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Automating 'Market Making Scalping Manual" by Gary Norden or "NoBSDayTrading"
Sorry to step in this conversation with an observation that might seem off topic.
I took a couple of courses by John Grady and they were quite interesting and instructive...however: his method of trading implies little or no understanding of markets, a part from searching market manipulations that might take price from A to B ( where the distance between A and B is only a few ticks away).
There is no deep logic and deep thinking behind his trading style, and I am not saying that he is not legit or that his style is BS.
I think that his method (and all scalping styles) will simply disappear over time, any programmer can implement his tricks into a very fast program that will run on the server a few meters away from the CME servers.
The guy who first started this thread mentioned machine learning....that is very meaningful. Do you really think that big funds cannot translate Gary methods into a software? this software might actually extract any "mechanical" anomaly that we human cannot even perceive.
Nowadays I don't think there is any value in anything that is purely mechanical and has no deep concept behind it. Robots will do it better than any human and edge will disappear.
I would argue that Gary's method very much tries to take advantage of the kind of edge that robots would go for, but they can't see yet. A lot of these statistical arbitrage types of trades are relying on some sort of correlation or cointegration threshold being met for them to decide that taking a fill in a particular location is worth trying. So they're not going to see the changing relationships and correlations based on fundamentals that the discretionary market makers can see.
Watching a few traders I've spoken to that use his method I've noticed they tend to do well in mildly fast and chaotic markets. They're also looking for less mature markets or thin markets. That suggests to me that they're finding inefficiencies in markets where the robots have a hard time making sense of it.
For me personally though as time goes on I rely more and more on news and my understanding of how large funds behave to try and predict order flows. I still use order flow, but it's more about optimizing entries and confirming the flow matches expectations. Focusing more on finding an informational inefficiency rather than a statistical inefficiency has made my performance more consistent, but I wouldn't have been able to do that without what I learned about order flow from Grady, Norden, Jigsaw, et al.
Re Norden Method I like some of Gary's core concepts such as making small incremental improvements over time but am not sold that his core method still works as effectively on traditional markets, such as trading Spoos outside their domicile hours in the Asian session for example. I am also of the same opinion you need more niche fast and chaotic markets that tend to blip around where one can often catch a wide bid ask spread. The margin for error taking say 1 tick in Spoos is too high as you will eventually get caught with a bigger loser on a random move that can wipe away most or all of your gains. Is anyone willing to share a few of the thin volatile markets which traders have more success with recently using the Norden Method? I have been looking to find more optimal ones to better test the approach on.
Paying to learn how to trade has never led to long term trading success… and people who sell courses are almost never full-time traders … I hate to say it but anyone with a edge that makes them tons of money does not turn around and sell the edge for a few hundred dollars… it really is insane that people defend or even believe that there is a paid short cut to “learn” the markets from a “expert”.. who of course does not have verified trading results that are audited, because of “privacy” give me a break
I cannot believe how many people actually think some company jigsaw can stop you from discussing a trading method or anything that you read. You can read and talk about any method you want legally so long as you do not actually print or reproduce an exact copy of the material.
Anyone who can scalp well would never share the method exactly because the edge is miniscule and scalping manually is extremely hard work and you run into all kinds of liquidity issues when trying to size up. It is a bunch of sales stuff to entice you to buy jigsaw etc. Come on wake up people.
The idea that jigsaw does anything special with data is silly. Jigsaw merely draws a different style of chart that you interpret and trade off of just like bars n candles.
Because cancels exist you never truly know buy sell intent as well as bonafide hedging which has zero to do with trading methods other than risk control.
I am not against jigsaw or anyone using it! If it helps you see the mkt nd helps make you profitable then booyah!! But for me. I need a Dom to scalp and a bar chart to keep me on the right side.
If it works use it. If it doesn't work stop paying for it
"Watching a few traders I've spoken to that use his method I've noticed they tend to do well in mildly fast and chaotic markets. They're also looking for less mature markets or thin markets. That suggests to me that they're finding inefficiencies in markets where the robots have a hard time making sense of it."
I fully agree with this statement regarding finding less crowded or mature markets that are both thin and blippy overall. Can you suggest a few futures markets that meet this criteria outside of the main ones everyone seems to trade eg Es, Naz, Dax, 30s/ultras?
Most of the people I've spoken to that are trying to do something like this are trading NQ, but I'm not convinced that's really the best place. The slippage there is easily more than you'd be making from market making scalps. Perhaps this is one place where it could be beneficial to live in a less developed country.
In the micro treasury yield futures there's sometimes a spread of 10-30 ticks in the less popular instruments. So there's definitely some opportunity there if you can find a more accurate way of determining value. I've tried calculating it from correlated instruments, but I haven't been able to get a number that is more accurate than the 1 basis point the robots are already doing.
@TWDsje Thanks for your response. Yes this is what I have seen also, many are focused on NQ for scalping and certain people are doing very well in this space. However, I find the NQ more and more crowded even though it remains a thinner market overall and secondly it can be very hard to control the downside in terms of tight stops, plus there are times where it can really run away from you before you can manually exit a trade.
I think the Norden style market making works best in a market with a wider bid ask-spread where there is relatively high level of volatility as well as two way price action- the micro treasury yield futures seem worth exploring further. I have considered looking at VIX futures in the past in this regard as well as the possibility of scalping (market making) options on futures, providing both volumes and volatility there were at certain thresholds.
I think there may be potential as well for a more Norden like approach in the niche commodities space as well as metals. Silver seems appealing with it large tick size, I believe 25 dollars, and palladium has a wide bid-ask spread which can be exploited during periods of high volatility (though need large account buffer as volatile contract).
Anyone here trade Heng Seng futures? I hear this maybe one of the better markets to try a more market making/scalping approach on?
