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Webinar: Private Banker's Perspective on Risk Management Presentation
Great webinar Ben - thanks for sharing your time and perspective. One of the difficulties I have is fading the high or low of the day (usually in the morning) when I expect that the market is going to stay in balance and potentially test the other side of balance. Sometimes this is very clear, for instance when a market opens up inside the range and value of yesterday and has comparatively low volume. However, my difficulty lies in not quite trusting the range to hold - essentially being too afraid of a breakout move. Some of this I think comes from a conscious or subconscious desire to have the market breakout and start trending with me aboard - consequently I'm not always as attentive to the signs that we are going to stay in balance.
Of course at some point you have to make your best judgment and either take a trade expecting the market to stay in balance or not and then manage the position based on what happens next. That said, can you provide any rules of thumb or tips/advice on some of the things you need to see that convince you a market is more likely to stay in balance rather than breakout? (I realize you are now planning on doing a webinar on this late summer but perhaps you can provide some context for us in the meantime). Thanks in advance and thanks again for the webinar!
Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
It certainly did not disappoint. The preparation and thought process were excellent, thorough and detailed to include the wide level of experience and background one gets at the futures.io (formerly BMT) webinars. It's a rare treat to hear from Ben himself, and it really gave some perspective to his sometimes enigmatic posts and replies in threads here. Now that I have a grounding in his management methodology, his posts make much more sense. His explanations were clear, thoughtful and his presentation style is easy to warm to, and stay with for a long time period. That was a long webinar, went by in a flash! The generous offering of his time to include written replies to the posted questions was unique and I hope inspiring to everyone.
Measuring and Managing risk: For me this was the gem of the webinar, and beautifully presented! Clear and accurate examples, detailed results and a sound management technique, to give traders another terrific tool for their box. It might not be something to use everyday, but as an example I shorted ES near the end of today using this technique and took more out than the trade distance was worth, thanks Ben ! Kept a core position running and grabbed the drops and took the profits. I moved my core stop along with the trade, not wanting a reversal to lose more than 2-3 points in profit, with the clock running.
Thank you for including him in the stellar line-up for the anniversary edition, he more than deserves to be on it!
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
Thank you! Some general rules of thumb and I'll definitely expand upon this in the coming webinar would be the following:
1. What type of day was the previous session? Profile Type?
2. Where are we opening in relation to the previous session's profile?
3. What has the overnight session done?
4. Are we opening in the ON session's value or is the market imbalanced? (trading outside of the globex/VWAP developing value)
5. What is the macro perspective telling you? This would include any sort of trend channels, moving averages or any other details that could offer a clue on directional bias.
As far as fading a move, the general rule there would be to typically never fade a market that has been trading in an imbalanced state or better said, trending outside of value. If the market is trading within value and all of a sudden the market spikes up and out of it, then it would make sense to fade that move. Reason being the market is balanced and any deviation from that should return to the mean.
For a balanced market scenario, just picture an auction. Let's say everyone is agreeing on price at 1650 and for some reason, price auctions up to 1655. The perceived value is around 1650 but price has moved up to 1655 which has buyers thinking that's too expensive and they back off. This creates an imbalance where sellers are now overpowering buyers because they are wanting to sell at those higher prices but buyers don't want them. Same goes for the other direction.
Now for an imbalanced market scenario, picture the same auction. Whatever the item is that's being bought and sold has some news that comes out that changes the perception of value. So in this example, we have buyers and sellers agreeing on 1650 but a news announcement comes across that makes 1650 sound really cheap. What do you think happens next? Buyers step in and buy everything. They absorb the sellers at those current levels which then leads to a major buy side imbalance and buyers become more aggressive and start jumping over each other and buying at the market. This is not a scenario where you would want to try and fade the higher prices.
This is obviously very general and I'll definitely go in to more detail later. But I hope that makes sense.
Broker: Advantage, Trading Technologies, OptionsCity, IQ Feed
Trading: CL, NG
Posts: 1,038 since Jul 2010
Thanks Given: 1,713
Thanks Received: 3,863
I'm not sure I discussed this but good question. If I have a scale in to my position and it doesn't continue in my favor I make a judgement call on whether the total position is still valid and whether or not the intended target still appears to be attainable. Let's say we have a trending day and I add to my position when the move is mature and that add goes against me without getting a scale out, I would need to make a decision on whether or not to stay with the trade.
Take a look at an earlier post (#40) where I reference this. The key is to not add to a position when the move is mature. But that's another conversation in of itself. The earlier post provides a good visual of what I'm referring to in this regard.
Many thanks for taking your time for the webinar. Most valuable and much appreciated. Look forward to future offerings.
Ref your website setup, note that your non-www domain does not work. ie, https://leprivatebanker.com/ does not work (and it should). Most people these days do not bother typing in the www (or should not bother) so you need to fix your site htaccess file to open up this domain.
PS. Mike - thanks for fixing the video replay. Assume you have done something as webinar played from start to finish with no skipping back. Wonderful.
identifying the day type early is the key. based on the pre market analyses, market open with respect to previous days value, we will have day type expectation.
example: open out of range, expect trend day in the direction of gap or open test drive
based on my observation, if the market trades in the direction of gap for more than 3 points in ES with out filling the gap, then we have very very less chances of filling the gap in that day.
it will be great, if you can explain or give some base point to start analyses to identify day type early in the day based on that days trading session (developing day). at what point of time you will change your initial perception on the market (from trend day to any other type of day or any other day to trend day)
example: based on pre market analyses, expectation is trend day, at that point of time you will start feeling that yes it is trend day.
sorry for lengthy question, looking for some kind of base point to start analyses to identify probable day type as early as possible in the developing day with respect to pre market day type expectation.
