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My direct access broker suggested I trade something other than $NQ
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Created: by shark505 Attachments:4

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My direct access broker suggested I trade something other than $NQ

  #21 (permalink)
Elite Member
Manchester, NH
 
Futures Experience: Beginner
Platform: thinkorswim
Broker/Data: TD Ameritrade
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shark505 View Post
@artemiso @josh

I thought I would add an example

6/25/2014 yesterday I entered a short $NQ scalp at 3818.5, 2:30pm (2014.06.25 14:28:44 per my trade log), price moved higher to 3823.75 then started reversing lower. It reached my cost price of 3818.5 at 2014-06-25 14:56:52, then bounced higher EXACTLY at 3818.5!! as shown on the chart. I closed the trade at 3820 and price then moved immediately lower, continuing down to 3813.75

I can't explain it

??

All the trades following yours were in your favor. Here's what I see:

14:28:41 - seqnum 9288385, short 2@3818.5
<!-- best bid stays at 3818.5 -->
14:28:44 - seqnum 9288416, short 2@3818.5 <-- probably you?
<!-- best bid stays at 3818.5 -->
14:28:48 - seqnum 9288522, short 2@3818.5
<!-- best bid stays at 3818.5 -->
14:28:50 - seqnum 9288560, short 1@3818.5
<!-- best bid stays at 3818.5 -->
14:28:50.575 - seqnum 9288568, short 2@3818.5
14:28:50.575 - seqnum 9288568, short 1@3818.5
14:28:50.578 - seqnum 9288568, short 1@3818.5
14:28:50.578 - seqnum 9288568, short 4@3818.5
<!-- best bid stays at 3818.5 -->
14:28:50.578 - seqnum 9288569, short 1@3818.5
14:28:50.578 - seqnum 9288569, short 6@3818.5

Since this is a many-to-one function, you can draw almost any horizontal line at any price and it would represent at least one other seller who experienced the same 'reversal pattern' as you did, just at a different price.

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  #22 (permalink)
Trading Apprentice
Chicago + IL/USA
 
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Posts: 23 since Aug 2012
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only 2 reversals

@artemiso

Thank for taking a look. So its just random chance? I agree with the many-to-one level relationship and that other traders might be experiencing it too

But if I draw horizontal lines at all levels going into the close, there are only 2 reversals of size >1pt, on the down move from the high and one of them happens at 3818.5.

So in a way only traders at those 2 levels, who stayed short, experience it? What makes this level significant?

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  #23 (permalink)
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San Francisco, CA
 
Futures Experience: Advanced
Platform: IB-TWS, Ninja, Wave59, R
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@shark505

Hi Shark,

I do feel your pain...I don't think there is a trader here that has not bought at the top or sold at the bottom.

I don't want to change the thread from a discussion about HFT, but I thought it may be helpful to bring up the chart you showed and analyze it as if I were trading it. I personally do not think in this situation that HFT had anything to do with your trade or the movement during that time, but who knows.

So I really have no idea how you trade or what you use to make your decisions and I am sure every other trader here will have a different opinion so take this with a grain of salt.

If you look at the chart I attached I highlighted in aqua where you sold. Now technically none of my indicators showed this as a sell, but in my opinion it was a channel brake to the downside (red diagonal line) so you could argue this as a short opportunity. The mistake was not getting out of the trade and going the other way after the market broke its high (horizontal red line). Those two lines also roughly formed an ascending triangle. So the move above the high and the breaking out of the triangle are both bull signals so you should have gone long (highlighted in yellow).

On the flip side if you waited the market formed a really nice head-and-sholder pattern at its top and you had another selling opportunity after it finally broke through resistance (the price you shorted it at) at the cash close.

Now all this is in hind-sight and it is much more difficult to in real time, but thought it may be useful to have another traders opinion/analysis.

