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Came up with theses numbers when trying to evaluate the greatest risk associated with day trading, if there is a greater one then someone please let me know, also anyone can feel free to let me know if these numbers are off - thanks, ahead of time. Is it possible to get worse than this? Just thought I am going to check the daily biggest moves lists on wikipedia and post another set of numbers.
How can one prepare for such volatility? Given stops may not be honored and if curbs are used (still trying to find out if treasury futures have curbs) you could get out even farther when the market re-opens for trading. The most solid, but not great alternatives, things I have heard if you are going to trade is use a stop and/or only go short and/or have plenty of capital. Options seem too expensive, buying or selling them and then not even getting profit from them, but then again maybe a some kind of spread would work. Thanks for bearing with this, I am almost literally throwing stuff at a wall to see what will stick and all in all it's getting pretty gross.
10/15/14 Treasury Flash Crash
ZN - range of 3'095 = 3296.87 per contract
ZF - 1,262 = 1511.71
ZB - 5'19 = 5638.50
Also, welly192 is a journal I just found out about and plan to check that out.
Just read my 17 pages of notes from Norden's book, I interlibrary loaned it, and it really is a good book influenced by Thinking Fast, Thinking Slow and Taleb. Norden does a really good job at getting you to think of what all you need to be aware of when creating "situational awareness" ( @Blash ) for your products.
Can you help answer these questions from other members on NexusFi?
Most of my trading is based on predicting where the market was going. This required hard work, real-real hard work vs. what some might say that it’s easy. However, still the rewards weren’t consistent. In my experience, I would say that a successful trading career isn’t built out of luck.
I'd thought I'd add to this discussion as I've crossed over on some of this same territory years ago.
Al Brook's materials I would concur is some of the best intro material out there for the money. However, to be candid, I feel he holds back on his personal sauce that would make his material all come together and be truly profitable if indeed he is even profitable which is very debatable. I think it's readily apparent in his webinar room the same questions are always left vaguely answered and ultimately he's deflected all questioning about proof of live or even profitable trading.
Sorry to be a damper, but in my estimation, it usually takes a lot more than 40 sim trades to get a better grasp of trading. Looking back now, I'd say it's more like 4000 sim trades or 400 real trades to reach the stage to begin to sort out a sense of more stability and the beginnings of a found personal edge to trading. The key is to lose on small accounts so one isn't busted permanently. Irregardless of the hype and outright advertising frauds, almost everyone venturing into the retail trading endeavor inevitably busts accounts usually by making the same mistakes such as pulling stops far past a reasonable daily loss threshold or doubling down. It's strategically better to bust five to ten small accounts and being able to recover and learn from those losses than two big ones ending a trading career for a lifetime.
Same thing here. The key is to risk a small percentage of the total account on every trade. Options and option spread trades which initially risk up to 10% but could still potentially damage the account by half is akin to playing russian roulette imo. It can work fine until volatility bullet day where all heck breaks loose. I'd suggest looking up the story of "Karen the supertrader", a wonder of the retail world, until the ultimate outcome of her venture.
No damper at all. I was trying to convey that I haven't traded enough and I know I need to make a ton more trades. As a matter fact, I am on course to go live. It is more for the sake of going live and my stops will be sorta tight as I will be trading just one lots for a while. First, I need to do some more studying of the NO BS stuff and then master daytradr. After all that I have go to start trading. Personally, I am sick of talking the talk of sim and want to walk the walk of live trading. Brooks' method, admittedly, can cause large losses per trades (e.g. placing a stop at or below the most recent bottom) and I can't stomach that loss or opportunity costs.
The other point I was trying to make is that I am most concerned about Flash Crashes or other scenarios where leverage, in even a one lot, can come and ruin you - i.e. loss a lot more than risk capital. It doesn't seem many people understand the amount of risk trading futures involves. You are literally liable for 100Ks when you place a trade and whoever comes after you for that isn't gonna care you placed a trade using a small percentage of your account. Thanks for the Karen clue. I looked that up and, other than the fraud, her story seems to stress the significance of over-leverage.
