I’ve been an Australian based prop trader for a number of years now and I’ve just started trading remotely for a new firm.
I’m starting this journal and a blog to keep me honest.
I’m going to try and keep this thread updated by sharing interesting daily trades as well as speaking about prop trading and delving into the setups I like to use. I also love the psychology of trading and performance so I’ll share my thoughts on the mental game when relevant.
As it stands I trade intraday outright futures focused on:
Aussie SPI and the 6A
Bund, Bobl and FESX
ZN and ZB
My general time frame for holding a trade is usually between 5-30 minutes, however I will take a few scalps here and there depending on the situation. I also trade spreads on a longer term basis or what you might consider to be “swing trading.”
I trade predominately using the DOM and market profile. I also put a huge focus on using the news and market sentiment to find higher probability opportunities. I like to trade markets that have a strong correlation to others as in my opinion they present us with more opportunities.
Being based in Australia we have to luxury of being able to trade a wide range of markets so I'll often trade different markets at different times.
Feel free to comment or ask me anything as I’m more than happy to share my experiences.
Good Trading.
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I'm trading the Australian SPI (which is the S&P/ASX 200 Index Futures), however the information and ideas are relevant to any market.
Holidays are generally good times to avoid as a trader. Certainly Christmas and Thanksgiving can be very poor and Easter isn't great either as I'm sure most of you are aware.
We have a shortened week in the Aussie market so I wasn't expecting huge moves.
However if you're looking to trade during these quieter times here's some thoughts.
There's going to be less people active so there probably isn't going to be the follow through on a breakout. So you can really look for false breaks.
As you can see in the chart we never really looked like breaking out and there were some chances to trade the range.
Some markets are closed just prior to the open, so they present an opportunity for a gap to potentially close. It certainly isn't always going to happen, but if a market has drifted on no real news and it's quiet I'd certainly be looking for a test of the gap, which is what we got here.
Good Trading.
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We had some big data out today in the CPI and Chinese Manufacturing which are both important for the Australian economy.
The data isn't released for a couple of hours into the session so I was expecting a slow start.
Interestingly there was some good buying early and we can see the up move prior to the data.
You could see some buying happening on the bid here on the way up and there were a couple of chances to get in on pullbacks.
The CPI came in below expectation, and the market was slow to react. As we were headed toward the highs this was a good chance to enter expecting a test of the highs - which we got.
Then the Chinese data was a little bearish and we sold off. Another clear opportunity to get on the mini trend as there was good selling on the offer.
I thought this was going to go all the way down and test the lows but the selling came to a bit of a holt.
I didn't do much as the day went on as I didn't see much I liked.
Certainly some good spots to trade around the data and with plenty of clear entry points which is always nice.
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There is still opportunity but there's no doubt it can be a slow mover at times.
I will use the 6A a bit also as they often trade in sink and that creates opportunities with potential leaders and followers.
I think you have to adjust your strategy for something like the SPI to look for different kinds of trades like that, or for things like false breakouts, because of the low volume at times.
If I see better action in something like the Bund then I put my focus on to that market and trade it in the evenings instead.
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I'd much rather be trading the opening 2 hours and call it a day.
As you can see on the chart we got a decent test of the highs after a bit of a sell off - followed by a test of the gap.
There were a few good trades here for me.
The I couldn't really get a handle on whether we were in a trend or if it was just a range.
Looking at the chart now it looks like a bit of a trend but those are 5 minute candles so it was certainly a slow moving trend at best and they're not the easiest to be trading.
Price then sold off in the arvo before a late rally.
A good day to trade the open and be done with it.
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After yesterday which was a really tough - we just got a ripping trading day.
I'd like to say it was because of all my skills and talent, but the reality was it was just a huge downtrend.
It was almost 100 ticks from the highs to the lows so by SPI standards that's big!
The day started and I was actually initially looking long when I saw a nice setup, however the AUD just started to tank and I got stopped out.
The market then proceeded to sell and there was really no reason to be long here at any point.
The news out of China was that it was going to start regulating financing of iron ore which is obviously bad news for OZ as we are big exporters of iron ore.
The thing that made this day quite good was that the pullbacks were really clean.
You can't see it quiet as clearly on the chart but on the DOM there was clear selling every time the market pulled back. Heavy on the offer always. Just what you want to see.
