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The brutal truth of day trading

  • #741
  • Edited 4:31pm May 10, 2021 4:17pm | Edited 4:31pm
Quoting Pumi
{quote} I have been chewing what you said. Does this mean when they make that move they are dribbling traders and sending them to the wrong side? Or they just matching the order that is in front of them (as according to Buffett's quote below)? What else is possibly there in that move? I watched the Market Delta "Footprint Deep Dive" Course videos some time ago and I tried to marry the stop runs concept with the order flow and I felt something was off. "Which, you know, has always struck me as like having a house that you like, and you’re living...
Hi Pumi

I think there is a basic flaw traders fall into which newbies don't. You know that saying "beginners luck " when you often get a nice win at the start of your trading career and you go "Wow, this is easy".
They look at the market with almost no knowledge and see the price move so jump and get a nice win.
Soon after they start to place 100 indicators on their charts and look for areas they believe supply and demand are placed and just start trading for those moves.

They lose again and again.

Why did the beginner get lucky?

Because they saw the market as it really is - then just over complicated trading after a short period with incorrect assumptions.

A... Passive Limit orders are stronger than Market orders = Stop runs occur because liquidity pools in clusters
B... Aggressive market orders are weaker than passive limit orders = The big players want to hunt my stop loss at any chance because they need the liquidity.

The Newbie does not see that but instead see's this

A... The market just moved strongly bearish so people must be selling = I have no idea why or where but I will Sell because it seems aggressive
B.. I don't know what supply and demand is?

What does this tell us

Aggressive Market orders are stronger than passive limit orders - it pays no attention to stop loss cluster because they contain little liquidity.
There is very little liquidity on a chart - the primary amount of liquidity in a trend comes from new market orders expanding the pool of current liquidity.

Only Michael and DonPato like me talk about Passive Limit orders and Aggressive market orders but last time I looked, they see it the other way around.
Just another viewpoint perhaps.
Trading thin liquidity at the boundary of the charts
  • #742
  • May 10, 2021 4:25pm May 10, 2021 4:25pm
Trading becomes simple when one starts to look at it from a limit order and market order point of view.
A trade should be based on an assumption based on facts
  • #743
  • May 10, 2021 4:38pm May 10, 2021 4:38pm
Quote
A... Passive Limit orders are stronger than Market orders = Stop runs occur because liquidity pools in clusters
B... Aggressive market orders are weaker than passive limit orders = The big players want to hunt my stop loss at any chance because they need the liquidity.

Aren't the two same?

Couldn't understand the "liquidity pools in clusters" term.
A trade should be based on an assumption based on facts
  • #744
  • May 10, 2021 5:33pm May 10, 2021 5:33pm
Quoting maverick2017
{quote} Aren't the two same? Couldn't understand the "liquidity pools in clusters" term.
Yes, just trying to reinforce my point.

Liquidity pools are a group of stop losses that tend to be grouped close together, like suburbs in a city.

Herd behaviour by traders tends to make them all place their stop losses in the same levels, if there is a few levels close together - we get pools that sit in clusters.

My point is these clusters don’t really contain much liquidity, that huge liquidity we talk about mostly comes from aggressive market orders that get executed every second.

Therefore a large group of us tonight could during a quiet period with little trading activity, could create a pullback.

I have done that already in another group (pullback may only be a pip)
Trading thin liquidity at the boundary of the charts
  • #745
  • May 10, 2021 5:41pm May 10, 2021 5:41pm
Quoting maverick2017
{quote} So. Do you trade intraday swings?


Yes, if there is deeper value there to be grabbed. Unlike many people these days, who think using point to point data (Not necessarily RickM specifically) is the answer to their insight gaps, I realized years ago that technology would speed up and take over some areas. So I learned a different/better way to read what is going on. Although I don't go for 4-5 pip moves, my end of day return and overall SR% is more than capable of satisfying my requirements. I'm not going to disclose it so please do not ask. It will only start arguments. But seeing as intradays are smaller, you need to appreciate what's below the surface otherwise you'll chase everything that comes along. That is why I also use the nuances and idiosyncrasies of a market to help with selection.

To speak plainly, if something does not prove effective at least 60% of the time I don't use it.


Peter
Real Trading is not gambling.
  • #746
  • May 10, 2021 5:46pm May 10, 2021 5:46pm
Quoting Pumi
{quote} I have been chewing what you said. Does this mean when they make that move they are dribbling traders and sending them to the wrong side? Or they just matching the order that is in front of them (as according to Buffett's quote below)? What else is possibly there in that move? I watched the Market Delta "Footprint Deep Dive" Course videos some time ago and I tried to marry the stop runs concept with the order flow and I felt something was off. "Which, you know, has always struck me as like having a house that you like, and you’re living...


