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Just a bit of advice, for anyone, for free

  • #21
  • Sep 13, 2015 12:12pm Sep 13, 2015 12:12pm
Quoting dreamt1me
Thanks for post, wish you to get health back on track as soon as possible. About 9. point. Really in world now everyone can find really big amount information about everything. Way toooo much information. A person must have really good "filtering" skill to choose which information to read/listen/watch and which one leave behind. Besides about "professionals" who wants to sell systems etc. When you do something (want to buy, try something) need to have good reasons behind, analyse everything before you do something. Because life is too short, we...
Thanks dreamt1me, thanks for your wishes, very well said and no worries your english is good!
  • #22
  • Sep 13, 2015 12:13pm Sep 13, 2015 12:13pm
Quoting Atokys
{quote} While there is definitely no 'holy grail' system there are benefits to adopting a purely mechanical automated approach. {quote} You certainly can completely codify a trading method into a system though the trick is to design it to fit your beliefs and personality. Afterall, all forms of trading, even discretionary trading, take place on some kind of system. The pitfalls of using a discretionary system when it comes to newbie traders is that they often transmute their desire for control and fear of uncertainty into the system resulting in...
hi Atokys,

this is an interesting point, I will write more about this during the week when I have more time as it is for a bit longer.
  • #23
  • Sep 13, 2015 12:26pm Sep 13, 2015 12:26pm
Quoting landsat
{quote} Dear Atokys it's not the first time , that i read that the ''key to survival is risk management'' . could you share your view on how you manage your risk ? i understand that different people have different risk tolerance , even if i don't agree with it , i believe that risk management should be based on the trading system historical maximum drawdown. To survive with a long term positive expectancy , traders need to use a fix capital , at a fix maximum risk exposure . Landsat
hi landsat,

I think there is no clear answer to this, as everyone trades with different style and not everyone has a mechanical "system" for trading (myself included). The same goes with risk management. I can tell you how I manage my risk if you are interested. What I do is managing myself and managing my PNL, I would normally run several different positions at the same time. I have my max VAR/risk limit set up by my boss (lookup what VAR means on the internet if you don't know yet) and if I am utilizing my full risk that either means that I've been having a very good run or that my conviction is extremely high. Normally I trade around my positions every day, sometimes I keep some of them for a bit longer, some of them are there for a day or few hours. What is important though is that I measure my risk as a sum of all the trades which I have on, with all the correlation between the currencies included in the calculation. If I am doing well / having a good "mojo" I would trade more often and take much more risk (i.e. bigger positions), if the momentum of my PNL curve starts slowing down or it reverses I would cut down my risk (i.e. cut all positions by half), trade less, take smaller risk (i.e. smaller positions). When my PNL starts sloping upwards again I go back to taking more risk and bigger positions. In general, the best situation is if your PNL curve looks like a nice uptrend, with nice impulsive waves up and slow corrective moves down
  • #24
  • Sep 13, 2015 6:04pm Sep 13, 2015 6:04pm
Quoting katrooo
{quote} hey friend, good to hear from you again yes, the career is luckily moving very well and fast, unfortunately got some unexpected health issues and had to take 2 weeks of sick leave to start the treatment. Hoping it will go well although it is going to be a long journey. Actually the reason I started posting here is that I want to share something, but also mainly because it lets me think about other things than my health. And yeah you are right, this job can be extremely extremely stressful - was difficult at the start but got used to it...
Sorry to hear that dude, no fun at all and I hope you get back on track quick smart. Meanwhile, take the time off trading to give it a break and uh... write about trading
  • #25
  • Sep 22, 2015 7:32pm Sep 22, 2015 7:32pm
Hello katrooo,
sorry to hear about your health issues, hope u get well soon.
I mostly trade intraday, so i am really interested by the post from you in another thread.
"6. There is a lot of times of the day when prices are behaving erratically for different reasons, there can be a lot of option related gamma / delta hedging flow, 10AM NY option expiries, depending on the spot vs strike (all the round numbers pretty much will be strikes for decent option clips) distance and market's net gamma position will determine whether we trade it within a tight range or we fly around one direction quickly - this can be happening even few days into a big expiry as your gamma baloons close to the expiry if spot is close to the strike. The same thing for London / NY / Asia open, where you are more likely to get stopped out
7. Month end flows (last 3-4 days of the month) are extremely important, and are mostly related to portfolio rebalancing flows (rebalancing portfolios and FX hedges every month depending on performance of different asset classes like US equities, US Treasuries, EU equities etc.), but also seasonal exporter / importer flow for example. It gets even more extreme for quarter-end and price action can be extremely messy.
"
Basically a chart is nothing else then a Cartesian coordinate system with an y-axis (Price) and an x-axis (Time).
While most people focus completely on the y-axis (aka Price and pricelevels like S/R, keylevels (round numbers, pivot, fib)), just a few people are mentioning levels on the x-Axis, that are important to consider.
So i'd really be interested what are important times to consider, as markets react.
So far i know:
->Session openings & closings can be volatile
->last few days in month can be volatile, end of quarters even more
Are there any important times to look at? So the 10am NY Option expiry and 4pm Reuters have significant impact on the market? According to the BIS report (http://www.bis.org/publ/rpfx13fx.pdf) options are only accounting for 6% of the FX market.
​
  • #26
  • Edited 8:36pm Sep 22, 2015 7:58pm | Edited 8:36pm
Great to have you on board this forum katroo. Your viewpoints are very appealing to me and obviously to a lot of others. I am looking forward to perusing your past posts. :-)