I took a nice early trade from around 45's all the way into the gap. I was pretty happy after the slow moving grind of yesterday that it played out reasonable quickly.
I thought the trend would stop around 5520 where I got stopped for BE after around 1000 contracts traded - but sure enough the selling just came back giving a couple more nice trades later.
In the end it kind of slowed but probably one of the better days you could hope for in the SPI.
Nice way to bounce back.
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After a good day yesterday we got a bit of follow through and it ended up another decent day to be trading.
The market gapped higher and basically sold off nicely from the outset.
A had a downside bias so my plan for the day was to only take shorts. I got a couple of really nice moves on the way down that played out pretty fast.
I had to get short a couple of times at 71's as I got stopped out to the tick which is always annoying. I generally use a 3 tick stop and that works well for me.
Around lunch the market began to flatten out a touch and kind of got into a bit of a range.
If you look on the chart, the pink lines are the market profile ranges. Basically these are the areas that have the bulk of the volume. So initially most of the volume was between 71-62. So if price was at the upper level , 71, I'd be looking to get short. Which I did.
Eventually the market pushed through 71's and a really solid MP range developed at 80.
What I mean is that at 5480 - there were 900 contracts that had traded. At 5481 there were like 100. So that's a significant ledge if you can call it that.
That's telling us that there is selling at 80. So I took a couple of nice little range trades when it came and retested that level.
In the final 30 minutes we had the month end saga.
If you recall from earlier posts at months end or something similar, you can often see some of the big guys exiting positions.
We got a nice big seller at 83 - good for a few ticks. The move was quite big on the chart but I wasn't able to get all of that by any stretch.
Generally those last 30 minutes are a time for scalping the DOM. I'd even put the charts away and focus hard on the DOM.
Another decent day though.
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I suppose you are using the DOM (tape reading) to determine where the big orders are, aren't you? It would be usefull if you post some similar example, if you don't mind.
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Good to hear from you. Bund/Bobl/Shatz are one of the best markets to be trading imo. I traded it for a long time myself. You'll get a heap of great opportunities and it's great for reading the DOM.
In the example that I mentioned, I saw on the DOM there was about 40 contracts on the offer (5483) at the time - however price kept on trading there. Maybe 500+ contracts traded at 83, yet the offer always kept on staying around the 40-50 mark.
What that was telling me was that there was a big seller there who kept on refreshing his order. Price just couldn't go any higher in the short term because this big seller was trying to execute his order.
If you watch the DOM for a while you'll start to see this kind of thing.
If I get a chance I'll post a video so you can see it happening live and it might be a bit easier to see.
Also if you are using ninja trader there's a great little free add on indicator that I'd encourage you to download.
It's called the 1 lot trader - or something like that.
It's just a DOM that shows all the volume trading at each price level and it will let you see the big buyers and sellers - which at the end of the day is what trading is all about. It's like a free version of what you get with Xtrader.
All the best
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The market did what it's been doing of late, which was sell off after Wall Street dragged it higher overnight.
Again looking on the chart it looks OK - but the market wasn't great to trade. Not for me at least.
The volume felt quite thin and price was really skipping through the lows very easily.
When it did pull back it was fast and only on light volume making it really hard to get into a trade.
I was biased short but I missed a fill early on and only managed one trade at a decent pullback around 72. If you look on the chart you can see that a nice market profile level had formed at 72. That's one of the key things I look for. It also hung around for a little while at that level.
I don't really like stepping up and jumping into pull backs too early. However as a result I can miss them at times. Which is what happened today.
Toward lunch time the volume really slowed and there were times when I thought my DOM had actually frozen so I figured that was a good sign to call it a day.
Tricky action today. Wait for better spots.
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I highlighted this because to you its second nature, but I'm not sure all readers would have picked up on it's significance.
After a strong move, there is often "complex" (call it what you will) price action before any continuation. There is a period of buyers and sellers matching each other out before the dominant force resumes.
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The two things I notice about this chart on the continuations is that at 87 / 86 you see a drop off of volume on the profile which also coincides with at breaking of price downwards. I think this is a nice place to enter.
Also I notice pretty much the opposite at 85 / 84 as the profile ramps up coinciding with the same type of continuation I stated in my previous sentence but now it's getting sucked into a high volume node. This is also a good place to enter.