Happy trading

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My direct access broker suggested I trade something other than $NQ-nq_1m_6-25.jpg  
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  #24 (permalink)
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josh's Avatar
 
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shark505 View Post
@artemiso @josh

I thought I would add an example

6/25/2014 yesterday I entered a short $NQ scalp at 3818.5, 2:30pm (2014.06.25 14:28:44 per my trade log), price moved higher to 3823.75 then started reversing lower. It reached my cost price of 3818.5 at 2014-06-25 14:56:52, then bounced higher EXACTLY at 3818.5!! as shown on the chart. I closed the trade at 3820 and price then moved immediately lower, continuing down to 3813.75

I can't explain it

Two things:

1) If you look at the volume for that series you will see that about 900 contracts traded at that price, and below it this drops off. No doubt this was sold by others, and when it returned to their break-even price, they bought back. This is the fundamental reason (other than self-fulfilling) why broken resistance often becomes support, and vice versa.

2) There were about 20 ticks between where you sold to the high. Does it stand to reason that there were at least a few people (sorry, computers, people don't trade anymore) positioned short at each price? Doesn't someone's entry price have to be the place where it bounces?

Don't try to explain it unless you want to waste your time trying to find the answer to something that is unknowable, as it would require the collective market to answer--it happens ALL the time, because people will position similarly and create buying/selling pressure at points like this. Markets today have evolved to become so fickle, short-sighted, transient, and illogical, that even IF this were a conspiracy to get you out of your 5 lot, it would make better sense practically to bury your head in the sand. Just think about what this market is: it trends up all day on a thrice revised down -2.9% GDP print; the next morning it sells off the whole of the prior day's range for only 20 minutes because a non-voting FOMC hawk has hawkish comments; it then stops dead in its tracks and grinds higher all day. You can make no sense of how the machine works, so don't try; just trade your best to make money.

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  #25 (permalink)
Trading Apprentice
United States Chicago, IL
 
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This is my first reply, and I'm a new trader too, trading index futures. This same situation has happened to me, and I thought for a moment damn, they must've read my exact orders and picked me out of a line to screw me over. Then I realized how ridiculous that sounds. Over the course of my single contract 4pt loss there were hundreds or thousands of contracts pushed through to screw me out of $80? How narcissistic is that? I realized that not only does nearly no one pay attention to my one contract, but also that it's a damn volatile market. And then I put on my big boy shoes, widened my stops and took it all right back in a few minutes. Guess they weren't trying to screw me that time! Sigh. If you come in looking for an excuse for losing a trade you will almost always find one. Most of us traders are smart people that can find an explanation for anything if we try. My suggestion would be to trade in less volatile times of the day (2:30-3:00 CST is very, very active) or really expect to go deep in the red to make a lot if your not set up perfectly. Which explains why paper trading Is so easy, you have no fear, your stops are wide (like they should be) and you just wait until you win. The market is cyclical enough to whipsaw you all day on 4 pts especially the NQ, in my experience. Then again I'm a beginner too, but I can find an excuse for every losing trade I have if I want too. But I don't. That just ruined my attitude and my profitability.

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  #26 (permalink)
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two trades avg cost and bounce

from 7/1/2014, I made two short trades (3886.25, 3880.75) average price 3883.5. I let it ride, no stops were used and price move to hod of 3894.5, on the way back price bounced exactly at the inside market offer of 3883.75. See chart.

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My direct access broker suggested I trade something other than $NQ-nq_7_1_2014.png  
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  #27 (permalink)
Trading Apprentice
United States Chicago, IL
 
Futures Experience: Beginner
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First of all have you compared your data to others to make sure you're broker isn't faking you out? I doubt they are and the whole market isn't going to snipe your two orders out of hundreds. It doesn't make sense given how fragmented the market is and the volume that goes through (hundreds of times more than you put in). You're probably just getting really unlucky and it feels like someone is trying to screw you when it's just the market doing it's thing. My two cents. Comparing data is the only way to know. Who is your broker?

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  #28 (permalink)
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Futures Experience: Advanced
Platform: IB-TWS, Ninja, Wave59, R
Broker/Data: IB, IQFeed
Favorite Futures: ZB
 
Posts: 35 since Sep 2013
Thanks: 0 given, 21 received

Don't forget the market does not know you position. Even if the traders (or HFT) knew and were watching your orders how would they know that you went short and were not just covering a long from last week? No one is watching your orders, averaging them, and then based on that info moving the market right at your average price.

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