Pumi,

This is why I advocate for someone to organize their learning curve into a schematic. Less to try and 'remember' and more that you can access later on at any stage of learning. It also helps with removing all the 'stories' people love creating to make things sound "interesting".


Peter
Real Trading is not gambling.
  • #747
  • May 10, 2021 6:03pm May 10, 2021 6:03pm
I want to say something here before RickM info overloads people. Large vs small liquidity DOES NOT MATTER when you know how to use it. Motivation + "Liquidity" drives activity. And activity moves the market, PERIOD. P-O-P activity is WHY you get your "big moves" not just because of big liquidity. It's a tennis match that leads up TO the bigger liquid moves that Rick and other P2P traders see and use. If anyone has actually proactively traded any market, notice how the market never really stops moving? Yeah, there is ALWAYS someone motivated by something to DO something. YOU remember that and it won't matter what type of approach you use.

A stop loss placed by someone can be 100 times more useful to someone who knows what they're doing and WHY they're doing it. But you get caught up in stories about stop hunts and all those things, you're sunk. Your psyche just took a nose dive.

P2P data trails do not answer questions they generate more. This is why Rick and ALL these other people using data to try and predict things, need to have a story to tell, so it makes sense to them. But if that data goes away then what? What do you do? A big chunk of your knowledge and know-how just disintegrated.

Anyway that's my bit. If you use P2P thinking you'll get caught out every time. Maybe tomorrow or the next day but there is an inevitability to things like that. So instead learn how to trade and stop outsourcing you learning.


Peter
Real Trading is not gambling.
  • #748
  • May 10, 2021 7:03pm May 10, 2021 7:03pm
Quoting RickM
{quote} Yes, just trying to reinforce my point. Liquidity pools are a group of stop losses that tend to be grouped close together, like suburbs in a city. Herd behaviour by traders tends to make them all place their stop losses in the same levels, if there is a few levels close together - we get pools that sit in clusters. My point is these clusters don’t really contain much liquidity, that huge liquidity we talk about mostly comes from aggressive market orders that get executed every second. Therefore a large group of us tonight could during a...
Isn't liquidity the limit orders that sit on the order book and market orders simply take the liquidity available?
A trade should be based on an assumption based on facts
  • #749
  • May 10, 2021 7:11pm May 10, 2021 7:11pm
Quoting PeterCaleb
{quote} Yes, if there is deeper value there to be grabbed. Unlike many people these days, who think using point to point data (Not necessarily RickM specifically) is the answer to their insight gaps, I realized years ago that technology would speed up and take over some areas. So I learned a different/better way to read what is going on. Although I don't go for 4-5 pip moves, my end of day return and overall SR% is more than capable of satisfying my requirements. I'm not going to disclose it so please do not ask. It will only start arguments....
So, you are essentially saying that someone capturing 4-5pips per trade can end up with more pip when the day ends?! This might be true.

Quote
you need to appreciate what's below the surface
below the surface, where?
A trade should be based on an assumption based on facts
  • #750
  • May 10, 2021 7:22pm May 10, 2021 7:22pm
Just grab a pen, pencil and paper and sit, be quiet and learn. DO NOT think about money or "making money" .... just listen take notes and absorb it.

BASICS ....

Inserted Video


Inserted Video


Inserted Video



Peter
Real Trading is not gambling.
  • #751
  • May 10, 2021 7:25pm May 10, 2021 7:25pm
It's called Point to Point Data trading. It's not new or better, just accessible.

Everybody always gets ahead of themselves. Learn the basics. MASTER the basics. Add these basics to a personal learning schematic.


Peter
Real Trading is not gambling.
  • #752
  • May 10, 2021 7:30pm May 10, 2021 7:30pm
Quote
Herd behaviour by traders tends to make them all place their stop losses in the same levels, if there is a few levels close together - we get pools that sit in clusters.

A little thinking and I'll have a new trading method.
Thank you !!
Suppose there a pivot level and market is below it. People will be short now with stop loss just above the pivot level. The move downwards will look like a normal move but if there is going to be a stop hunting then some people will take profits when market reverses and this may or may not reduce the volume when market is moving upward because some people would foresee the stop hunting which will happen and join the bull gang.
The question now is, why will people short without expecting a substantial move downwards?
A trade should be based on an assumption based on facts
  • #753
  • May 10, 2021 7:31pm May 10, 2021 7:31pm
Quoting maverick2017
{quote} So, you are essentially saying that someone capturing 4-5pips per trade can end up with more pip when the day ends?! This might be true. {quote} below the surface, where?