PS The only areas I would perhaps have a different viewpoint is in the following assumptions:

"3. Trading is an art not a science in my opinion - sometimes it's a lot about what kind of personality you are, as it is difficult to change some of our behavioural biases. It is not impossible though, i.e. some people are born as very good risk takers / traders, some people are not but might become very good, and, some people never do."

I would say that the dominant way it is pratictised is an art but it 'could' be a science provided we understand the science of complex systems in which uncertainty is an incovenient truth.

"4. Stop looking for this one system, robot, holy grail. Traders in general fall into this pursuit (as myself in the past) as they want to have a method which doesn't require them to THINK - this doesn't exist though. You have to treat it as a business, do your analysis, do your homework, think a lot, plan everything ahead, risk manage everything, manage your emotions and every trade continuosly, be open minded all the time and many other factors around. Markets are constantly changing and you have to adapt if you want to succeed. To do all these things properly, of course you need a lot of knowledge and experience."

This is where I would air on the side of Atokys in that being a probabilistic game, the only way you can survive in this game is through systems that use probailistic decision making. The only way you can track this outcome is through repeatable exact experiments as opposed to discretionary behaviour. The market is simply too large to allow for perfect information. As a result the only way you can interrogate it reliably is through defined sample sets that require exact repeatability to accurately define a confidence interval within which your system can survive. In science we define our system context (always a sample or approximation) of a wider domain and then use empirical observation to see whether our models replicate that 'defined' system's behaviour. Science is never the 'truth' but it progressively is working towards that infinite end-point. That is the way trading should operate. Your models therefore progressively adapt to deal with an ever expanding domain. Markets evolve and are dynamic....never static.

......anyway, I am looking forward to hear your views regarding Atokys's opinion. :-)
  • #27
  • Sep 22, 2015 8:01pm Sep 22, 2015 8:01pm
Good advice. No holy grail. Find your personal connection to the market.. Be it fibs, MA's, Support/resistance. Then run with it.
The only system that will work is one designed by and for yourself.
  • #28
  • Sep 22, 2015 8:09pm Sep 22, 2015 8:09pm
Quoting katrooo
Hi everyone, I haven't been very active on this forum for last few years, but kind of "give back" feeling brought me back so that I can share some advice for all the beginners or not so beginners who are struggling with trading, as this site and people on this site helped me a lot at the beginning. Just a bit of background: Have been trading FX and other markets since I was 16 (so almost 10y of experience by now), and have been trading FX on an institutional level for 4 years in total. I started doing prop FX trading (spot and FX options) for a...
hi nice thank you have a nice day
focus while relaxed to see better
  • #29
  • Sep 22, 2015 8:30pm Sep 22, 2015 8:30pm
Quoting katrooo
Hi everyone, I haven't been very active on this forum for last few years, but kind of "give back" feeling brought me back so that I can share some advice for all the beginners or not so beginners who are struggling with trading, as this site and people on this site helped me a lot at the beginning.Cheers, katrooo
Nice pointers. Thankyou.
The road to pipland is arduous and fraught with challenge.
  • #30
  • Sep 23, 2015 4:34am Sep 23, 2015 4:34am
Quoting triphop
{quote} Sorry to hear that dude, no fun at all and I hope you get back on track quick smart. Meanwhile, take the time off trading to give it a break and uh... write about trading
Thanks buddy, will see what I can do!! haha
  • #31
  • Sep 23, 2015 5:13am Sep 23, 2015 5:13am
Quoting h96
Hello katrooo, sorry to hear about your health issues, hope u get well soon. I mostly trade intraday, so i am really interested by the post from you in another thread. "6. There is a lot of times of the day when prices are behaving erratically for different reasons, there can be a lot of option related gamma / delta hedging flow, 10AM NY option expiries, depending on the spot vs strike (all the round numbers pretty much will be strikes for decent option clips) distance and market's net gamma position will determine whether we trade it within a tight...
hi h96,

