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Some insight for new traders
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Some insight for new traders

  #31 (permalink)
Market Wizard
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ctnz View Post
xplorer

I know I am going to open a can of worms by replying to your question. I can feel it in my bones. Best get the lay of the land first. What do you know about stops at this point?

I formed an opinion that 'the market moves on volume' although it can be interpreted as simplistic, but I simply don't understand 'The market runs on stops'.

Are you suggesting that when the market reaches an area where there are a number of accumulated stops it will run through that area?

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  #32 (permalink)
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xplorer

Lets start with some basics. A stop or profit target is the opposite side of what you did to get into the trade. So if you bought/went long you have to sell/go short to get out vice versa if you sold/went short you have to buy to get out. So the other side of your profit target or stop is the same of what you did to get in to the other side of that trade. A Short stop to you is a buy to the other side. You need to fully understand the other side of your trade. You need to get this very clear in your mind.

So if you go long you are basically putting a buy order at a better price farther down. The big boys can get Level III (the order book) which tells you every stop in an instrument. So they can see your stop and everybody else's stop as well. I call it food. When there is enough food they go for it every time. Almost all traders are taught the same thing "put your stop behind a pivot". So a lot of traders put their stop at the very same place. "They" herd traders like cattle."They" paint price action to get you to do exactly what they want. "They" do it every day, all day long. The only way "they"make money is if you lose money.

Many people call trading a zero sum game. Well I guess you could call a casino a zero sum game then as well. A lot of people go in but only a few end up with the money. I played blackjack for a living so I know this first hand. You are playing their game and their rules same at the exchange. The big boys refer to small traders as the "prey". Get the picture. You are not the hunter, you are the hunted. And they know how to hunt you well.

Trading is the most corrupt dishonest con game on the planet, bar none. People think trading is honest so they get killed every time.

Let me give you an example. The last version of the API (Application program interface) the software socket you plug into to receive your data and send orders to the exchange a change was made to require your computer to provide the name of the strategy (if the order was submitted by a program) that placed the order. Why in heck does the exchange need to know this???? Because if something is being used that cuts into their profits "they" will negate it. Every piece of software ever made has a weakness or vulnerability that can be used against it.

A second example is block trades. The exchange says they are now reporting time and sales based on what orders are filled from not how they are requested. So if an order of a 500 lot is placed you will see 1,2,3 lots on time and sales but never 500 because they don't want you to see a large block order. It might give you some insight and they can't have that. Some of the old timers can verify that time and sales doesn't show block trades worth a darn anymore. Do you think this was done for your benefit? Not a chance.

There are more but hopefully that proves my point that it is their game, their rules and nothing is ever done to help you but only hinder you. It is warfare plain and simple, measure - counter measure.

Enough of my conspiracy theory raving, lets get back to your original question. The price action moves to get you and others to do the wrong thing. When enough traders have fallen for a false move they go after the food. They can see the food(your stop), you can't but "they" can. For proof you can see a stop run after the fact in the volume.

xplorer did I answer your question to your satisfaction. Probably not to your liking though. I stated somewhere in my original post from years ago that you don't have a chance unless you know how the game is played. Hopefully you now get some insight of what I meant by saying that. In this post I am sure I shattered some traders belief system.

Cheers

ps: You might to decide that I am a raving lunatic and completely wrong. There is nothing wrong with that, you must do and believe what is right for you. For me it works but might not for you.


Last edited by ctnz; January 13th, 2016 at 06:34 AM.
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  #33 (permalink)
Market Wizard
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ctnz View Post
xplorer

Lets start with some basics. A stop or profit target is the opposite side of what you did to get into the trade. So if you bought/went long you have to sell/go short to get out vice versa if you sold/went short you have to buy to get out. So the other side of your profit target or stop is the same of what you did to get in to the other side of that trade. A Short stop to you is a buy to the other side. You need to fully understand the other side of your trade. You need to get this very clear in your mind.

Thanks for the refresher!


ctnz View Post
So if you go long you are basically putting a buy order at a better price farther down. The big boys can get Level III (the order book) which tells you every stop in an instrument. So they can see your stop and everybody else's stop as well. I call it food. When there is enough food they go for it every time. Almost all traders are taught the same thing "put your stop behind a pivot". So a lot of traders put their stop at the very same place. "They" herd traders like cows."They" paint price action to get you to do exactly what they want. "They" do it every day, all day long. The only way "they"make money is if you lose money.

I am not sure I agree with that. Perhaps we trade different instruments but my stops are not sent to the exchange, only my limit orders are.

Regarding chasing stops and 'they' or the 'big boys', sure, I would second that, but I would say people who have the ability to move markets are not going to worry to get my laughable, single-digit stop order. They are after people their own size and sure, if I get caught up in that then I'm out. But I tend to agree more with the school of thought that stops are a bit everywhere. There will be concentrations for sure and my level of experience is at a stage where I can occasionally see when they have been overrun.



ctnz View Post
Many people call trading a zero sum game. Well I guess you could call a casino a zero sum game then as well. A lot of people go in but only a few end up with the money. I played blackjack for a living so I know this first hand. You are playing their game and their rules same at the exchange. The big boys refer to small traders as the "prey". Get the picture. You are not the hunter, you are the hunted. And they know how to hunt you well.

Trading is the most corrupt dishonest con game on the planet, bar none. People think trading is honest so they get killed every time.