(maybe these are too obvious looking at them in hindsight after the profile has been created but I'm sure they showed some reference even in their creation)
Thanks
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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I like to enter when I see the pullback in the vicinity of a high volume area.
That 71-72 was a really good spot.
Specifically what I like to see is high volume around 71-72, but very low volume above it at 73-74 etc. I would have liked to have seen even less volume at 73-74 than what we had here.
It almost creates a ledge that shows there's selling in that area.
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Just a short sharp session today. I wanted to trade the opening 2 hours and I also ran into a few internet issues.
I did have a bit of realisation today too.
When the volume is a little thin, if a price can't hold it's a reversal sign.
What I mean to say is that let's say we have 10 contracts on the offer at 5433 and it tries a few times to go bid - but can't - that's a sign of weakness and a chance to get short. Like I said before I don't like to be too aggressive with my entries but it's something I want to remember.
It wasn't a bad day of trading however. I got short twice initially on a pullback, for a quick winner and a stop out.
Price then really broke down and I took a pullback that I really liked. Price then traded down to the lows, which were the lows of the day, however I saw quite a few contracts traded there.
It was something like this (these are market profile numbers):
5415 100
5414 150
5413 80
To me this looked like there was definite buying picking up here so I exited right at the bottom. I don't like to pick tops and bottoms so I didn't get long, but it was enough to get me out of my short. Sure enough the buyers entered and we ran right back up. Pretty happy.
Finally we pulled right back to what was eventually VPOC and I took a short for a quick winner. If you look I had my target as the other side of that market profile range at 29 and we traded to it nicely. That's a good way of setting your risk/reward targets.
After the number at 11:30 I tried a short again, but in hindsight that was a mistake as the number was bullish and I got stopped.
Regardless I think it was a solid day.
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I've had a few requests to elaborate on exactly how I trade the big buyers and sellers with the DOM.
These things don't show up on the charts so if you are using the DOM you can sometimes spot some good opportunities.
A lot of the time large buyers and sellers show up toward the close of session and especially on Friday's or at the end of the month or quarter etc.
Now I wasn't trading this session (it was last Friday afternoon), and I wasn't even there for that matter. I just left the screen recorder on - probably wasn't even live either.
And as we know, trading is pretty easy with the value of hindsight.
However I just wanted to point out this type of action as you might be able to look for it in your own market.
I wouldn't expect this in the larger markets like the ES, but if you're trading something smaller, keep an eye out.
Hopefully it's of some value.
It's not always easy to understand if you're new to it, but give it a chance.
This is one way you can use the ladder to trade and you can apply these ideas to all your setups.
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This was another day that I wanted to focus on the opening 2 hrs. Volume really fell away after lunch so I think that was a good move. The reason you need volume is that even though the setups are there, they just don't get any follow through and you just end up burning commissions.
On the open I took a couple of scalps when I saw decent buying on the DOM. I sometimes worry about taking these type of trades early on as I think you can get a bit fired up by the start of trading and take some silly trades. It kind of feels like being a kid at Christmas if you know what I mean. Maybe it's better to wait and be a bit more calculated.
After the run up there was clear selling at the top. I don't pick the tops and bottoms that much so I stayed out but sure enough we sold off.
Price then developed a really textbook MP ledge (as I call it) at 65. I took a trade nicely down to 59. It then came back a while later so I took it again. I got out at 59 a second time, then price really fell away.
After some data, we made another nice little range and I got short, but it didn't have any follow through unfortunately and I got stopped.
You can see price just drifting along not doing much so that's a good sign to call it a day.
I have been making fewer trades these days, but I think I'm finding good spots.
I've also been experimenting with a new DOM as a bit of an add on which has been a real help over the last few weeks so I'm happy with where things are at currently.
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We had the RBA rate announcement out at 2:30pm, and that usually keeps things pretty quiet.
In the morning there were some chances.
I got an early scalp in that I probably shouldn't have taken and lost a couple of ticks.
I then wanted to go with the trend, just to see if we would make an unlikely break. We didn't and I scratched.
You can see that there were a few good trades at the top today. An RBA day is a pretty good chance to take them IMO as the likely hood of a big breakout is slim. I know that's contrary to my earlier trend trade btw.
