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Stating The Obvious and The Quest For Wisdom

  • #141
  • Mar 10, 2010 11:13pm Mar 10, 2010 11:13pm
Quoting silverheat
how do you explain ... a person with no time (full time job, wife, kid), "no intelligence" (no education), doesn't put much thinking in it, makes money month in and month out with demo trading (with just looking at the chart and sensing), but every time he puts real money on the line, he doesn't need a week to blow the account ... i know such a person
Easy.. his psychology is all screwed up.
  • #142
  • Mar 10, 2010 11:21pm Mar 10, 2010 11:21pm
Quoting silverheat
how do you explain ... a person with no time (full time job, wife, kid), "no intelligence" (no education), doesn't put much thinking in it, makes money month in and month out with demo trading (with just looking at the chart and sensing), but every time he puts real money on the line, he doesn't need a week to blow the account ... i know such a person
Live and Demo are two completely different animals.

Paper money doesn't mess with your head like real money. One has to learn to cope with the psychology of trading......some can accomplish this faster than others, some never do at all...

edit: six minutes late, damn you darkstar...
  • #143
  • Mar 10, 2010 11:27pm Mar 10, 2010 11:27pm
Quoting Leonlorenzo
This makes no sense, the guy who had all his posts and journal deleted to protect his method is now back and giving pointers.

Don't misunderstand me, I've followed your stuff since 2008 and think your responsible for the most thought provoking and BS free posts Ive read (on trading) so this is no kind of attack. I just don't get it.
No offence, but frankly speaking, no matter what the motives of a poster, a trader (who is serious about his business) should at least tell which part may be useful and which part not useful or misleading.
  • #144
  • Mar 10, 2010 11:33pm Mar 10, 2010 11:33pm
Quoting Darkstar
Easy.. his psychology is all screwed up.
right, then why is he profitable on demo? he has no system, no edge, looks at the (naked) daily charts for a few minutes, stays in a few trades, doesn't think about it, in comparison to him i'm the overanalyzer, i always scrutinize his calls, i never follow them, though most of the time he is right .. or maybe he just tells me when he is absolutely sure, but then again, this is enough to be profitable
Invincibility lies in the defence, the possibility of victory in the attack
  • #145
  • Mar 10, 2010 11:38pm Mar 10, 2010 11:38pm
Quoting silverheat
right, then why is he profitable on demo? he has no system, no edge, looks at the (naked) daily charts for a few minutes, stays in a few trades, doesn't think about it, in comparison to him i'm the overanalyzer, i always scrutinize his calls, i never follow them, though most of the time he is right
Maybe he is using 'The Force' but when he goes live the stress cancels out his belief.

“Ready are you? What know you of ready? For eight hundred years have I trained Traders. My own counsel will I keep on who is to be trained. A Trader must have the deepest commitment, the most serious mind. This one a long time have I watched. All his life has he looked away... to the future, to the horizon. Never his mind on where he was. Hmm? What he was doing. Hmph. Adventure. Heh. Excitement. Heh. A Trader craves not these things. You are reckless.” --Yoda
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #146
  • Mar 10, 2010 11:49pm Mar 10, 2010 11:49pm
Quoting LasVahGoose
“Ready are you? What know you of ready? For eight hundred years have I trained Traders. My own counsel will I keep on who is to be trained. A Trader must have the deepest commitment, the most serious mind. This one a long time have I watched. All his life has he looked away... to the future, to the horizon. Never his mind on where he was. Hmm? What he was doing. Hmph. Adventure. Heh. Excitement. Heh. A Trader craves not these things. You are reckless.” --Yoda


this one goes into my little black book
Invincibility lies in the defence, the possibility of victory in the attack
  • #147
  • Mar 10, 2010 11:49pm Mar 10, 2010 11:49pm
Nice Goose...never realized how appropriate the jedi speech is for trading :lol:
  • #148
  • Edited 1:36am Mar 11, 2010 1:04am | Edited 1:36am
Quoting Darkstar
Its all about FUTURE ORDERS.
This makes sense to me Darkstar, but which ones? Yes, all of them or the sum of them could be the answer, but you are looking for something specific in what the market is doing or for a series of orders that are predictable to you. Sorry, I don't want to put words in your mouth, just thinking out loud here.

