Any Traders Out There?

[RayDunzl]

No, not trading gear...

Financial vehicles.

No, not so much investing...

Short term in and out, long or short.

What do you watch, and why?

 

[HemiRick]

I tried trading for a living from 2003-2008, I learned a bunch, but eventually was a loser. My current holdings are SLV, hoping for the economy to correct.

 

[vitalii427]

I speculate IPOs and invest in some stocks after deep corrections for profit. Also investing in BTC for fun.

 

[GD Fan]

Occassionally. Trying not to so as to do less damage to my NAV... Mostly futures - ES, VIX, a little GC and CL. Used to play around with Treasury futures too. Not much in terms of equities but sometimes it's hard to resist leaning against absurd charts like Tesla's recent action. Vol plays every so often - shorting vol on corn futures during the drought a few years ago was a personal favorite.

As a related but separate note, please use extreme caution when talking trade ideas to an anonymous source with a stated affinity for the Grateful Dead on an audio board!

 

[Wes]

Never touch the stuff - bad for my liver

A friend does options trading (for income he says) but it takes a lot of his time. I like to go long...

 

[RayDunzl]

After a long period of inactivity, I've become fond of YM futures. Dow Jones $5 Mini.

Why?

It moves. If it doesn't move, you can't trade it.

Leverage.

It's a good "size".

Long or short doesn't matter, no difference in trade requirements. You don't "borrow" anything to short. You just whip one up out of nothing and offer it for sale.

It's "safe". Safe as anything, I suppose, plenty of regulation in the Futures Market.

5 days x 22 hours and 45 minutes per day access. Sunday 6pm to Friday 5pm.

Good Liquidity.

Margin requirements aren't excessive.

Low slippage on stop orders. I haven't been bitten with more than one tick slippage. Not sure about when a very quick movement takes place.

One tick cost to trade. Or less, depending on your broker.

It seems to be a "leader", but you can look for agreement among the direction for S&P, Nasdaq, and Russell2000,

There's some more reasons, but those are the non-personal items.

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I haven't figured out if the futures drive the Dow itself, or if the Dow drives the futures, or both.

 

[RayDunzl]

Mostly futures - ES, VIX, a little GC and CL.

Watched CL (crude oil) years ago on a programmable platform, while it was near its highs - what was it, $145/bbl or so?.

Here's a quick audio file: low, medium, and high pitched "pop" is a trade (for 1,000 barrels or more), the pitch of the "pop" indicates price lower than previous trade, trade at the same price, or price increase over the previous trade. The voice is commenting on demo orders I was placing.

Unzip and play mp3.

Frantic. and it was like that all day for a while.

 

[GD Fan]

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I haven't figured out if the futures drive the Dow itself, or if the Dow drives the futures, or both.

The index and underlying constituents are inextricably linked, obviously. They're kept in line by banks and other big trading houses. Maybe the banks less so post-Volker, but I suspect they now just do it programmatically and have it buried in some market making algo somewhere.

On a break fund managers will always go with the most liquid thing first so the futures will wear it before the underlying constituents do in most cases. Among index futures the SPX is by far the most liquid. According to the last COT report ES had OI of 3.7mm contracts. The Dow futures you mentioned only 103k. Which means you're much less at the mercy of the systematic traders and big asset management houses which focus on SPX.

 

[RayDunzl]

Sunday 2/16/20 Futures Open continues to shrug off coronavirus and future consequences

 

[Berwhale]

I've spent most of my IT career working in financial institutions. Most of it with Merrill Lynch and BofA (after the 2008 crash and forced purchase). I've picked up a reasonable amount of trading knowledge along the way. I spent several years supporting Equity Derivatives traders (some of them wrote their own Excel add-ins in C++ to manage complex baskets of stock). However, I never had the desire to dabble seriously with my own money, possibly because I lost a fair amount of ESPP in 2008.

These are the Equity Derivatives desks in the early 2000's, we added extension poles and another row of monitors later on...

 

[RayDunzl]

I have a bunch of money in two "Advisor" Accounts, at Merrill and Suntrust

The Schwab Robot Advisor ("Intelligent Portfolios") does just as well.