Finally I found a really great spot, smack bang on the MP ledge - and I didn't get filled.
I was right at the front of queue but no luck. I then proceeded to watch it go my way 12 ticks.
The joys of trading right?
Otherwise pretty quiet and I stayed mostly out of trouble. Let's see what tomorrow brings.
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There's a saying in trading I heard somewhere which goes along the lines of, "If you can get it you don't want it, if you want it, you can't get it."
For me I just couldn't get it.
There were some really great spots yesterday, but I just couldn't get a fill.
One of the big issues with the SPI is that it trades to these levels then turns on a dime. Unlike say the bund that is very liquid and gives you a chance.
I missed 2-3 really great spots because there wasn't volume.
However I was lucky enough to spot some really great volume printing into the offer on a couple of occasions so finally cashed in.
This was one of those days that could have been massive - if only I could have got a fill.
I wasn't expecting big things today, as there was a jobs number at 11:30am. However it turned into a pretty nice trading day.
I've been trying to take a more cautious - longer term approach to my SPI trades. As a result I've been missing fills a bit. So today I tried something a little different.
There was a really nice MP level that formed at 46.
The first time it traded there it was bid 46 and a little size traded and it quickly snapped back to bid 47s.
Now I've been missing this type of spot quite a bit so today I just bid 47s and got filled. It turned into a nice trade as it went and tested the highs.
The next time it came back down I did a similar thing. Price didn't snap back so fast and I had to sit on it for a while as you can see from the chart.
I trailed this one up and we ran into some selling at the MP level at 53-54 which is to be expected.
In the same manner that you look to enter at these levels, you can also use them as a good point to exit.
The big advantage of this type of trade is that if it can push through that level it will likely hit the highs as we saw the first time around.
There was another chance later but we were nearing the number so I stood aside. After that there wasn't anything I was looking for.
I've been monitoring some bond spreads today so that's been quite interesting post the jobs number.
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Another good day of trade in the SPI - I can assure you it isn't always this rosy - it just seems we're in a decent patch at the moment.
The first thing I really wanted to highlight is the excellent example of selling on a pullback.
Price broke down after the open and pulled back into a bit of a range at 43.
There was excellent selling on the offer and it just couldn't get up. It might have ticked up to get bid at 44 but kept getting whacked back down.
If you look on the chart it's almost a straight line across which is a super indicator of selling. This would have been even clearer on a tick chart if you use those (I don't) and it was clear as day on the DOM.
The other great thing about this type of spot is the risk/reward.
I'm short at 43 with 3 tick stop.
If we reach the lows thats 4-5 ticks away and I expect to see that happen around 75% of the time.
However if we run the lows - which might happen 50% we stand to make something like 10 ticks.
As it turned out this turned into a 16 tick winner with barely a back tick down to 27. Great stuff for only risking 3 ticks.
I got a small piece of the next one followed by a stop out when I tried it again.
Keep hitting it until the end I say.
We ran into some data and RBA stuff so I stayed out for a bit.
It might be boring as hell, but I suggest you read the Reserve Bank statements and get an understanding of the type of language they like to use. It can give you some insights and is a must if you trade bonds or STIRS.
We got a bit of a pullback later but I missed it, before volume died down a bit.
I might come back later for the close.
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Interested in your Bund, ZN thoughts/trades if you have any to post. Bund is my main market and aussie bund traders are rare. Also who are you using as a broker to get SPI, BUND ZN 6A etc in Oz? I defunded my account after the Mirus balls up so looking for someone when I'm back in the markets (i.e not studying full time)
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I love the Bund as a market to trade. Just the hours can be a bit of a killer like many markets for Aussies unfortunately. I don't trade the ZN as much anymore because the timezone is just too much for me.
I'll be sure to post any trades when I get back into the Bund though. SPI has been good lately but it's not always the case.
In terms of retail brokers I think AMP is probably your best bet if you need SPI. IB also has a good range of products but comms are high. AMP are reasonably priced and don't underestimate how important that is. I'm not sure if Deep Discount still offer SPI - but they'd definitely have all Eurex. They are great with customer service while the others aren't so good. DD would be my choice for a Bund trader.
Feel free to contact me anytime and best of luck with the trading and study!
@trentcroad how do you like Australia, could you describe what life is like out there? I've always considered taking a trip there once I save up enough.
