he would simply be buying back the 900 he's short. Remember the topic here (and in Baldwin's interview) is what moves markets. And his point is when a heavy hitter on the floor was stuck he frequently recognized that 900 could be just the start of a whole new game as he became the catalyst for it to move up. But, of course, he would need to be prepared to risk some additional money to be sure he really did clean the market.

Quote from tradingjournals:

Does he mean (in 3 words): the losers stops? Your first 2 sentences explained it 100 times better than him.

 

[Rorschach_test]

too often?holds true.

''That might be buying 3000 @ what ever price I can get out, carry the market with me and sell it higher.''

i imagine if he`s wrong,he reverses with the tripple size. i`ve been testing this to death,too.the outcomw is pretty much similar to collecting,scaling-into position.

his main concern,as he said, that the people who wrong trying to pull up/down the position to the point where they`ve been wrong to scratch it out.he probably don`t wait for the scatch and give up some.there are two options only,to collect and to reverse.i found no difference so far.

 

[Swan Noir]

The difference is he is a bit past the testing stage and has made himself a billion or so actually trading this way. In fact what he is suggesting here is almost the opposite of scaling in. He is not trying to build a position without moving the market ... he wants to take everything that's weighing it down and take it in fast enough to take it up.

I might be wrong but I think the sheer size of Baldwin's plays make it a bit unlikely that what you are doing has a similar effect on the market. When he buys back the 900 and takes a thousand more at increasing prices it's a different thing than your 10 lot or 50 lot or even your 100 lot if you are fortunate enough to be able to operate on that scale. You see the 100 lot is a lot to me but it is not to him. That's the point. He does move markets.

Quote from Rorschach_test:

too often?holds true.

''That might be buying 3000 @ what ever price I can get out, carry the market with me and sell it higher.''

i imagine if he`s wrong,he reverses with the tripple size. i`ve been testing this to death,too.the outcomw is pretty much similar to collecting,scaling-into position.

his main concern,as he said, that the people who wrong trying to pull up/down the position to the point where they`ve been wrong to scratch it out.he probably don`t wait for the scatch and give up some.there are two options only,to collect and to reverse.i found no difference so far.

 

[Rorschach_test]

Quote from Swan Noir:

The difference is he is a bit past the testing stage and has made himself a billion or so actually trading this way.

i`m very happy for him