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Stating The Obvious and The Quest For Wisdom

  • #1,261
  • Mar 26, 2010 9:23pm Mar 26, 2010 9:23pm
Quoting FXEZ
I'm going to boil down this response into the salient points. First, trading the markets has nothing whatsoever to do with warfare, rail guns, snipers, bullets, accelerators, barrels, slings, et al. Talking about tangental allusions and comparisons only tends to fog the main issues, and really all of these images are in the mind of the trader, and not in the market.

Second point is this, unless you are trading with such size that execution of your orders causes a tier 1 bank to need to hedge its exposure, talk about accelerating market moves is...
Nice post, I can't fault a thing you say.
Living the adventure in my head.
  • #1,262
  • Mar 26, 2010 9:33pm Mar 26, 2010 9:33pm
Quoting FXEZ
Whether you want to admit it or not, all trading (once the trade is on) is predicting, anticipating, guessing, forecasting, etc. Your open trade is your prediction.
Not something that you often here at the factory, but I agree. Why the heck would one press the buy or sell button if they didn't think price was going to move in that direction? (rhetorical question)

Nice post, all of it.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #1,263
  • Mar 26, 2010 9:44pm Mar 26, 2010 9:44pm
Quoting LasVahGoose
Not something that you often here at the factory, but I agree. Why the heck would one press the buy or sell button if they didn't think price was going to move in that direction? (rhetorical question)

Nice post, all of it.
I say this a lot . One of my personal pet peeves beyond all others. The typical signature or response "Don't predict... react." Said in a zen type of way with butterflies on the guys shoulders while he is milking a cow.
  • #1,264
  • Mar 26, 2010 10:03pm Mar 26, 2010 10:03pm
Quoting Deusomega
I say this a lot . One of my personal pet peeves beyond all others. The typical signature or response "Don't predict... react." Said in a zen type of way with butterflies on the guys shoulders while he is milking a cow.
I was thinking about SunTraders sig earlier on today... "Don't trade the news, trade the reaction". How can one trade a reaction? Isn't the point in trading to correctly anticipate and trade before the reaction?
Living the adventure in my head.
  • #1,265
  • Mar 26, 2010 10:21pm Mar 26, 2010 10:21pm
Quoting Leonlorenzo
I was thinking about SunTraders sig earlier on today... "Don't trade the news, trade the reaction". How can one trade a reaction? Isn't the point in trading to correctly anticipate and trade before the reaction?
I think he is meaning the news is meaningless and just trade how you think the mass of traders will react to it. DS has said the news doesn't matter it's whether the news is in line with the prevailing sentiment or starkly in contrast to what was expected. IE if its in line with what was expected then no big reaction but if its not boom a decent move will occur.

Or he could simply mean wait for the news... wait to see how traders react then fade it because you realize it was just a momentary sentiment response.

Idk either way its all prediction.

But he's here so I have no doubt he will tell us
  • #1,266
  • Mar 26, 2010 10:21pm Mar 26, 2010 10:21pm
Quoting Leonlorenzo
I was thinking about SunTraders sig earlier on today... "Don't trade the news, trade the reaction". How can one trade a reaction? Isn't the point in trading to correctly anticipate and trade before the reaction?
I guess it's like saying "buy the rumor sell the fact".
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #1,267
  • Mar 26, 2010 10:24pm Mar 26, 2010 10:24pm
Quoting Leonlorenzo
I was thinking about SunTraders sig earlier on today... "Don't trade the news, trade the reaction". How can one trade a reaction? Isn't the point in trading to correctly anticipate and trade before the reaction?
Don't worry, maybe someday you too can do it.

Meanwhile if you want to move with the crowd to make the potential big bucks and anticipate you might a) guess right, b) guess wrong, c) get whipsawed and maybe just be d) too slow or e) too fast on entry/exit.

I prefer to let the market show its hand.
  • #1,268
  • Mar 26, 2010 10:28pm Mar 26, 2010 10:28pm
Domino since you quoted yourself in a message, here I go:

Quoting SunTrader
I was saying how can market orders form clusters. Are they not filled pronto. If you are talkin' milliseconds it means nothing to me, maybe others, since I trade a 1 h timeframe using a 5 m/15 m charts or a 4 h timeframe using a 1 h chart.
You are talking a lot of shop speak but I still don't any mention of how market orders can form clusters?? Do they not just execute upon hitting an order book of anyone other than a shady FX ripoff dealer.

