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If every trader is out to get (ie. consume) every other trader, then one could say that every trader
wants all the money in the market...and therefore wishes to be the last trader...and therefore desires
to destroy the market itself.
Other traders, individually, are out to get you in a way. I need to take your money in order to put it into my wallet. For me to win, someone has to lose.
But when people say "my stops were run" type stuff, or "they took it up just enough to get me in, then dropped it" or etc, this implies that "the market" as a whole is out gunning for you -- and that is just not true. There was no meeting where everyone decided to run Bob and John out of the market, individually.
But if you put stops in stupid places or make stupid trading decisions, then it would be hard to tell the difference...
The market isn't out to get you. Other traders aren't out to get you. And the market's are not manipulated (99% of the time).
Sure price will test obvious stop areas because people are not rewarded for buying in front of them. The best reward comes from buying in or below them or for those looking for confirmation, buying after someone's been stopped out and price rejects the area.
Getting over thinking like that made it easier to see what the market's auctioning and testing was doing. Once you believe it is just the sum of all the trader's opinions and their willingness to act on them then trusting price action and volume is a lot easier.
If/when (perhaps it's already happened) what's in blue above ceases to be true, such phrasing will have to change.
We are sentient beings, but if the trading of algorithms exceeds 50%? 80%? 99% of the trades of a given
market, we're at the point where human psychology does not play any significant role in that market.
We would also probably be at the point where it would never again play a significant role in that market.
I thought about adding some info and quotes here about chess grand master Garry Kasparov and his
matches with IBM's computer. I came across so many cool quotes from him
that my next post will be only that.
(Of course futures.io (formerly BMT) members can skip that post if wished.)
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Sentience is the ability to feel, perceive or be conscious, or to have subjective experiences.
I agree with your comments above. 10 tick bar range at the sub second level is the stuff of nightmares for a retail guy like me. Although I have to wonder, if algos took over the markets would the likelier scenario not be less volatility (something we see with ES)?
Of course that would present a new set of obstacles for intraday trading.
I think there would be less volatility, if most of the algos only require a couple of ticks movement to be profitable. But overall I think the natural progression will be, that some other geniuses are gonna come with new algos to take advantage of these other algos, and the evolution goes on... Maybe one day trading will be about finding the shop with the newest leap frog algo.
I don't think they hurt guys like us with the exception of flash crashes. Point being HFT Algos will take advantage of other HFT Algos and what worked at one time with one HFT Algo will be exploited by other HFT Algos. So there will always be movement and a counter balance in the markets. I can easily trade in between the chaos. I think there will always be room for guys like us. Although I would like to see something done to deal with certain aspects of what they do that can produce nightmare flash crashes.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
I would disagree about the market not being manipulated. Of course this depends on definitions... depending on our definition of "manipulated" I would say it is manipulated 100% of the time. Market participants who have the resources to move the market by taking out all the bids or offers in a given price range can and will use this ability to make money. They will suck participants into trades and then try to wipe them out. When big traders sense that the market contains too many shorts who got short at too low a price given the context and current composition of the market they will start buying to drive price up and force those shorts to give up their positions (i.e., take their money). Once you begin to understand this aspect of the game you can begin to understand more of the patterns on charts and use that knowledge to make money.
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
