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Confessions of a Prop Trader


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Confessions of a Prop Trader

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  #51 (permalink)
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trentcroad View Post
This was a pretty quiet day for me. There seemed to be some size around and I think if you were a pure scalper you might have had a pretty nice day. I'm looking for larger moves so there wasn't a heap on offer.

I saw the heading for this post, "May 16th" (thinking it should be the 15th), and was temporarily, and foolishly, confused.

Internal conversation: "I'm on East Coast USA, he's in Australia, duh...."

OK, aside from that, I'm enjoying this thread. I've seen that you are looking more for largish moves... I'm a bit more scalpish, although not committed to it. (I like bigger moves if I can find them.)

I also see something about how you are making decisions, and I think I'm fairly clear on it (profile, DOM/order flow, news/reaction to news, etc.) It seems that, taking these factors into account, a fair amount of your decision-making is also by feel or, for lack of a better word, intuitive. Would you say this is correct?

I am asking because I am interested in finding a balance between formal and non-formal, or at least less-formal, ways of making trading decisions. I am trying to simplify down about as far as I can go, without simplifying too far .

I am not asking about the particular tools, which obviously are going to be an individual matter, just about the general approach. How would you describe it, in an overall sense?

Thanks, and thanks for the thread.

Bob.

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  #52 (permalink)
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bobwest View Post
I saw the heading for this post, "May 16th" (thinking it should be the 15th), and was temporarily, and foolishly, confused.

Internal conversation: "I'm on East Coast USA, he's in Australia, duh...."

OK, aside from that, I'm enjoying this thread. I've seen that you are looking more for largish moves... I'm a bit more scalpish, although not committed to it. (I like bigger moves if I can find them.)

I also see something about how you are making decisions, and I think I'm fairly clear on it (profile, DOM/order flow, news/reaction to news, etc.) It seems that, taking these factors into account, a fair amount of your decision-making is also by feel or, for lack of a better word, intuitive. Would you say this is correct?

I am asking because I am interested in finding a balance between formal and non-formal, or at least less-formal, ways of making trading decisions. I am trying to simplify down about as far as I can go, without simplifying too far .

I am not asking about the particular tools, which obviously are going to be an individual matter, just about the general approach. How would you describe it, in an overall sense?

Thanks, and thanks for the thread.

Bob.

Hey Bob

I hope my thread is of some value. Good to have you following along. The timezone thing is confusing. I spend half my day trying to work out what time it is in New York tbh.

Yes you're spot on regarding my approach.

It's basically this:
  1. Identify market profile areas of interest
  2. Look for size printing into the bid/offer in those areas
  3. Look for good risk/reward
  4. Always try and go with the sentiment
At a most basic level, my approach is effectively using the DOM to spot where the big buyers and sellers are. Trying to spot these guys executing orders so I can jump on and come along for the ride.

The market profile stuff and the risk/reward is just a way I add a few more "layers" to it I guess.

But the DOM is always the best place to start in my opinion.

The feel just comes from practice. It's a bit learning a new sport. It takes time and practice.

And in regards to the length of trade I look for, I only try and take longer trades to firstly avoid the churn that can be created through algos etc and secondly because of costs. Depending on your situation, commissions can really damage the bottom line so you do have to be a bit selective.

Hope that answers your question. Happy to help with anything.

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trentcroad View Post

Tip

A nice little tip when doing that kind of trade - don't make your target VPOC. Make it 1-2 ticks beforehand. Everyone uses VPOC as a point to cover so quite often price will bounce. Also have your exit orders stacked and ready to go. Getting a fill is important here and you want to be front of the queue.

Agree with that - nothing worse than seeing the train hit your station but leaving without you getting on (or off)....

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  #54 (permalink)
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DionysusToast View Post
Agree with that - nothing worse than seeing the train hit your station but leaving without you getting on (or off)....

Haha perfect way of putting it Peter

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  #55 (permalink)
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trentcroad, thank you for the daily analysis. I really enjoy your thread.

I have a few questions concerning the way you approach the market
1) Do you use a longer term chart to give you some kind of context or do you only rely on the DOM and market profile building up on any given day?
2) How do you determine the market sentiment?

Thanks,
Jürgen

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  #56 (permalink)
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Jyrgen View Post
trentcroad, thank you for the daily analysis. I really enjoy your thread.