I had a thought a while back about stop orders and how often they affect prices, but as you have stated, most transactions on the interbank are not speculative, they are real people doing real cross border business. If I drove my piece of filth Toyota over a parade of midgets tomorrow because my gas pedal develops a mind of it's own, Toyota is going to convert a lot of yen into greenbacks for me and my bereaved little friends when we file a class action suit.

When Toyota buys USD they don’t necessarily hold a position in the market that will be of any consequence to them when UJ declines in price. It’s like me converting a couple hundred bucks for Pesos at the Riu’s front desk when I’m in Puerto Vallarta. I walk away with my pesos and even though my pesos may lose value I don’t care because I’m going to spend them. I won’t be getting a margin call or have a need to stop the loss. If most transactions are this type of thing on the interbank, then a lot of price movement could seemingly be called random. The risk in all these transactions would lie with the dealing bank who’s goal is to make the spread. If he can’t offset the inventory by offering it at his bid or ask before prices changes then he will lose and have to issue an equal opposite market order (in some cases) to stop the loss, thus accelerating the price change that motivated him to stop out in the first place while possibly pushing another trader like himself into a similar position. I think of this as the chain reaction stop cascade.

Am I on the right track with this sort of thinking? If a large market order is issued to buy Euros (EU), and liquidity is consumed through 15 pips worth of price in a matter of seconds, there is no way that many of those dealers/traders who offered the liquidity could get out from under the loss- especially the ones who were hit first (12,13, 14 pips ago). If they issue get me the heck out market orders, they’ll take liquidity from further asks higher in price. The point is that every move in price is extended to some degree due to losses being covered. What stops the snowball?(This is key) Either the loser holds his shorts and does not stop out, the winners the transaction created cover and absorb the stop energy, or a value trader see’s it coming and absorbs it with one large limit. This is what I believe happened on your chart (the 3rd option). They can get into a large portion of their position by supplying the losers with liquidity while receiving a nice price concession and then consume the liquidity that fills up the price ladder as price fell. This is what I believe the story is behind most pin bars.

I could be way off, but if I’m right, how do I know that the snowball has stopped? I’m not the guy with millions-billions looking to get liquid who can stop it so how do I know he’s going to be there? I don’t have access to simple DOM on the interbank, so I can’t see what kind of padding exists below price as it’s falling. I do know of one way using futures data to see this sort of thing without messing with DOM or interbank data. I won’t share it here because I don’t want to cheapen the idea, but those of you who have done some homework or studied with me know what I’m talking about. It could be crap for all I know and the way I’ve presented this data to some of you was incorrect so trash that if you have not already, I had it backwards.

Anyways, I wish I had a little more time to dialogue here. Life is crazy when kids come into the picture. Also, my eye has been messed up the last week or so. I developed a corneal ulcer on my right eye. It’s getting better, so I should be around more. It’s nice when your eyes work and they don’t hurt.

Thanks again for bearing with my babble,

Scotty
  • #149
  • Edited 1:38am Mar 11, 2010 1:27am | Edited 1:38am
Quoting Scotty B
I had a thought a while back about stop orders and how often they affect prices, but as you have stated, most transactions on the interbank are not speculative, they are real people doing real cross border business. If I drove my piece of filth Toyota over a parade of midgets [..]
Have you read this? (Osler has written a lot of really good stuff)
http://www.newyorkfed.org/research/s...orts/sr150.pdf
  • #150
  • Mar 11, 2010 1:34am Mar 11, 2010 1:34am
Quoting mikkom
Have you read this? (Osler has written a lot of really good stuff)
http://www.newyorkfed.org/research/s...orts/sr150.pdf