Hmmm.
  • #1,269
  • Mar 26, 2010 10:30pm Mar 26, 2010 10:30pm
Quoting LasVahGoose
I guess it's like saying "buy the rumor sell the fact".
Do you not understand and believe the rational for that statement??

I didn't when I first came to trading but totally understand and agree with it now.
  • #1,270
  • Edited 11:02pm Mar 26, 2010 10:36pm | Edited 11:02pm
Quoting SunTrader
Do you not understand and believe the rational for that statement??

I didn't when I first came to trading but totally understand and agree with it now.
Yeah, I like Martin Pring's explanation of that statement and I agree it is powerful. It also goes hand in hand with order flow, IMO.

Those that accumulated now distribute to the uniformed traders entering the market (or the opposite).
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #1,271
  • Mar 26, 2010 10:46pm Mar 26, 2010 10:46pm
Quoting Deusomega
Or he could simply mean wait for the news... wait to see how traders react then fade it because you realize it was just a momentary sentiment response.

Idk either way its all prediction.

But he's here so I have no doubt he will tell us
Yes this 2nd point and agree everytime we trade we predict, with our money on the line.

This evening on a business market report program on the radio the reporter said a stock "X" can't remember which hit a 9 year. Yesterday (Thurs) the company's quarterly report came out showing excellent earnings growth. Today (Friday) the stock sold off. Not a big deal but enough of a drop that the reporter seemed puzzled it was down on the usual "sell the news", and why do they do that?

It probably rallied for the last couple of weeks and it ran out of buyers, at the moment. Now it may drop some more early next week and at some point stabilise and resume the uptrend to further new highs.

But if anyone knows Tom DeMark he is known to say:

Markets top out not because there is an overwhelming amount of new sellers but a lack of new buyers, and vice versa, a lack of new sellers at a bottom and not an overwhelming amount of new buyers.

Of course once the turn happens at tops or bottoms and is recognized then the new additional sellers/buyers come in.

I will admit that sometimes when the news is released price explodes and the train has left the station. I am more than willing to take the chance and miss some moves here and there and be patient to not get burned.

We each make our own choices. This is what I have used to survive in this game.
  • #1,272
  • Mar 27, 2010 1:05am Mar 27, 2010 1:05am
Quoting SunTrader
Domino since you quoted yourself in a message, here I go:



You are talking a lot of shop speak but I still don't any mention of how market orders can form clusters?? Do they not just execute upon hitting an order book of anyone other than a shady FX ripoff dealer.

Hmmm.
Yeah, no offense to Domino, but it hurts my brain to read through his posts.

There are a couple ways that market orders could cluster. One would simply be stop orders, whether breakout stops or stop losses, these would exist within a banks/brokers books and would exist in a visable tangable way making them material information to those who have access to them. This is why many professional traders wouldn't think of issuing stop instructions with an order. If you know there are a ton of stops at a certain level then you're good to go.

Another way stops could momentarily cluster would be in an illiquid market. I've heard of times where, for example, all the offers run out for a time when lots of buy stops were executed and they become inert until new offers come in.

