"money, love and knowledge"
Are you talking about hookers?
Are you talking about hookers?
Why are people so secretive here?
- Thread starter pclark
- Start date
Although the ES has volume in the millions, it must be understood that this volume is not evenly dispersed across all price levels and time periods. 15,000 contracts trying to enter at the same price 3 am will have a different effect then at 9:30 am during the opening bell. Likewise, following the notion that the majority of market participants lose money, the majority of profitable traders are entering where the minority of volume exists making the proper maintenance of market impact that much more important.
As for simply holding the contracts for longer, that is a partially valid point. More contracts entering in the direction of your trade is not necessarily a good thing. People that are running scalp plays with limit orders bank their success largely on tight slippage. Too many contracts trying to enter and exit where you are means that you are less likely to get filled. Risk exposure will also increase as a result of increasing your stop loss to stay in the trade longer. If your profit target is going to increase proportionately, then one can reduce position size and still take the trade. However, if your strategy becomes popular enough, not even this will help.
I keep track of the average volume during the entry and exit times for my systems. Applying my own analysis, I know what I can theoretically scale up to. If I see consistent significant deviation from the average volume during my entry and exit times, it is most likely that my edge has been compromised, and my system needs revision.
Under this assumption, the market would never move, or barely ever move. As a reaction to a considerable amount of trades in one direction entering at specific price levels in a limited period of time, either directly or planning to do so through options, the market will move in one direction by a certain amount without an equal amount of retracement in an equal amount of time. This is why the market moves.
I feel that I have given you fair explanation of the logic to my statement. If you want more details, then ask what it is exactly that you want to know. If I can, I will answer. I am not saying this in a negative way to start an argument. I just want you to understand where I'm coming from.
I am studying applied math right now to go into quantitative finance. During the course of my studies, I am sure that I will run into professors that have made some good money through their own trading ventures. However, I am not expecting these professors to divulge the specifics of their trading strategies. They will teach me about math, economics, and business.. the tools I need to build my own trading strategy, but they will not give me exact blueprints.
I do understand where you're coming from. Thank you.
Good luck with your studies. Math is beautiful.
If you want to get some laughs ask one of the professors who insist on EMH just how in world is it possible that in a system which is supposed to be random, the two of the variables behave in a non-random fashion with respect to each other: http://elitetrader.com/vb/showthread.php?s=&postid=1034264&#post1034264
That way you can find out if they know what they're talking about. And I don't mean it in a negative way to start an argument either.
pclark,
ok, i would share the secret with you because you are a nice guy and you have shared business tricks with other people before. but would you share back once you have built on this secret info?
i am worried that once you start making big $$, you will turn from a cheerful willing-to-share person into a sulking secretive a-hole.
Thanks for the great reply. You are exactly right about knowing where I was coming from. I will take what you said to heart. Man, I am on vacation and checking this on my iPhone and I see my little thread has grown. Hopefully it's not causing any
fights.
fights.
Quote from lilduckling:
Hey pclark, lilduckling hereâ¦â¦.. I know where your coming from and I feel your pain. You want to focus your attention on a narrow set of methods or method, and not spend months and months chasing every strategy to see whether or not they work. Thus when you see traders shooting down a method, you kinda of want to see the reasons why, so that then you could use your own assessment to determine who is on to something and who is full of shit.
Well, I will tell you some things hereâ¦. You may or may not agree with themâ¦. I donât knowâ¦. and it doesnât matter to me either way.
First off, you need to make a sharp distinction between knowing how to trade, and becoming profitable. The two are not the same, different as night and day. A basketball coach knows how to play basketball, but could never compete against players that know a lot less then him. You often hear people inquiring âwho is a good traderâ or others posting their trades to proudly show how well they did. Its all bologna. None of that tells you whether a system works or notâ¦. It just tells you it worked for that particular trade in that particular time. A feat that a chimp in any zoo could easily accomplish also.