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
I don't mean to digress, but I like this beach called Ipanema that kronie posted on big mikes ecuador thread not for the sexiness but it just looks awesome (I posted the link below). Only problem is English isn't the native language like in Australia
The beaches here in the Tri state area from New york, New Jersey, and even Delaware have nice board walks, casinos, restaurants etc. but when it comes to the actual water it's mediocre. The water is very cold and dark dark blue. There's usually no waves and there are also many jelly fish and guidos. This is a somewhat accurate picture
R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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This was a bit of a strange trading day for me today and it was a mental test. But not in the way you might think.
Price opened up quite strong and pushed through the highs. I got an early stop out before we got a rally great sign of buying. I got long and we pushed up into the highs. When we got to like bid 71 or 72 there were a few pumped up "fake" bids.
It just looked like someone wanted a fill on the other side of the high and that would be the end of it. Sure enough that's what we got.
As price then collapsed, my connection started playing up. I messed around for a bit a missed most of that nice sell off and the little pullback that I love.
Now bad connections are one of the things that I just hate! I almost felt a bit tilted (to use a poker term) after seeing some great chances go begging. I pulled myself together and got a nice short on a further pullback but it didn't have much follow through.
I was kind of mad and not in the best head space so I didn't trade after that.
In hindsight maybe I shouldn't have traded that last one, regardless of the result.
If you feel like you missed out and you're angry - that has revenge trade written all over it.
A weird day to say the least.
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Well I wasn't able to walk away with a profit today, however I don't think I traded too badly.
The day started with some good buying and it looked like it was a mirror image of yesterday. There was a nice pullback and some buying and a chance to get long. It ran up but didn't push too far through the highs.
Then we saw 200+ contracts printing at the highs, which made me think it was another top. In classic "toppy" fashion price had a second crack before a sharp sell off.
Now I don't particularly like picking highs in a market like the SPI. I also trade bonds outright and bond spreads and I'm basically doing a lot mean-reversion type trades, so I save it for those markets. That said SPI is known for its false breakouts.
After the sell off there were some good spots but I kept on getting caught up in the chop. There was a lot of action and the market was quick and back and forth a lot. Maybe that's a point to widen my stop - I'm not sure. We've been seeing clean buying and selling lately and maybe today just wasn't one of those days.
There was another little sign of buying but it was smack bang on VPOC. Now many might disagree with me here but I don't like using VPOC as an entry point. I like to use it as a target. I find you can get churned a bit and I've never really liked doing it.
Just after the number there was a great trade for me where I got long at 80 and we reverted right back to VPOC - now that's my kind of trade.
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.
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Thank you for your writeups. I've been enjoying them.
I also don't like using the VPOC as an entry. I have pretty tight time stops. I don't want to be chopping around for a long time even if it means I miss the move away. So it's good to hear you say this.
I'm curious. It looks like you're using XStudy charts. How far is your volume profile looking back? It seems like you use the levels and steps a lot in determining entries / exits. Are you also looking at composites or is it prior day? I've been trying to find the right balance. Currently I'm looking at volume profile for the prior day for potential movements then using the building profile of the day to trade off of.
Thanks again,
Michael
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Regarding the look back period I generally only use the current trading day for my volume profile.
However I have played around in the past with using the prior days VPOC as a potential target, and I think there might be some value in that. As price does get sucked toward it so it's good to be aware of it if there's a breakout or something and it's headed in that direction. Your current approach sounds quite good to me.
I like to use the current days VPOC as a target, if price is looking to revert toward it.
If say I'm trading away from the VPOC (breakout), then I don't look for targets all that much tbh. I'll try and hold the trade until I see a lot of size printing. Making a big step in the volume profile if you will. That kind of gives you an idea that there is someone there on the other side slowing price down and it might be a time to exit.
Hope this was of some help.
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This was a rather uneventful day for me, with light volume and very rangy action. Ironically I made a profit today in poor conditions, while yesterday in better conditions I didn't. That's trading I guess.
From the outset things look really range bound. We tested the low, then the high, the we came back to the low. There wasn't much in the way of news flow or volume so I really felt that this was an OK spot to look long.
If I am going to step up at a low, I like to let price push through first and I won't step up early. There was some OK volume down there and hardly anything printing at the very low, before price snapped back. I like that kind of action and got long.
