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Why does this happen?


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Why does this happen?

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  #1 (permalink)
LAKEVIEW, MI USA
 
 
Posts: 6 since Apr 2016
Thanks: 3 given, 3 received

I have traded stock options, but I'm new to futures, and I'm experiencing a new phenomena. Well, new to me anyway.

It seems that the vast majority of the time that I place a trade, the NANOSECOND I'm in, price moves the opposite direction. I'd say like, 90% of the time. It is so regular that I can say "hold my beer and watch me change the market direction"

Now logically, there's no way an entire market with tens of thousands of people, and millions of contracts is going to care one whit what little 'ol me and my teeny tiny 1 lot does, but it's truly amazing to watch because it doesn't matter if its a fast, high volume market, or a slow, nothing market. If I go long, price turns on a dime and goes short. If I go short.......screeeeching tire sounds and price is off to the races.....long.

Has anyone else experienced this?

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  #3 (permalink)
Philadelphia
 
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I'd suggest to enter at the bid if going long and ask if going short to save yourself a tick and not get slipped so much with market orders.

60-80% of the time price will move against you initially if you wait because price naturally fluctuates. This doesn't mean that it won't eventually go your way. You may need to widen your stop to account for noise. Price moves back and forth, you can't always just catch it and have it go your way initially. It's hard to catch price and have it go your way initially without looking back unless the market is really trending hard.

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  #4 (permalink)
LAKEVIEW, MI USA
 
 
Posts: 6 since Apr 2016
Thanks: 3 given, 3 received

I understand about the market "breathing", and don't expect it will always go my way (wouldn't that be nice tho...lol), but what I'm seeing is a stark reversal right at my entry, no matter where/when I enter. It will always...ok 9 times out of 10, head straight for my stop, and I don't put my stop where everyone else does (trying to avoid the obvious). It hits my stop and turns right around again. If I have no stop, it keeps on running...today I finally cut it off at an 11 point loss. It's really weird.

This is all sim though, so I'm not actually losing my shirt here. I don't expect to have all winners, and I have no vision of getting super rich off this, but wow.....this is discouraging.

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  #5 (permalink)
Market Chamois
Chicago, IL
 
Experience: None
Platform: NT8,NT7,TWS
Broker: InteractiveBrokers, S5T, IQFeed
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
 
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Posts: 2,255 since Nov 2011
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Michael217 View Post
I have traded stock options, but I'm new to futures, and I'm experiencing a new phenomena. Well, new to me anyway.

It seems that the vast majority of the time that I place a trade, the NANOSECOND I'm in, price moves the opposite direction. I'd say like, 90% of the time. It is so regular that I can say "hold my beer and watch me change the market direction"

Now logically, there's no way an entire market with tens of thousands of people, and millions of contracts is going to care one whit what little 'ol me and my teeny tiny 1 lot does, but it's truly amazing to watch because it doesn't matter if its a fast, high volume market, or a slow, nothing market. If I go long, price turns on a dime and goes short. If I go short.......screeeeching tire sounds and price is off to the races.....long.

Has anyone else experienced this?

Where do you enter as a rule?

The only way I know to take the least amount of heat, but you will still take some, is to enter far away from value at an extreme. But this takes a good amount of skill and study to understand where these prices are.

If you tend to enter trades in a value range of prices the market loves to play up and down games chopping around for many hours or days sometimes.

I suggest getting out of the small time frame. See how few trades you can make as you wait patiently for a sweet trade location.

Ron

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
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  #6 (permalink)
Market Chamois
Chicago, IL
 
Experience: None
Platform: NT8,NT7,TWS
Broker: InteractiveBrokers, S5T, IQFeed
Trading: The one I'm creating in the present....Index Futures mini/micro, ZF
 
Blash's Avatar
 
Posts: 2,255 since Nov 2011
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Michael217 View Post
I understand about the market "breathing", and don't expect it will always go my way (wouldn't that be nice tho...lol), but what I'm seeing is a stark reversal right at my entry, no matter where/when I enter. It will always...ok 9 times out of 10, head straight for my stop, and I don't put my stop where everyone else does (trying to avoid the obvious). It hits my stop and turns right around again. If I have no stop, it keeps on running...today I finally cut it off at an 11 point loss. It's really weird.

This is all sim though, so I'm not actually losing my shirt here. I don't expect to have all winners, and I have no vision of getting super rich off this, but wow.....this is discouraging.

I would also say what edge are you trading? Have you studied it and know it's probability?

The way I approach the market is with probabilities. Stacking them in your favor and over a large enough sample size they wil work out.

If you are waiting for confirmation for say a long, you will want to see some buying. You are increasing your comfort for the trade but at the same time increasing your risk. IMHO the best trading is when you are uncomfortable but have a larger far reaching long sighted comfort due to probabilities in your favor. So uncomfortable on a per trade basis as the market (again for a long example but the reverse for a short) comes down hard to your buy limit but your risk is small at this price extreme.