The last way mkt orders exist in clusters is in the minds of mkt participants. These are the ones you have to guess about. They are truly unpredictable. Lots of traders may have a level in mind they will act on if the market trades there, so yes they are clustered but only God could actually know it before hand.
  • #1,273
  • Mar 27, 2010 11:07am Mar 27, 2010 11:07am
Quoting FXEZ
I'm going to boil down this response into the salient points. First, trading the markets has nothing whatsoever to do with warfare, rail guns, snipers, bullets, accelerators, barrels, slings, et al. Talking about tangental allusions and comparisons only tends to fog the main issues, and really all of these images are in the mind of the trader, and not in the market.
the quote of the rail gun thing is just something i remembered that can help the visualization of what im saying im not saying trading is like warfare you missed the point.. the point was why predict the flow to continue or reverse only trade what is happening.. aka limit orders are being triggered you can see huge numbers in the order book and price is breaking out. align yourself with the orders and rather than predicting or anticipating just trade it. simple. and has nothing to do with warfare.
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Second point is this, unless you are trading with such size that execution of your orders causes a tier 1 bank to need to hedge its exposure, talk about accelerating market moves is moot. Additionally it is naive to think that you can put the price up/down with your orders and then profit from your own liquidity. That should be patently obvious to anyone who thinks the matter through or has researched the subject but maybe not. It's been like this from the beginning - just take a read of "Remiscensces of a Stock Operator" or any of the old books...
not did i say anything about profiting from my own liquidity or did i say help price.. and by help price mean lining orders up with with the other block limit orders. Is it really that hard of a concept to trade what is happening currently rather than predicting or "anticipating" so dont put words in my mouth.. to help price we align orders with other orders so those orders will trigger the same time ours does. your not moving the market bulk orders are moving the market.. and yes ive read remiscensces of a stock operator.. and did that tell you how to trade no it didnt so dont bring it up it was that great of a book.
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or any interview with a large money manager that discusses the added difficulty of moving size without moving the price on yourself (hurting your entry position).
a large money manager that needs to discuss this problem is a bad money manager that goes without saying if they cant trade multiple markets and the are not spreading risk and they are saying hum i guess ill stick to the eur/usd and trade 100 million in capital then they need to be slapped..
Quote
As soon as your order is away, your impact is over. In practical terms nobody on this forum has the type of impact that will move price even 1 pip, so let's refrain from making these type of groundless assertions. It is what happens after your order has been placed that matters - the flow of orders post entry. In the end whether you make a profit or loss has everything to do with how well your order anticipates future order flow in your selected direction.
you know something you dont grasp things very easily.. Ill state it one last time am I saying move the market into profit with your own orders no im not. but I am saying that if you align yourself with the triggering order flow.. you are planning for the cluster to move price .. I help you here.. your not moving price for the order cluster.. your not moving price for yourself.. the sum of the orders that is being triggered is moving price.

Quote
Whether you want to admit it or not, all trading (once the trade is on) is predicting, anticipating, guessing, forecasting, etc. Your open trade is your prediction. If you're buying a breakout, all those orders that made the price break a line are history. The orders that are displayed on your chart as (old) prices won't help you if the new orders coming in are counter to your position. If you are to profit from a breakout, you need new orders coming in - ones that don't show up in the chart because they are future orders that haven't been made...
not really .. I know new orders will come in and I know orders will build on the backside and I know new limit clusters will build on the front if they do not its time to align your stop at the clusters on the opposite side.. not a hard concept.

Even if you're trading a historical chart pattern, you need future order flow to make your position profitable.


Quote
Nobody said anticipating future order flows was easy but as you rightly point out - you anticipated the flow, you got the initial direction correct but due to the constraints of your artificially imposed r:r and fixed profit / stop point (the rigid structure of your trading plan) the market didn't behave as you wished. This is what makes trading so challenging - you can be right on initial direction but fail to profit due to the magnitude of your estimation being off, even if just by 1 pip.
see your trying to make me seem like I operate like you.. I dont apply r:r at all to my trading I dont give a F because I dont care.. I look at it at the end of the month and after each trade but so I set profit targets no not at all .. so dont try to so dont try to put me into any catagory with your narrow minded thinking.
  • #1,274
  • Mar 27, 2010 11:16am Mar 27, 2010 11:16am
Quoting SunTrader
Domino since you quoted yourself in a message, here I go:



You are talking a lot of shop speak but I still don't any mention of how market orders can form clusters?? Do they not just execute upon hitting an order book of anyone other than a shady FX ripoff dealer.

Hmmm.
Any market order that comes in has to either have an Idea of a stop whether its a placed limit order or its a planned market order area or they dont use a stop. So if you have a bunch of market orders lets say at different times trying to discover price they are building limits or market order ideas for exit somewhere.. where is that usually.. at the swing low or high from where they expect price to move.. the longer price trys to selloff and can not trigger order clusters below the more order clusters that build up on the exit area of the sell off or the swing high.. why do you see LH LH LH Failed Low Break out HH combinations. the orderflow.. watch the order book around these levels.. its not so much the effect of massive market orders being triggered at once but the aftermath of order clusters. if you got one large down candle and 14 candles that cant bust the top of the one selloff candle tell me where the orders are after 14 bars of buying trying to take out one candle of clusters.
  • #1,275
  • Mar 27, 2010 11:25am Mar 27, 2010 11:25am
Quoting Scotty B
Yeah, no offense to Domino, but it hurts my brain to read through his posts.