Price rallied nicely back into the heart of the range.
I tried something similar at the high but it came back on me for a scratch. I then could have made a case to be long and in the end I felt a bit undecided so figured that was a good sign to not be involved for the time being.
As you can see from the chart, it was just low volume churn for the rest of the morning so I didn't do much.
I had my eye on the yield curve as well as it was in a bit of a range, but fills were a bit tough - as usual.
Today was a pretty interesting one and I have a couple of good spots to discuss. My thinking was good, but I could have executed a bit better I think.
The first thing to look at was how the day setup. We made a high then sold off and put in the low. We then proceeded to charge right up toward the high of the day again.
This is the type of spot I love. Everyone is watching the high with many looking to get short and many more looking to get long on the other side.
My plan is a bit different.
I like to get long before we reach the high and I expect us at the very least test that level. Now I've never done any analysis of how often we are going to test the high, but I would expect it to be higher than 75%. So in this instance I got long on a little PB around 92.
Now the other thing that made this interesting was that on the other side of the high we had 5500. round numbers make good levels, so again I would expect a test of this level.
So as we pushed into the initial highs, I was looking for a bit of a stop run and hopefully a second stop run through 5500.
Sure enough we did get the first run of the highs and I was gunning for an exit around the 5501 mark but we only printed 5499 before coming off a touch. I covered at 97.
Price then pulled back and buying came in so I got long again at 96. Sure enough we got our test of 5500 and I covered on the other side around 02.
I had one more go on the last PB, hoping for a run into yesterdays close (the gap if you like). We didn't get it and I got stopped out.
For me that was all pretty interested stuff. I like getting in before we hit "levels." In theory I guess I could have held my trades a bit better - but it's just so damn tough to do that sometimes. Also it's probably not realistic to try and get all of the big moves. So I can live with that truth be told. Actually as I sit here writing this I think I traded this quite well. It's interesting to look at after all is said and done.
Afterward we churned around the 5500 level as we have tended to do of late. I had a few spots I liked but couldn't get filled.
Just prior to the number we got a big run up. After the number (which wasn't a big one at all) I looked to get long, but we sold off and I got stopped. Sometimes those run ups just happen and then auto-retrace so it's questionable as to how good of a plan it was to get long there. Oh well. I'd rather keep hitting trends until they end.
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.
There was a nice spot early though.
After a push higher we pulled back and 100+ contracts printed around the 93-94 area.
I love these spots as we have a volume profile ledge, size printing into the bid and the bid holding strong and finally a great risk reward.
I have a 3 tick stop and the high was about 8-9 ticks off so that looked pretty good to me.
In the end we ran up and stalled out at 5499, so I covered. Price did eventually run the highs but I was long gone. But I was pretty happy with the spot and my trading.
There was some size around later and a few chances that didn't follow through for me, but ended up as scratches.
I didn't really want to keep churning the comms today. Given the nature of the day there might be some potential in the final 30 minutes.
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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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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:
Identify market profile areas of interest
Look for size printing into the bid/offer in those areas
Look for good risk/reward
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, 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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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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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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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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I'm going to be taking a look at the ZN for a little bit so I'll be doing a few late nights for a while.
It was nice to be back in a liquid market, but it wasn't an easy day for sure.
I hadn't traded the ZN for a little while and there was certainly some size printing. A lot bigger than I remember it.
The Bund had been really weak during the European open but right on the pit open we saw a big buyer really stepping up and buying right at the bottom.
From there on we had quite a bid in the market. There was a nice pullback a bit later and it was a hard market to do anything with other than go with the trend.
We eventually sold off, but I wasn't able to get a piece of that.
Interesting start. Looking forward to the next few sessions.
On the Aussie front we have RBA minutes but there wasn't a lot new. Aussie has been weaker since and XT is a couple of ticks down.
Unfortunately I only got a couple of ticks out of those big buyers. Would've liked more
I did actually get stopped out trying to pick the top.
I don't pick tops and bottoms that much but in the ZN I think it's a good trade.
I also like to wait a bit into the session as usually if there's a trend it's there early.
In this instance I wanted to get short. I like to get short on the other side of the high.
Often if you look at the MP there will be a couple of prices at the top with very little volume and then one with a lot.