Secondly, you need to draw out a plan that explicitly states what is profitability and what is break even. Not just for every trade, but for the week, for the month, and for the year. It is very different for everybody. After one year, you made $3500. Itâs a profit on paper, but is it a profit for you? Is it a breakeven? Trader A makes $4000 in one week, and gives it back the following 3 weeks and is at zero for the month. Trader B makes $50 per week and is up $200 for the month. Some would say they are both break even for the month. Others say trader B. What if after six months they are both at $2500. Along those 6 months trader A had 60% draw down while trader B had 8% draw down. Is it still a coin toss? I donât know. It doesnât matter. Its something you have to sit down and decide for yourself. Because it is between you and your wife, if after one or two years, you made $15,000.â¦.. And your wife tells you to get out and get a ârealâ job or sheâs leaving you.
Third, you are starting off like I didâ¦.. Putting more emphasis in the method or strategy than on yourself. The best trading systems will not be profitable if in the wrong hands, and the oldest crummiest ones will work in the right hands. Just like a camera. In my case a firearm, often in the range, I would outscore shooters with high tech modern pistols, while I used a 120 year old colt revolver replica. When I started trading in 03, I remember being in Dan Zangers room (In those days I was searching for everythingâ¦. Gurus, trading rooms, methodsâ¦.newslettersâ¦.etc, left no stone unturned) anyways there was a trader that was really making good money, big money⦠he would call out trades from stocks he was day trading, but it would usually be too late by the time you were ready to hit the buyâ¦. They moved fast right after he called them. He never would talk about his method. Fed up one day I asked him for some tips. He didnât give me any, except to say that I have to find my own way, find what works for me. Of course the system he was using was what I wanted, because I could see it working week after week. I didnât understand then, that it wouldâve never worked for me. He was using tremendous amounts of money (millions) for very small moves. Even if had I somehow adopted his strategy, had the balls of steel to scalp in and out like he did, I still would hardly make any money. In fact the profits would not pay for all the data fees. The point is thisâ¦â¦ just because a system works, doesnât mean the system will be profitable for you.
You have to be in the right time frame, the right trading vehicle, with the right amount of $, that fits your style and personality. No one here can tell you which of those is best for youâ¦.. Only you can figure that out for yourself. And you will figure it out. All you need is two things in this business to become successful. You always hear 97% fail. But all youâ¦. All anyone, needs to succeed is TIME and MONEYâ¦. thatâs it. Run out of either one before you learned the ropes and thatâs it⦠your out. 97% fail⦠but anyone can succeed. Take a homeless bum off the streets, if he has no restraints with money or timeâ¦. He will become a profitable trader!! It may not be as fast as you⦠might take him 15 years to get there⦠but he would get there. Most fail because there IS a constraint in money and timeâ¦most are out in under 1 year. Even a monkey, will become profitable!! Just give him 150 million years in front of a computer. So what you have to do, before you even draw up a trading planâ¦. Is come up with a business plan. Thatâs right⦠you need both a trading plan and a business. Because some of the most important things you will do, is lay out a foundation that will allow you the time and expense to become profitable in trading. THIS is often overlooked by manyâ¦. And thus they fail within 1 year. Have a business plan, that will allow you the time and money to stay alive in this, long enough to learn how to become profitable. As you are beginning to see, some off the most important things you can do to increase your odds of success, has nothing to do with trading. Some of the most important things in trading, have nothing to do with strategies⦠as I mentioned above. Most approach this business in the exact opposite of what I have laid out. They start off looking for a strategy.