I have a few questions concerning the way you approach the market
1) Do you use a longer term chart to give you some kind of context or do you only rely on the DOM and market profile building up on any given day?
2) How do you determine the market sentiment?

Thanks,
Jürgen

Hey Jürgen

Good to hear from you.

I do take note of levels on a longer term chart. So I might open a 30 minute chart say and look for obvious technical levels. I take note of round numbers. I also look for gaps like yesterdays close, or the break between sessions. My market is shut a couple of times a day so it allows for that kind of thing.

These type of levels I just keep in the back of my mind as places I think the market will likely test and can help in setting up risk/reward situations.

Generally all my entries though are based on the DOM/MP.

Sentiment is a bit based on feel, the news and the trend. News is certainly an important factor and I don't like to fade things much when it's based on something fundamental.

But most basically - I am just trying to go with the trend. Often times the market will be a bit back and forth for the opening 10-30 mins. If it can break out of that range I kind of try and stick to the bias. Going with the trend basically.

Then I'll apply those things I listed earlier and only trade in that direction.

If it's very much range bound I'll adjust to that and be more open to fading.

So when I say sentiment I guess I mean the type of day we're having.

The markets do change a bit and go from periods of high volume/activity to low so I take that into consideration also.

Hope that helps.

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  #57 (permalink)
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I just had a realisation that there are probably a few readers of the thread that are interested in DOM trading and are still new to it.

I just had a silly story that I wanted to share, highlighting the importance of what platform you use. I know many new traders like ninja trader.

When I was just beginning I got into a training program.

I knew that it was all about using the DOM so I thought I'd get a jump on things, so I wanted to start learning it asap.

So I loaded up the ninja dom and sat there looking for setups using only the DOM.

Here's the stupid part...

I sat there for 1 month. That's 20 trading sessions. And I saw one "possible" setup.

Now what I didn't realise is that you can't really see buying and selling on the ninja DOM.

The DOM is too basic. It doesn't show the volume accumulating, which is what you need.

While it's pretty funny now, back then it wasn't. Funny in hindsight.

My only consolation is that at least it shows I was committed.

So if you're starting out you need a good platform. Xtrader is a good one but it is expensive.

If you're using ninja checkout Jigsaw Trading. It's probably what I would consider the next generation DOM and is pretty impressive. Ideal for ES traders and it's proving to be very useful in thinner markets.

I hope that by sharing my stupid story, that I just saved a few people a month of their lives

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  #58 (permalink)
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trentcroad View Post
So if you're starting out you need a good platform. Xtrader is a good one but it is expensive.

If you're using ninja checkout Jigsaw Trading. It's probably what I would consider the next generation DOM and is pretty impressive. Ideal for ES traders and it's proving to be very useful in thinner markets.

I use both Xtrader and Jigsaw, so I agree. Both terrific in different ways.

Do you use Jigsaw for live entries or are you still using Xtrader in addition to the Jigsaw DOM?

Since you mentioned you are doing spread treads as well I would guess you're at least using Xtrader for that.

Thanks,

Michael

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  #59 (permalink)
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empty View Post
I use both Xtrader and Jigsaw, so I agree. Both terrific in different ways.

Do you use Jigsaw for live entries or are you still using Xtrader in addition to the Jigsaw DOM?

Since you mentioned you are doing spread treads as well I would guess you're at least using Xtrader for that.

Thanks,

Michael

Hey Michael

I still use Xtrader for all entries. It's only in recent times that I've just been playing around with it as an add on. It is quite useful as you can miss things on Xtrader at times.

For spreads Xtrader is excellent. It obviously has auto spreader and is easy to use. I'm not sure if ninja would have exchange traded spreads either.

But if you are focused on pure outrights Jigsaw is great.

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  #60 (permalink)
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We saw a bit of a sell off this morning, but I didn't like the action all that much.

Volume was thin and patchy on the DOM and we were skipping between prices on not much at all.

It's the kind of action I dislike as there are big moves happening but it's hard to know where to get in.

I took some shorts early, by virtue of the fact that we were tanking - so I just jumped on board.

Then I got stopped out at the bottom and annoyingly took a bigger loser than I would like as we just didn't back tick.

Then I just couldn't find an entry I liked.

Frustrating.

I'm going to be taking a look at the ZN this evening so looking forward to a market with a bit of size for a change.

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