M6 - Man, Mind, Money, Markets, Method & Madness

[jamit_05]

So that the traders know what they are facing and how well prepared the 'other side' is.... Can we be complacent in trading? When 300 Mil. dollars are spent to shave off .005 seconds to execute an order? This no doubt pertains to Intl. markets - but what is not known is how much the FII's and local biggies have spent to have their servers located close to NSE's, while we trade on outdated cables and irregular net connection.....

Speed would be a factor to consider for big corporations and trading houses that have a few thousand trades every day.

For retail traders like us it is not on the top 10 list of concerns. But, yes, it is a very intriguing piece of information.... something which I would not have known otherwise

 

[DSM]

Heard from a connected guy :

NSE is considering extending trading hours by two hours upto 5.30 PM. They are in talk with the broking community. It's not official I suppose, but this is a move in the making.

 

[DSM]

Al Brooks on Indicators and Price Action :

New traders often have a deep-seated belief that something more is required. They start to look at all kinds of indicators and play with inputs to customize the indicators to make them just right. Every indicator will work some of the time, but for me they obfuscate instead.

I have spent over 10,000 hours writing and testing indicators and systems over years, and so I am not dismissing indicators out of ignorance of their subtleties. The extensive experience that I have had with indicators and systems was an essential part of my becoming a successful price action trader.

Many traders are drawn to indicators, hoping it will show them where to enter a trade. What they do not realize that the vast majority of indicators are based on simple price action.

Indicators work well for many traders, but best success comes once a trader finds an approach that is compatible with his personality.

There are countless ways of making money trading stocks, but all require movement. If you learn to read the charts, you will catch a great number of these profitable trades everyday without ever knowing what any indicator is showing. Price action will tell you where to enter a trade with a small but tight stop loss.

 

[amitrandive]

Speed would be a factor to consider for big corporations and trading houses that have a few thousand trades every day.

For retail traders like us it is not on the top 10 list of concerns. But, yes, it is a very intriguing piece of information.... something which I would not have known otherwise

jamit

Speed is a primary concern for retail traders also, if you are trading intraday.

If you are scalping with multiple contracts,speed is of utmost importance.As orders and stop losses are filled in the blink of an eye.

Speed combined with emotion and logic,can be one potent weapon we humans can use against Algorithms and Robot trading.

 

[jamit_05]

jamit

Speed is a primary concern for retail traders also, if you are trading intraday.

If you are scalping with multiple contracts,speed is of utmost importance.As orders and stop losses are filled in the blink of an eye.

Speed combined with emotion and logic,can be one potent weapon we humans can use against Algorithms and Robot trading.

Hadn't considered that area of retail trading. I once met a guy who ran an office in Dadar, where he hired a few young-runs with adept fingers on the keyboard, who did arbitrage in small scrips of NSE v/s BSE. Yes, for them speed would matter.

For retail scalpers too, if there even was such a species of traders. I just cannot comprehend how one can take 20 trades in intraday nifty, pay two points per round-trip of expense, face the 50% strike ratio and still emerge winners...

 

[DSM]

Jamit, there are many scalpers, who trade 5-10-20 lots of Nifty or BankNifty for 5-8-10 points multiple times a day, and who are in and out of the trade in a few minutes or even under. If you watch the quote screen, hundreds if not thousands of 'buy' and 'sell' orders will appear and disappear before the blink of an eye all of which are programmed algo orders. Not possible for a human to place and cancel such orders. Many in retail don't understand why their trade cost them 2-3-5 points more when they placed a 'market order'. It happens all the time, and it is the retail including you and me who is taking the hit. Incidentally this issue is being recognized in the US, and there is an ongoing investigation to see if high-frequency traders have undue advantage over retail.

http://www.bloomberg.com/news/2014-...ing-said-to-face-n-y-probe-into-fairness.html

Hadn't considered that area of retail trading. I once met a guy who ran an office in Dadar, where he hired a few young-runs with adept fingers on the keyboard, who did arbitrage in small scrips of NSE v/s BSE. Yes, for them speed would matter.

For retail scalpers too, if there even was such a species of traders. I just cannot comprehend how one can take 20 trades in intraday nifty, pay two points per round-trip of expense, face the 50% strike ratio and still emerge winners...