There are a couple ways that market orders could cluster. One would simply be stop orders, whether breakout stops or stop losses, these would exist within a banks/brokers books and would exist in a visable tangable way making them material information to those who have access to them. This is why many professional traders wouldn't think of issuing stop instructions with an order. If you know there are a ton of stops at a certain level then you're good to go.
I use stops all the times.. do I think theyll stop hunt me .. no not at all institutions simply target the amount of orders they are trying to simply move price not say lets take out these guys then these guys ... they are just trying to create some movement.
Quote
Another way stops could momentarily cluster would be in an illiquid market. I've heard of times where, for example, all the offers run out for a time when lots of buy stops were executed and they become inert until new offers come in.

The last way mkt orders exist in clusters is in the minds of mkt participants. These are the ones you have to guess about. They are truly unpredictable. Lots of traders may have a level in mind they will act on if the market trades there, so yes they are clustered but only God could actually know it before hand....
yes I agree so rather than guess where these market orders are going to come in at I just watch them come in find out there point of failure and read the order flow all those markets have stops rather psych stops limit stops or margin call stops lol they have something and those for the most part are swing low swing highs. take everyone no.. as you press against a resistance zone no new highs are being discovered but lots of transactions are coming into the market you can bet they are at failure.
  • #1,276
  • Mar 27, 2010 11:46am Mar 27, 2010 11:46am
Quoting FXEZ
You profit when after your entry others come in with their orders and push price in your direction. If your profit is showing green, you anticipated correctly the future acts (order flow) of others.
guess id rather not do this .. no need to do anything only realize price is doing something.

I HOPE IM GONNA DO WELL PLEASE DONT FAIL - being afraid to put on the trade being to intense to wait .. anticipation probably not for me..

Id rather REALIZE what is happening and trade it.. seem easier.
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  • #1,277
  • Mar 27, 2010 5:35pm Mar 27, 2010 5:35pm
Darkstar's website has been updated if anyone wants to take a look.

"Sadly, even after nearly a 1000 forum posts on the subject, not many have been able to figure it out."

I feel retarded. I think Darkstar is a smart guy but I think I am as smart as he is... yet I just can't get my mind wrapped around the order flow mindset fully. I understand that orders cluster and from the literature I can see where these orders "usually" cluster... I think I'm gaining a better grasp on the effects of options on the spot market... I understand SL hunting and all that.. but I'm just not at the point where its usable or something. There are still things I don't understand fully how to use though like Implied Volatility is often talked about on IFR and Risk Reversals. I understand their general idea but that's about it so far.

Becoming a proficient trader is such a weird process... unlike other pursuits the carpenter knows he is becoming more proficient when he is advancing in the things he is able to craft. The lawyer understands he is becoming more proficient by being able to craft stronger legal arguments than when he first began.

The trader has no real midpoint or stepping stones... an individual who is trying to become proficient and profitable in trading can go on learning and reading forever without ever accomplishing this goal. Sure he learns about trend lines, support and resistance like all the other masses of wannabes but this is in no way advancing towards his goal. He can go months where he thinks he has seen the light or understands how to trade profitably but it could all be due to unique market events.

It's an odd learning experience to say the least.
  • #1,278
  • Mar 27, 2010 6:23pm Mar 27, 2010 6:23pm
Quoting Deusomega
Darkstar's website has been updated if anyone wants to take a look.

"Sadly, even after nearly a 1000 forum posts on the subject, not many have been able to figure it out."

I feel retarded. I think Darkstar is a smart guy but I think I am as smart as he is... yet I just can't get my mind wrapped around the order flow mindset fully. I understand that orders cluster and from the literature I can see where these orders "usually" cluster... I think I'm gaining a better grasp on the effects of options on the spot market... I understand SL hunting...
I wonder how much the books going to cost?
Living the adventure in my head.
  • #1,279
  • Mar 27, 2010 6:29pm Mar 27, 2010 6:29pm
Quoting Leonlorenzo
I wonder how much the books going to cost?
Hm I'd say it will be in a fair manner. I need to pay some forward anyways because of all the free trading books on docstoc and other sites.
  • #1,280
  • Mar 27, 2010 6:44pm Mar 27, 2010 6:44pm
I don't care how much it costs, I want it!!!!!111
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