thanks for your input and especially the link you sent - it's a very interesting read. I would like to know the methodology for these calculations though, and how they got the numbers, i.e. if it is some hard data from institutions' systems or if it is done as some kind of a survey (would suspect first option which definitely adds some credibility). The survey method is extremely inaccurate, sometimes I have to do some surveys from the banks I deal with and honestly you don't have much time for proper answers so it can be very ad-hoc, and everyone in the industry does it the same ad-hoc way. Also for example they mention there is this 24% of other financial institutions (meaning mostly banks which are not primary market makers). This can be very tricky because there can be a lot of customer (from corporates etc.) related flow behind it, for example Turkish local bank buying a lot of EURUSD (which probably counts into this 24%), but there is some local Turkish corporate behind (i.e. bank working out an order for him). Also other things are very important to consider, and I see many potential pitfalls why you can't really determine what % is speculators and what % is natural real flow. Another example is FX swaps - many buy-side firms are using FX forwards to express their directional views as you don't have to exchange cash in T+2 as in case of spot. Especially if you have a fund with client's money which is in USD for example. You normally invest this money / cash somewhere (equities, bonds, ETFs, whatever else) so it is very difficult / impossible for you to trade spot FX, which is why you use FX forwards with shorter maturity (1-3 months) and then you just roll the forwards when the maturity approaches by doing FX swap (to avoid the cash exchange). You can do FX spot, and many firms are definitely doing that, but those are more likely to be hedge funds or prop firms with trading style, i.e. holding a position for less than 1-2 days. Most real money firms (asset managers, pension funds) have much longer horizon so they use FX forwards. Because of that you have large FX swap volumes belonging to these firms and it might appear like it is part of "speculative" trading which is in fact not true (as doing FX swap has no impact on the FX spot rate). The same holds for interbank flow, it is just impossible to estimate how much of that flow is just a hedging activity for the FX trading book, e.g. large exposure to a currency coming from a client's trade (which can be a corporate, real retail from coming from bank's branches, or other institution) being hedged out with some other bank on the street.

With regards to your point on options and that it is only 6%, again not sure about the methodology, I would expect they measure it only as option notional amounts being summed up together which is not correct, as there is quite a massive flow attributed to options risk / position management / greeks trading. And even if it was only 6%, the key is that these flows matter only some days and usually at a particular time during the day, so you can imagine it can have a significant intraday impact. And not even only that, sometimes you have a lot of structured products which are bought by corporates / retail with no understanding of how they work, many times they get some yield enhancement by selling OTM options (for example dual currency deposits and other products). When the corporate sector gets levered and has these structures on (latest example is Chinese yuan and local TARP structures) it can have a massive impact on the market, lasting for days. That is more typical for emerging markets currencies though.

I guess this was too long and maybe even difficult to understand, let me know if you have any questions.

cheers,

katrooo
  • #32
  • Sep 23, 2015 5:38am Sep 23, 2015 5:38am
Quoting Copernicus
Great to have you on board this forum katroo. Your viewpoints are very appealing to me and obviously to a lot of others. I am looking forward to perusing your past posts. :-) PS The only areas I would perhaps have a different viewpoint is in the following assumptions: "3. Trading is an art not a science in my opinion - sometimes it's a lot about what kind of personality you are, as it is difficult to change some of our behavioural biases. It is not impossible though, i.e. some people are born as very good risk takers / traders, some people are not...
hi Copernicus,

thanks for your input, this is also my reply to Atokys which I promised before.

Basically I am not against mechanical / automated systems. It's just the fact that I believe that a seasoned experienced trader who works hard, is patient / disciplined and understands the way markets work and market participants behave, can do much better than any mechanical / automated trading system - might be wrong here though as have never done proper research into automated trading

Actually there is something I would be really opened to with these regards. What I am quite good at (at least I think haha) is identifying the type of price action (in terms of range-y / trend-y / squeezy / breaks / pullbacks) for following days / weeks (based on global macro, market participants way of thinking, global events ahead and charts). So if I was doing this from home as a retail trader, I would work on my coding (actually can code in few languages so shouldn't be a problem) and I would try to develop few "robots" for different market conditions and I would turn some of them on and off based on my price action predictions. On top of that I would do my classic non mechanical discretionary trading.

I think here is the problem with automatic "robots", people in general are trying to create all weather systems which work in all conditions. I believe that having different set of robots for different market conditions and an experienced trader who turns them on/off could be much more successful. I would be interested to hear your thoughts, especially as you seem to be a bit more oriented into mechanical systems and EAs.

cheers,

katrooo.
  • #33
  • Sep 23, 2015 9:17am Sep 23, 2015 9:17am
Hello katrooo:

Excellent advice at the beginning of the thread.