The temptation is always to short at that large MP level. However I find price loves to test the highs so I like to wait for a push through and to see size printing into the offer on the other side.
We got that here, however there was just a bit much buying and it ran back through me.
Unfortunately I was right and we did sell off - I just wasn't in it.
Hope this helps.
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Last night there was a ton of size printing all over the place and I was really looking for a bit of a pullback from the buying, but there was really no let up.
After we tested the highs I looked to get short after a massive amount of size printed around 265. However we just couldn't sell off and it kept on getting bid up at 250.
I held this one for an 1 hr+ before finally giving in.
Then as we broke higher and there was really only strength (and a lot of weakness in the equities) I got a nice pullback.
Classic spot for me. MP level. Size printing into the bid.
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Trading: EMD, 6J, ZB
Posts: 798 since Oct 2009
I was so hoping this was a US based thread, with US based experiences. Then I realized, how enlightening it will be to keep up to date with this thread, to see how "prop" is defined for other traders / countries.
I am glad, its only up to 3 pages, instead of more, which means I am getting in, just after this took off, but then again, isn't that how they describe pro traders, who pile into a proven trend and accelerate it even further...
I honestly didn't know that there were proprietary shops offshore to the US, although, when I was with the Bright Brothers, they had traders in other countries. I guess all my knowledge is US centric, and US regulatory perspective, but then again, if one can't make his fortune with what he has before him, how would he expect that more would be put before him.
thanks for sharing, can't wait to see how this thread develops
We started with a weaker tone as Bund was dragging us down after a poor auction.
We ended up pushing lower on the open and pulled back a touch before a big MP level got established at 250.
I traded this twice but we never really broke through. I made 2 ticks on each in very rangy fashion, before we finally got a push lower.
We had FOMC minutes out later in the day and that is always going to help things stay a bit more range bound, so I adjusted my expectations accordingly.
A bit later in the day I took another pullback to the MP range which was now at 240. In truth this might have been a bit close to VPOC but in reality price just couldn't get up at all.
I was short and luckily we also got a comment from ECB's Weidman that was bearish for bonds.
I would sometimes hold this for a bit more of a push, but all eyes were on the FOMC so I just took my 2 ticks once again.
I actually didn't wait around for the FOMC minutes as I'm still battling the hours a bit and they were out at 4am.
There's sometimes a bit of a chance to get some nice news play on minutes but I felt that my 4am I wouldn't be sharp enough anyhow.
Slow and steady day that's for sure. Just the way I like it.
I think in our timezone the Kospi is the market to look at. Similar tick value to the SPI but loads more volume - usually 100+ a side and average 150k contracts a side. Or the HK futures if you prefer a bit more volatility.
Bit confused, you said you were trading remotely for a firm, but then also talking about using AMP as your broker. I'd have thought your firm would get you onboard some decent rates due to the group buying power?
anyway, just saying hello, and posting so I can subscribe for further updates.
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I've watched the Hong Kong Futures a bit as they sometimes give a bit of a lead for the SPI I've noticed. You're right about the volatility too. I haven't watched the Kospi so much though, so I'd be interested to look at it. I've been digging into the broker situation a fair bit recently, as going forward I'm weighing up the best options for my trading. I have accounts with a few different ones as I put on some longer term spread positions (mostly calendars) so comms aren't such a worry for that time frame. My plan going forward is that I want to put more time into spreads though so I'll see what happens.
I use e-signal for Kospi data. One of the few I could find that has access. Only 30/month once you're already using e-signal (which is I think 110/month for futures access). I'm a systems trader and bought some historical data from Investware in Korea for back testing.
and fyi I use IB as my broker. KRW is a difficult currency to get in/out of so not many guys give you access. I'm still testing in SIM but I don't forsee many problems getting my profits (fingers crossed!!) back into AUD.
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A reasonably quiet start to my week. I did little yesterday and wasn't expecting huge moves today given the long weekend.
I found a bit of buying early which was good for a few ticks. I still like to look for a bit of break early, however I'm not expecting those breaks to hold given the light volume.
Later there was a nice run of the lows on some volume and squawk was talking about China.
There was a bit of a PB I liked and took it. Held it as it went against me before it ran down to the lows. I didn't get a fill as I tried to get out and I ended up taking a scratch. Unfortunate.