Ron

...My calamity is My providence, outwardly it is fire and vengeance, but inwardly it is light and mercy...
The steed of this Valley is pain; and if there be no pain this journey will never end.
Buy Low And Sell High (read left to right or right to left....lol)
Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
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  #7 (permalink)
Boston, MA
 
 
Posts: 264 since Apr 2014


Michael217 View Post
I understand about the market "breathing", and don't expect it will always go my way (wouldn't that be nice tho...lol), but what I'm seeing is a stark reversal right at my entry, no matter where/when I enter. It will always...ok 9 times out of 10, head straight for my stop, and I don't put my stop where everyone else does (trying to avoid the obvious). It hits my stop and turns right around again. If I have no stop, it keeps on running...today I finally cut it off at an 11 point loss. It's really weird.

This is all sim though, so I'm not actually losing my shirt here. I don't expect to have all winners, and I have no vision of getting super rich off this, but wow.....this is discouraging.

Since you're trading in sim, the market isn't seeing anything you do. It doesn't know to head straight for your stop, because your stop does not exist to them. Take a step back and try to get to know futures a bit more, and you'll eventually discover the love/hate many of us have for futures. :-)

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  #8 (permalink)
LAKEVIEW, MI USA
 
 
Posts: 6 since Apr 2016
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HoopyTrading View Post
Since you're trading in sim, the market isn't seeing anything you do. It doesn't know to head straight for your stop, because your stop does not exist to them. Take a step back and try to get to know futures a bit more, and you'll eventually discover the love/hate many of us have for futures. :-)

So what I'm seeing is actually platform software doing it's thing?

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  #9 (permalink)
Boston, MA
 
 
Posts: 264 since Apr 2014


Michael217 View Post
So what I'm seeing is actually platform software doing it's thing?

You could say that, yes. But assuming you are trading in sim, on your platform's sim engine with live market data, you must remember that all sim is not reflected in the real world market. Many folks will say that if it was real world live market money in your face, the platform does the same thing. And it really does. All the platform is doing is feeding you the live data and the sim engine is executing your trades based on an algorithm based on some factors such as slippage and delay. The "real world" money will mirror what the sim money account is doing.

But you have to step back and ask yourself at that point, "Is this what the market will do to me with my live money, for real real?"

Yep. Since your platform is seeing the live data streaming in, it's all in real time. Your sim trades do not affect the market movement. If you do it with live money with a couple of contracts, the market is not going to react against you JUST BECAUSE YOU ENTERED A POSITION. They are not out to get you. There is no cabal against small traders who enter and exit with 1,2 or 4 contracts.

The phenomenon you are seeing is simply how futures can be, many times over a day. I have seen it more often than not. Enter a position, it moves against you for a time. Ergo, it is not the fact that you are entering that spooks the position/price, but rather, where you are entering. It is very tough to enter into a position in futures and not see some pull-back. If you manage to go long right at the time in GC for example when it has one of it's burst moves up, you won't see a pull-back. But 98% of the time, you will see a small (or large) pull-back before your target is filled.

Hope that made some sense.

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  #10 (permalink)
LAKEVIEW, MI USA
 
 
Posts: 6 since Apr 2016
Thanks: 3 given, 3 received



HoopyTrading View Post
You could say that, yes. But assuming you are trading in sim, on your platform's sim engine with live market data, you must remember that all sim is not reflected in the real world market. Many folks will say that if it was real world live market money in your face, the platform does the same thing. Well, all the platform is doing is feeding you the live data and the sim engine is executing your trades based on an algorithm based on some factors such as slippage and delay.

But you have to step back and ask yourself at that point, "Is this what the market will do to me with my live money?"

Yep. Since your platform is seeing the live data streaming in, it's all in real time. Your sim trades do not affect the market movement. If you do it with live money with a couple of contracts, the market is not going to react against you JUST BECAUSE YOU ENTERED A POSITION. They are not out to get you. There is no cabal against small traders who enter and exit with 1,2 or 4 contracts.

The phenomenon you are seeing is simply how futures can be, many times over a day. I have seen it more often than not. Enter a position, it moves against you for a time. Ergo, it is not the fact that you are entering that spooks the position/price, but rather, where you are entering. It is very tough to enter into a position in futures and not see some pull-back. If you manage to go long right at the time in GC for example when it has one of it's burst moves up, you won't see a pull-back. But 98% of the time, you will see a small (or large) pull-back before your target is filled.

Hope that made some sense.

Well, I figured there's no way an entire market is going to turn precisely on my trade, but yet, if you were to watch me trade, that's exactly what you would see and think....lol. So, my next logical conclusion is that the platform is programmed to do this (which would account for the 90% of traders lose thing we always hear about). I know, I know...conspiracy theories and all that

One of these days I'll video some of my trades, it's really entertaining because I can literally say "watch this", and the market will turn exactly on my trade and keep going.

In all fairness, I did make some positive trades this week, but only a tick or two here and there. It seems darn near impossible to eek out a tick, much less a point....but the market sure does move quickly against you...lol!

I have much to learn......

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