Now I want to address the posters here. There is bad information here, and there is good information here. The bad info posses no threat to you, since you see it for what it is. The good information is what you have to be careful withâ¦. Since itâs what may have you spend time with further investigation and dissemination. Time, as I spoke about earlier, is a commodity in this business. This brings us to your original dilemma⦠how to tell which posters are sharing valuable info, and which ones are just posting opposing views for the hell of it. Well if you are new here and donât know the posters, then its difficult⦠since your just going by peoples opinion. When you read a strategy out here do two things: Does it make sense? In other words is it rational? If yes, then figure out if it fits you. So if thereâs a neat thread about swing trading using fundamentalsâ¦. And your style is day trading with technicalâs⦠no matter how good that system is, it would be a waste of your time to pursue it. âOh⦠maybe I can incorporate some aspects of it to fitââ¦.. forget it!! There are so many strategies and systems that are up your alleyâ¦. Why spend time walking around in another neighborhood? Some people think⦠âIâll take a little from that system, and little from that other oneâ¦. etcâ¦. and Iâll end up with a real sweetheart of a systemâ well feel free to engage in mental masturbation all you want⦠but you usually end up with the red headed step child. The truth isâ¦. Its almost impossible to tell a new trader they donât need other peoples strategies. A new trader does not want to hear it⦠its like asking them to breath underwater. Only when a trader begins to get experience under his/her belt, does that trader realize the truthâ¦. That they, and only they will come up with a system that works. âBut, but, but how..but I need a start, I needââ¦â¦. Take your computer, turn it on, watch the market. Donât trade, donât even paper trade⦠just watchâ¦.watch. Start taking a few notes after a while. But keep on just watching. Weeksâ¦even months! Believe me, you will be head and shoulders above so many others that start this.
Lastly, there are no âsystemsâ that people have that they want to keep secret⦠in fear it might âwater downâ the profits. Any system they have that is working for them is because they made it âfitâ them. Its like one old lady asking another old lady if she can borrow her dentures because she left hers at the house. Systems are kinda like that.
I know I didnât really answer all your questionsâ¦.. But I figured Iâd contribute something to this thread. Otherwise people will say all i do is attack Jack.
I just want everyone to know I not trying to "skin" anyone. Quite a few of the threads I read it seemed like people were making comments then intentionally not backing up there comments or with holding info. I am just used to a profession and forum where people are a little more free with their knowledge. I am not the kind of person that free loads. That being said, if there is knowlege that would save me years of time and money and someone is willing to share it I would be stupid to turn it down. There have been several helpful posts even though my first may have been somewhat short sighted and I appreciate them.
Paul
Paul
Quote from MandelbrotSet:
Hey you know, it's funny. I find the cluelessness on this website to be a turnoff too, where every johnny-come-lately and nOOb who just tuned-in to Mad Money wants to come on the website and beg people to give him their system so they can get rich (just hysterical).
I'm definitely not the one to spoon feed the clueless.
***
... and on a website that allows and encourages vendors who can't wait to skin people just like the OP, I find your post to be rediculous and not the least bit hypocritical.
But tell you what ... trading systems are like jobs, you only need one ... so why don't you send the OP a PM giving your full system strats, probs and money managment algos.
OP - check your Inbox.
P.S. But hey, maybe you ARE from a communist country, Zdreg, or some other place where people want to believe that pollyanaish crap you just wrote ... in which case, I'll say it again.
OP - check your Inbox.
Most people choose to analyze the market in one of two terms: as a stochastic process (not to be confused with the stochastic indicator) or chaotic. The former states that movement is random whereas the latter states that every outcome is the result of the event before it (deterministic). I believe that both these view points are true.
I believe that everything is deterministic. However, if not all of the factors substantially influencing the outcome after are known the observer will deem it to be random. These unknown factors may equally affect two different variables leading to correlated movements across stochastic processes. This generally occurs on lower time frames explaining why statistical arbitrage so often involves short hold periods. As we get into higher time frames, some of the factors which are unknown to the observer are less imperative to determining the outcome of the next event, making deterministic analysis possible (chaos theory applied to finance markets). Stochastic processes might occur on higher time frames and deterministic ones on lower time frames, but I don't want to get too far into it.
Either case, the factors which influence the generation of price points - known or unknown to the observer - are present and may equally affect multiple instruments. This is why "random" movement can exist, yet the changes in the values of these variables can correlate heavily with other variables. Random is not fully random.
But you are right.. I will be asking this question to my professors. It is a good way to gauge their perceptions.
That's pretty much it exactly. People cannot explain certain parts of an otherwise deterministic process (they do not know what is causing it) and therefore deem the entire process to be random. A good analysis of the markets requires respecting both view points, even though one might be prevalent over the other.