Brooks price action is good place to start. It will begin to give you confidence in your interpretation of a chart. It is by no means an endgame in and of itself. Also, his trading room and other materials he offers creates an ecosystem full of resources to help learn what he offers.
i did not trade the Flash Crash....so this is not advice.
But i did trade Brexit/Trump votes...etc. If one looks at liquidity....liquidity disappears or is very thin on such days of brexit/votes, halts, etc. Am pretty sure before such an event liquidity has to have dried up. So all one needs perhaps "since this is not advice" is a liquidity quaging tool. Also there are other ways....if one keeps track of NBBO cross ...or is able to quage volatility. Anyways all of this not valid...as i have only gone back to reflect what mrkt did...i was not in on that day.
Yes, of course leveraged instruments incur a risk including futures. Many long time traders are aware of it. However I don't think it's as bad as you've painted it for the regulated futures markets. Most trade a futures contract several months ahead of expiration and retail brokers besides watching for margin calls usually are not facilitating retailers taking ownership of the underlying product. The big personal losses reported are usually those who've overleveraged or shorted options or stock, such as the guy who shorted KBIO and incurred > 100k debt past his wiped account. I was just offering my idea of a stable strategy during adverse conditions where flash crashes occur, mainly small % size relative to account. Per post above, yes, I've seen similar where liquidity dried up on big moves on news items. I usually still come out breakeven net, or even ahead. My worst past losses are still mainly mistakes of overleveraging and pulling stops when wrong in direction. Best of luck.
I have taken the webinar and it was really good. John goes out of his way to answer questions thoroughly. He is quite impressive that way as he is a very patient teacher.
I plan to follow this method for a while, if not permanently. He provides continued support in the form of helpful daily newsletters.
Really glad I am following his course material.
Also, I recently read the book One Good Trade. It is more of a philosophy book as opposed to offering technical how to trade advice. But that is ok as it is a real mindshifter when it comes to mental priorities. For one, I need to do a lot more listening. Also, the book makes it clear hard work, really hard work, is key to becoming a successful trader. I make note of that because not many in the retail industry state so, as Norden does a fine job explaining.
Well, the part of education that takes place before going live is over.
I, like I have seen others do, put quite a lot of energy into thinking about when to go live. The main reason I did it was because I knew my platform, enough about a method to trade, and established the fact I am using risk capital. Also, I'd rather learn to box in the ring rather than in the weight room - seems a good way to motivate more efficient learning. Furthermore, honestly, I sort of said, forget about it and just do it.
For me, the difference between live and sim was amount of focus, thought, and action. Focus and thought more intense with live and action less with live. Goes to show the more you do this and do that pretty soon you are stuck in your own do-do.
I could not have gone live without the NoBS courses and webinar (endless hours of review) and lots of webinars from FIO, especially FT's. Just today, after trading actually, I consulted with ideas for organizing and cataloging trades, ie some administrative ideas, and I worked through some psychological stuff to get my head in the game. And, while I was in the game, I stared at the DOMs and didn't even check email the whole trading session. Felt nice to forget about most of the world and have that kind of focus. Also, the books I mention in previous posts (particularly Norden and One Good Trade and Fooled by Randomness were key in my pre-live development.
Some things I made sure of before I live trading: status of risk capital, organization/routines, trading method, plans for future (like when to go back on sim if I have to)
All said and done, I took one trade, lost two ticks, figured why it was a mistake I can easily eliminate, learned, moped, watch some education method stuff, felt better, did some administrative stuff (eg emails to traders, etc), went for a walk. Now in 45 minutes I take my screen shot of the day, process some educational material, call it a day.
Shout out to Big-Mike for this community!!!! Also, to Terry for his help with all those great webinars!