Thanks Mikkom. Yeah thats a good read. If you know the market is stopping and you're a large trader, you can in theory fill large size via a limit and get a great positon in the market.
  • #151
  • Mar 11, 2010 1:38am Mar 11, 2010 1:38am
Scotty, your research on order flow should have shown you that financial customers' orders carry much more information for interbank dealers than commercial customers. In all the empirical studies I've read, one is statistically relevant to price and the other is not.
  • #152
  • Mar 11, 2010 1:40am Mar 11, 2010 1:40am
Just for fun..Using my shoddy futures data looking at EU. I beleive a possible short could be in play at the moment from that way things are shaping up. Hopefully I'm wrong and end up supplying Darkstar with cheap scotty b style liquidity. Just as a way of saying thanks for dropping by.
  • #153
  • Mar 11, 2010 1:44am Mar 11, 2010 1:44am
Quoting Scotty B
Thanks Mikkom. Yeah thats a good read. If you know the market is stopping and you're a large trader, you can in theory fill large size via a limit and get a great positon in the market.
That paper is much more about fat tails and where they might come from - I'm not sure if this is kind of order flow you are talking here but it's something I trade a lot.
  • #154
  • Mar 11, 2010 1:45am Mar 11, 2010 1:45am
Quoting jpat1023
Scotty, your research on order flow should have shown you that financial customers' orders carry much more information for interbank dealers than commercial customers. In all the empirical studies I've read, one is statistically relevant to price and the other is not.
Yes, but given my example just replace toyota with mr bighedgefund. It doesn't really matter who initiates dealer losses. In my mind, if you're offering liquidity via a sitting limit then you're always in some danger. It takes one large market order to get the ball rolling.

Plus, how are you ever going to gain access to a banks private book to see financial customer flow apart from trading for the bank?
  • #155
  • Mar 11, 2010 1:51am Mar 11, 2010 1:51am
Quoting Scotty B
Yes, but given my example just replace toyota with mr bighedgefund. It doesn't really matter who initiates dealer losses. In my mind, if you're offering liquidity via a sitting limit then you're always in some danger. It takes one large market order to get the ball rolling.
Yes, I figured you would say this, but my comment was more in response to you concluding randomness because of commercial orders, where this is not the case.
  • #156
  • Mar 11, 2010 2:48am Mar 11, 2010 2:48am
Quoting Scotty B
Just for fun..Using my shoddy futures data looking at EU. I beleive a possible short could be in play at the moment from that way things are shaping up. Hopefully I'm wrong and end up supplying Darkstar with cheap scotty b style liquidity. Just as a way of saying thanks for dropping by.
Did you get pinch out or you going to ride this one for awhile?

Right now my opinion is you could be right, just early...price has a date with the the 3669 area first...that's where I'm looking to get short...we'll see, eh?


disclaimer: not a trade signal...my opinion could change with a tick.
  • #157
  • Mar 11, 2010 3:06am Mar 11, 2010 3:06am
Quoting jpat1023
Did you get pinch out or you going to ride this one for awhile?

Right now my opinion is you could be right, just early...price has a date with the the 3669 area first...that's where I'm looking to get short...we'll see, eh?


disclaimer: not a trade signal...my opinion could change with a tick.
He he, and if not 3669 then perhaps 3750..that would be the first fake, with the second being the best to catch..
Biggest joker
  • #158
  • Edited 3:52am Mar 11, 2010 3:35am | Edited 3:52am
Quoting baron193
He he, and if not 3669 then perhaps 3750..that would be the first fake, with the second being the best to catch..
yea, not sure how I feel about the 3670 area now...if we make it up there after that fall its liable to run right through...I'll be up late to watch (as if its not already late, 3:30am here lol)...but my longs are still on...
Anyways, enough with the call outs......I was originally just interested to hear what Scotty did with that short trade...if he even took it.
  • #159
  • Mar 11, 2010 5:21am Mar 11, 2010 5:21am
Quoting jpat1023
yea, not sure how I feel about the 3670 area now...if we make it up there after that fall its liable to run right through...I'll be up late to watch (as if its not already late, 3:30am here lol)...but my longs are still on...
Anyways, enough with the call outs......I was originally just interested to hear what Scotty did with that short trade...if he even took it.
Hey, no worries. I just mentioned the trade to stick it in the context of all this orderflow talk. I was hoping Darkstar would give some feedback as to why I was right or wrong. Plus, it's conveiniant to use real time examples.

The EU short is an example of what I explained with my last lengthy post and also fits with the example Darkstar provided, I think. I'm still in the throwes of learning though, so don't take anything I say to seriously. I'm just a work in progress.
  • #160
  • Mar 11, 2010 9:03am Mar 11, 2010 9:03am
The information Scotty gathered in the order flow thread is priceless. There is no easy way but after half year of hard work I can say that *maybe* I'm on right path.
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