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Do you watch honkers much when trading the SPI? My successful trading always involves watching another market with my primary market, obviously speaking of semi- correlated markets here....
Edit: I see where you replied to this already above, but do you specifically find the HHI or HSI best?
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I used to watch the H-shares, but I guess it's like anything when it comes to correlations, the leader might change day to day. So maybe one day it was HHI then the next HSI.
A bit like the SPI and the 6A. One day SPI follows 6A, the next 6A follows SPI.
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Yeah agree, see this allot with the DAX and the FTSE (Z), mostly the FTSE seems to lead, but occasionally depending on the theme of the day the DAX may lead or the relationship is not worth following. I'm not always looking for a lead, more often just that the general directional bias is shared i guess....for lack of a better way to put it.
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It's been an interesting couple of days in the Aussie market, with some negative sentiment around combined with some important fundamental data.
I really enjoy trading when there is that hint of negative sentiment in the air as it can lead to some pretty biggish moves, which is what we've been seeing.
Recently we've seen the price of iron ore really fall away quite heavily. There are also increasing reports about Chinese property weakening all combined with low consumer confidence on the back of a less than well received federal budget. Yesterday was RBA day and today we had GDP.
When we get these environments my trading plan starts getting pretty simple. I'm just looking to get short on pullbacks with my usual formula.
There have been some good spots and I've been quite active.
There was a boost with higher than expected GDP and that saw a bit of bounce but that was short lived.
So for now the plan will be for more of the same.
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Back into it after a couple of weeks off. In that time I re-jigged my trading a little in terms of my focus and my structure (if you could call it that).
I also moved house and now have an amazing internet connection - at least by Australian standards. Our internet is awful compared to the rest of the world.
I can't describe how much joy a good connection brings me
Anyhow...
It was a day of early selling in the Aussie SPI today.
I grabbed a couple of nice pullbacks right off the bat.
From there things got a little trickier...
There was an obvious downward bias - however the market refused to really pullback all that far. I hate trying to jump on a pullback when it's 2 ticks off the low - there's just too much room for it to go against you hard when people cover and stops trigger.
I ended up getting a little churned at the bottom. There was some really good volume down there and it looked like we had come to a bit of a bottom so I just wanted to play the ranges a bit. It was a little tough to find a nice entry for me however.
I found a nice MP range later good for a a couple of ticks as the market started to slow.
Bonds drifted higher ahead of the RBA action tomorrow - won't be expecting too much there other than some more talk really.
End of the half/quarter/financial year today so might be worth watching the close - could be some good action and size about.
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Well it was RBA rate decision time and it turned out to be a tricky day.
I actually enjoy trading on days when there is big data due out. The main reason being that I don't often expect price to bust out of its range in a big way.
So that was my mindset going in...
After we had developed a bit of a range we broke out to the upside and I saw around 200 contracts printing which made me think we had a bit of a top in the action. I got short for a nice winner.
Then I saw the same thing at the bottom after it came all the way down. This time it looked like it might revert, but it didn't and really blew through hard.
After that the action started to get really thin. What I mean is that you might see 5 contracts print at a price then it would jump 3 ticks the other way. It was thin and impossible to get a read on so I really could only sit out from then. Just not tradable given my style.
After the RBA left rates unchanged (as expected), the dollar really rallied as they didn't talk it down as many had expected as it's what they've been doing a fair bit of. The SPI didn't do all that much though. Bonds came off a touch in response.
After the strong lead from Wall Street overnight, the Aussie market powered on this morning.
There was a quick run up early that I didn't get on and I was eying the first PB I could. We got a good one at a nice MP spot and I was targeting the 5400 area. It traded exactly to 5400 but I got out a couple of ticks prior.
I wanted in on the next pullback but unfortunately I stepped up a touch early. I ended up getting stopped to the tick and it didn't even go offer. Must have been a little jumpy.
From there I kept on targeting solid MP areas. I got one and lost one. There was a bit of buying late post the number.
Trade balance saw Aussie sell off and bonds rally a touch. SPI was slow to follow suit.
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I've been putting a fair bit of time into spreads so I haven't been focused on the Aussie outrights much at all hence the lack of updates. I was just keeping this journal more about that. Spreads are pretty boring.
can't even look at em
. 