I would say this: I never imagined trading as an honest game. If somebody who can trade large size has the chance to trap people into positions to get them to run for their door and in the process gets him/her a few ticks profit I can't blame them. Wouldn't we all do that if we could?


ctnz View Post
Let me give you an example. The last version of the API (Application program interface) the software socket you plug into to receive your data and send orders to the exchange a change was made to require your computer to provide the name of the strategy (if the order was submitted by a program) that placed the order. Why in he## does the exchange need to know this???? Because if something is being used that cuts into their profits "they" will negate it. Every piece of software ever made has a weakness or vulnerability that can be used against it.

A second example is block trades. The exchange says they are now reporting time and sales based on what orders are filled from not how they are requested. So if an order of a 500 lot is placed you will see 1,2,3 lots on time and sales but never 500 because they don't want you to see a large block order. It might give you some insight and they can't have that. Some of the old timers can verify that time and sales doesn't show block trades worth a darn anymore. Do you think this was done for your benefit? Not a chance.

Regarding block trades, when the CME changed the way it reported block trades on T&S I seem to remember the justification was 'market transparency'. Certainly different people are going to read different things into that but there are workarounds anyway. There are 'reconstructed tape' tools where you are able to see the trade as intended.



ctnz View Post
There are more but hopefully that proves my point that it is their game, their rules and nothing is ever done to help you but only hinder you. It is warfare plain and simple, measure - counter measure.

I guess I am a fan of the quote 'People are never after you. They are just looking out for themselves.'


ctnz View Post
xplorer did I answer your question to your satisfaction. Probably not to your liking though. I stated somewhere in my original post from years ago that you don't have a chance unless you know how the game is played. Hopefully you get some insight of what I meant by saying that. In this post I am sure I shattered some traders belief system.
Cheers

I agree that in order to have a chance one definitely needs to know how the game is played. Could it be that in terms of stops we have different understandings though?

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  #34 (permalink)
Trading Apprentice
Nelson, New Zealand
 
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Regarding block trades, when the CME changed the way it reported block trades on T&S I seem to remember the justification was 'market transparency'. Certainly different people are going to read different things into that but there are workarounds anyway. There are 'reconstructed tape' tools where you are able to see the trade as intended.

---------------

There are tools to help but most traders don't have or use them. The exchange only reports to the second when they could go to a lower level but why don't they? The data providers have gone lower level but not the exchange. There is a lot of information to be gleaned in sub second time stamping.

-----------------------
I am not sure I agree with that. Perhaps we trade different instruments but my stops are not sent to the exchange, only my limit orders are.

Are you telling me you submit orders with no stops? Tell me it ain't so.


--------------------------------------------------
Regarding chasing stops and 'they' or the 'big boys', sure, I would second that, but I would say people who have the ability to move markets are not going to worry to get my laughable, single-digit stop order. They are after people their own size and sure, if I get caught up in that then I'm out. But I tend to agree more with the school of thought that stops are a bit everywhere. There will be concentrations for sure and my level of experience is at a stage where I can occasionally see when they have been overrun.

But your stop is not alone as there are many others with you. The stop runs you have seen confirm it. They paint price action to get you and others to do exactly what they want. They are not amateurs at this, it is how they make their profit.

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  #35 (permalink)
Market Wizard
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ctnz View Post
Are you telling me you submit orders with no stops? Tell me it ain't so.

What I am saying is that the stop orders (which I use) are not sent to the exchange. They are 'local' to me so to speak.

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  #36 (permalink)
Trading Apprentice
Nelson, New Zealand
 
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That means TT trader or cqg.

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  #37 (permalink)
Market Wizard
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ctnz View Post
That means TT trader or cqg.

Yes, I do use CQG.

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  #38 (permalink)
Trading Apprentice
Nelson, New Zealand
 
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solotrader

Thanks for your thoughts but I will stand my ground on what I have said.

Ever gone long when price is falling like a rock? Or gone short after a new high is made. It is hard to pull the trigger. They call it freight train trading because you normally get freight trained or run over. So the best or most profitable trade might have been at the low or high but most people will wait for confirmation or the turn. I will go short at the turn or yes sometimes before it turns but most traders will wait, often waiting for some indicator to tell them to pull the trigger which has more lag than a millennium clock. I am not counter trend trading I just have some pretty good analytic's I created for myself which fit who I am.

But this is not everyone's style or personality. You need to do what fits your personality (psychological makeup) and bankroll or it won't work. Never try to trade like someone else because you are not them. You must always trade who you are.

Briefly just looked at the Michael Harris website, looks interesting. Thanks for that tip.


Last edited by ctnz; January 13th, 2016 at 01:13 PM.
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  #39 (permalink)
Trading for Fun
Kalispell montana
 
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ctnz View Post
sledmt

I am a dinosaur 360 Assembler, PL/1, Cobol, Fortran IV, RPGII, RPGIII, light Basic, C# is what immediately comes to mind, could have forgotten a few.

And yourself? As only a programmer would likely ask that question especially one from Flathead County.

Good point, programmers talk a certain dialect.

I have worked with C, C++, C#, basic, python, assembly, arduino processing.

Enjoy low level programming over high level coding.

You know where the flathead county is?

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  #40 (permalink)
Trading Apprentice
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sledmt

I know you are just south of Whitefish and the Canadian border. I lived in Reno, Nv for a long time. Probably the closet I ever got to you was around I90 in Missoula on on of my drives at night eons ago. You guys flew at night on the highways in those days.

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