Since you seem to still be learning I will say this - whatever you deem true right now is true. Until, it is proven otherwise. A 5 pip move for a usual retail trader will yield 5 - spread (and possibly also minus commission). So 5 minus (up to 1-3pips). So do the math and see what you get. Same amount of work as any other trade but lower yield.

You just need to keep learning and find your way.


Peter
Real Trading is not gambling.
  • #754
  • May 10, 2021 7:42pm May 10, 2021 7:42pm
Quote
But if that data goes away then what? What do you do? A big chunk of your knowledge and know-how just disintegrated.

Exactly. I want to be able to trade without thinking what the big money players or other players are doing.
This will mean that I enter trades at levels where market cannot move in any other direction than mine.
A trade should be based on an assumption based on facts
  • #755
  • May 10, 2021 7:49pm May 10, 2021 7:49pm
Quote
A 5 pip move for a usual retail trader will yield 5 - spread (and possibly also minus commission). So 5 minus (up to 1-3pips). So do the math and see what you get. Same amount of work as any other trade but lower yield.

Very true. You should also not try to trap people.

Scalping requires more work because one has to take multiple trading decisions per day and most of the time they have to take decisions in split seconds.
A trade should be based on an assumption based on facts
  • #756
  • May 10, 2021 8:10pm May 10, 2021 8:10pm
Quoting maverick2017
{quote} Exactly. I want to be able to trade without thinking what the big money players or other players are doing. This will mean that I enter trades at levels where market cannot move in any other direction than mine.


So you want to just be a speculator. All the horse play I see and read around the place by people when talking about "the big boys" etc etc.

I'll keep saying it ....... stories are the rumor and the end result of the market's activity is the fact. The only way to get out of the "spec pool" is to learn and understand how to think properly. This then gives you the power to think through possibilities etc without relying on anyone or anything. It also gives you the ability to push everyone else out of the way that just talks a lot of rubbish. BUT you'll never ever know if they are, unless your human faculties are working properly. For me, on a scale of 1-10 with 10 being the healthiest, I would say that "properly" rates at around 7 and above.

Just something to think about and start taking a bit more seriously.

Peter
Real Trading is not gambling.
  • #757
  • May 10, 2021 8:41pm May 10, 2021 8:41pm
Quote
So you want to just be a speculator.
I just saw the work a speculator does and that did not interest me at all. What interests me is a qualitative approach to solving the situations which market gets into and then profit from them. This is because I believe that that is more rewarding/satisfying.
What does think properly mean in financial markets? How can one think properly when it comes to financial markets, I'm not saying that it cannot be done. Does it involve reading a lot of financial newspapers?
A trade should be based on an assumption based on facts
  • #758
  • May 10, 2021 8:59pm May 10, 2021 8:59pm
Quoting maverick2017
{quote} I just saw the work a speculator does and that did not interest me at all. What interests me is a qualitative approach to solving the situations which market gets into and then profit from them. This is because I believe that that is more rewarding/satisfying. What does think properly mean in financial markets? How can one think properly when it comes to financial markets, I'm not saying that it cannot be done. Does it involve reading a lot of financial newspapers?



I would start here .........

https://www.forexfactory.com/thread/...ng-and-trading

This is why the thread was setup. For people to learn.

Enjoy your learning and everything else is easier.

Peter
Real Trading is not gambling.
  • #759
  • May 10, 2021 9:05pm May 10, 2021 9:05pm
Quoting PeterCaleb
{quote} I would start here ......... https://www.forexfactory.com/thread/...ng-and-trading This is why the thread was setup. For people to learn. Enjoy your learning and everything else is easier. Peter
Been through 5 pages already and all I could learn was different people have different perspectives. Also, something about how does a human mind work and also that one should be aware of the outside world and thoughts which arise in their head.
A trade should be based on an assumption based on facts
  • #760
  • May 10, 2021 10:08pm May 10, 2021 10:08pm
Quoting PeterCaleb
I learned a different/better way to read what is going on. Although I don't go for 4-5 pip moves, my end of day return and overall SR% is more than capable of satisfying my requirements. I'm not going to disclose it so please do not ask.
Peter what you can tell regarding Renaissance Technologies 30+ years consistent results? Is that some money loundary scheme or corruptive insider trading practices? Or quantitative analysis and algos is working approach?
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