You gave very good reasons for not trading the very low time frames like the 1 minute.

So what time frames you do you look at and trade ?

And what hours do you trade ?

Thank You

Borg
May the Forex be with you.
  • #34
  • Sep 23, 2015 9:20am Sep 23, 2015 9:20am
Quoting katrooo
14. Don't get obsessed with trading, keep a healthy diet, do sports, keep up with your social life - it's very important when you have such a stressful profession as trading
You're a good man Kat. I enjoyed reading through your thread mate and your advice is sound (especially number 14 on the list!). A must read for new and seasoned traders.
Keep up the good work chief.
  • #35
  • Sep 23, 2015 10:43am Sep 23, 2015 10:43am
Quoting katrooo
Basically I am not against mechanical / automated systems. It's just the fact that I believe that a seasoned experienced trader who works hard, is patient / disciplined and understands the way markets work and market participants behave, can do much better than any mechanical / automated trading system - might be wrong here though as have never done proper research into automated trading Actually there is something I would be really opened to with these regards. What I am quite good at (at least I think haha) is identifying the type of price...
To me, both mechanical and non-mechanical trading amount to the same thing: The translation of a subjective personal belief into a tradable form.

All forms of trading are ultimately discretionary. Choosing to run a mechanical system without interference is also a discretionary choice.

I also believe that there are occasions for discretionary decisions even if you are using a purely mechanical system. This usually has little to do with the technical aspect of trading and more to do with keeping portfolio heat to an acceptable level.
Quote
I think here is the problem with automatic "robots", people in general are trying to create all weather systems which work in all conditions. I believe that having different set of robots for different market conditions and an experienced trader who turns them on/off could be much more successful. I would be interested to hear your thoughts, especially as you seem to be a bit more oriented into mechanical systems and EAs. cheers, katrooo.
What I would do is create a system which is applied all the time but only fires off when conditions signal a tradable market condition.
  • #36
  • Sep 23, 2015 10:52am Sep 23, 2015 10:52am
Quoting katrooo
13. Don't abandon other things in your life just because of trading (e.g. wohoo I am dropping out of college / resigning from work to become a full time trader) unless you have enough capital and a very strong confidence in your skills

14. Don't get obsessed with trading, keep a healthy diet, do sports, keep up with your social life - it's very important when you have such a stressful profession as trading
Well said!
Trading is the hardest way to make easy money...
  • #37
  • Sep 23, 2015 11:05am Sep 23, 2015 11:05am
Quoting Borg
Hello katrooo: Excellent advice at the beginning of the thread. You gave very good reasons for not trading the very low time frames like the 1 minute. So what time frames you do you look at and trade ? And what hours do you trade ? Thank You Borg

I look a lot at many different things apart from charts.

But regarding charts only, I look a lot at daily and weekly candle charts to get the sense of direction, trend, big levels, how over-extended the move is, price action / candles. From that I try to get a sense of what kind of market I can expect for next few sessions, and then I trade from 15m-1h charts accordingly - sometimes it's buying the dips / selling the rallies (if I expect trending market), sometimes it is fading the breaks (if I expect squeezy market). I draw general stuff like S&D zones and channels and I also have 20 & 50 SMAs on my charts (to better see the trend, and to play a bounce out of them occasionally). I do not use any other indicators other than that.

And I mostly trade during London and NY sessions - when I am in the office, and when the liquidity is good. There is no particular exact time during the day when I do / do not trade.
  • #38
  • Sep 23, 2015 11:05am Sep 23, 2015 11:05am
Quoting Dimi.A
{quote} You're a good man Kat. I enjoyed reading through your thread mate and your advice is sound (especially number 14 on the list!). A must read for new and seasoned traders. Keep up the good work chief.
thanks sir!!
  • #39
  • Sep 23, 2015 11:09am Sep 23, 2015 11:09am
Quoting Atokys
What I would do is create a system which is applied all the time but only fires off when conditions signal a tradable market condition.

That's a fair point Atokys. I just believe I would be a better filter by applying discretion / experience to decide the right market conditions for a given system and when to turn it on. At least that would be the way I would go for if I was ever running EAs. But I would say there are different things working for different people.
  • #40
  • Sep 23, 2015 12:07pm Sep 23, 2015 12:07pm
nice read thank you katrooo

Quoting katrooo
Hi everyone, I haven't been very active on this forum for last few years, but kind of "give back" feeling brought me back so that I can share some advice for all the beginners or not so beginners who are struggling with trading, as this site and people on this site helped me a lot at the beginning. Just a bit of background: Have been trading FX and other markets since I was 16 (so almost 10y of experience by now), and have been trading FX on an institutional level for 4 years in total. I started doing prop FX trading (spot and FX options) for a...
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