 

[amitrandive]

Hadn't considered that area of retail trading. I once met a guy who ran an office in Dadar, where he hired a few young-runs with adept fingers on the keyboard, who did arbitrage in small scrips of NSE v/s BSE. Yes, for them speed would matter.

For retail scalpers too, if there even was such a species of traders. I just cannot comprehend how one can take 20 trades in intraday nifty, pay two points per round-trip of expense, face the 50% strike ratio and still emerge winners...

jamit

It is not a question of taking 20 odd nifty trades.The speed applies to execution of trades and analysis.

As an example,if one is trading intraday.There can be a world of difference between the speed with which charts candlesticks are being formed.

This can be very critical especially if you are trading commodities or forex,where there can be sudden spikes or dips on news or inventories or data being released.

As I said earlier, this is critical only for intraday,not for swing trading or positional trading.

 

[amitrandive]

Incidentally this issue is being recognized in the US, and there is an ongoing investigation to see if high-frequency traders have undue advantage over retail.

http://www.bloomberg.com/news/2014-...ing-said-to-face-n-y-probe-into-fairness.html

DSM

I am pretty sure nothing will come out of this investigation.This is merely a political stunt to please the voters.Like the political stunt of "Banning outsourcing",which occurred a few years ago.

There are hundreds of traders trading the US markets from all over the world.Most of the global trading platforms like Metatrader,Lightspeed,Takion ,etc are designed for High frequency trading.

 

[DSM]

Amit, Unfortunately the biggies in the US have financial muscle which they use to influence laws by spending money which is acceptable practice in the US, called 'lobbying' However the other side of the US justice system is that they have quiet a few dedicated guys who will go after their quarry, no matter how rich or powerful. Guess no need to quote the billions of dollars in fine extracted from powerful institutions. The numbers are astounding. JP Morgan by itself has paid fines of 25 Billion dollars just in about two years. Don't believe? (Fines of 15,200 crores) extracted from only one company!! See link below. And we have this example of MCX which has de-frauded and played fast and loose with people who placed their trust in it, and betrayed them... now the case is dilly-dalling, no doubt till some big politicos ensure a 'settlement' to the benefit of all, except the genuine investors. This will be another example of 'business as usual' here. This is one factor which sets the US apart - the way the DA's and public prosecutors function. There are too many examples of rich white collar criminals punished and sent behind bars due to the powerful DA;s and public prosecutors who go diligently doing their jobs in the public interest. So let's wait and see what happens.....

http://blogs.wsj.com/moneybeat/2014...-25-billion-plus-tally-of-recent-settlements/

DSM

I am pretty sure nothing will come out of this investigation.This is merely a political stunt to please the voters.Like the political stunt of "Banning outsourcing",which occurred a few years ago.

There are hundreds of traders trading the US markets from all over the world.Most of the global trading platforms like Metatrader,Lightspeed,Takion ,etc are designed for High frequency trading.

 

[DSM]

The Need To Be Right – Common Psychological Traps For Stock Traders by Olivier

http://www.tischendorf.com/2010/01/...common-psychological-traps-for-stock-traders/

Excerpt :

My experience tells me one of the biggest issues traders have is the ever present ‘Need to be right’. Although I’ve written about this issue in the past I decided to write more about my thoughts. I have stated numerous times my goal is for my readers to become Independent Thinkers and Traders.

Some thoughts on what characterizes great and successful traders:

Great traders graciously accept losses. They don’t need to be right all the time.
Great traders focus on proper execution not on the outcome of a single trade.
Great traders concentrate on good risk management. They constantly manage their open positions.
Great traders are emotionally detached. Single trades do not affect their mood.
Great traders don’t compare themselves to others. They isolate themselves from the opinions of others.
Linda Bradford Raschke Trading Rules: Number 9. Great traders are not afraid to buy high and sell low.
Linda Bradford Raschke Trading Rules: Number 7. As you probably know by now the single biggest mistake a trader can make is to hold on to a losing position. Failing to cut losses quickly and letting them develop into huge losses is mentally and financially devastating.

The underlying psychology which is responsible for this behavior is the ‘need to be right’ and the fear to sell at a loss. What aggravates the situation is adding to a losing position. Dennis Gartman says: “Do more of the things that work and less of the things that don’t.“ Conclusion: Isolate yourself from the opinions of other people. Make trading decisions your own. Focus on proper execution. Have the courage to do the right thing because it is right.

The most important rule of trading is to play good defense, not great offense. - Paul Tudor Jones