Rising market lifts all diversified baskets, so that's what they are for.

I have very little in individual securities, they like to go bankrupt.

I find "If you are going to panic, panic now" to be good investment advice.

So I will probably "panic" and cash in ahead of the Election, possibly depending on just how strong the Democratic Socialist Candidate (whoever it is) appears to be.

I'd rather miss the re-election pop (and catch the retrace) than what I suspect could be a rush for the exits on the "everything for free!) choice.

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As for the futures thing, just dabbling, using what I've learned over the years about "price action" to guide my entries and exits.

I like it, because a day on the Futures Chart is like six months on a typical stock. Instant gratification or defeat while the long-term stuff percolates, trying to make a few percent a year on dividends and capital appreciation.

I started with it back in September, done well, done badly (twice) and currently back to a new high, hopefully with a few lessons re-learned.

Status:

$24200 margin deposit to fund the account (just a reallocation of idle cash to meet the requirements to trade, and fund the maximum margin for four contracts should I be so foolish as to push the button that many times in succession).

34% annualized gain
$158/week net (since September)
2.4 trades per day

"Oh that's a lot of screen time!"

Well, I spend a lot of time here anyway


Pondering at what success level I will move to a two contract trade.

Still a bit volatile on my results.

Now to decide if I want to buy a little around 29,407 or wait for 29,350 area.

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I think I will reject 29407 for the moment, now that coronavirus has been remembered.

---

Wrong. (no harm) There will be another opportunity in a few minutes to tempt me.

 

[GD Fan]

It's really early in the overnight session (I never even look at it until 8pm ET at the earliest). Plus the Yanks are on vacation tomorrow which will restrain volumes even further. So it will be hard to read much in to the price action, but that said the marginal daily growth rate of WHO confirmed coronavirus cases continues to trend very negatively.

 

[RayDunzl]

Slow isn't bad...

I don't have the reflexes nor the speedy access to trade the highly volatile times. The charts I have just jump around as they try to keep up when it gets busy.

A more "professional" platform might be in order, if I maintain my interest in this activity.

I don't even think about trading the 9:30am area... Just sit back and go "Wow" if I'm even awake then.

The little pop off 29407 (which I contemplated buying beforehand) was worth as much as $145 over the next three minutes.

You mentioned the higher interest in the ES.

The problem that I see there, is, if you figure out a level at which price is going to cooperate with you, there are too many other trade orders stacked up at that level and ahead of you in the queue, and you might not get a fill.

I've seen hundreds of competing orders at turn points on ES. YM rarely has more than 10 or so, and I have yet to not get a fill at my bid when price touches.

ES at 7:42pm

YM at 7:42pm

 

[GD Fan]

Yeah, good rule of thumb regarding the 930am open. An old adage among traders is to avoid the first half hour and last half hour of trading.

Do you mind my asking what platform you're using? I tried to discern it from the charts you posted but it wasn't evident.

I think we're in agreement regarding the action in ES. As I said, your contract will be far less impacted by the big boys and systematic traders. That said the info in your last post is slightly concerning with your YM contract showing only 5 up on the bid side and 3 on the offered - that's really illiquid.

 

[GD Fan]

Then again, the liquidity in ES looks really poor too. Clearly the Sunday night of a holiday weekend.

 

[RayDunzl]

Do you mind my asking what platform you're using?

I have accounts at Schwab, and they bought Options Express a couple of years ago, and I think this is their rather clunky holdover platform accessible through Schwab StreetSmartCentral.

Schwab, if anything, has been like "no foolishness, no unresolved problems, good service" to me, since maybe 1995. my first trade cost like $150 in commission, now they're "free"...

So, to keep things simple, I'm there for the time being. (got a small burn with the PGFBest/Peregrine Financial fiasco, years ago)

It's ok to get started on, but not as exciting as something like NinjaTrader or other more advanced programmable multi-broker offerings.

Good enough to dabble, which is where I'm at. I look at the price action, pick a level, place an order, and cross my fingers.

Good fills, automatic investigation when I've ordered and it (someplace) has failed, with credit for missed price, accounting to the penny for what I calculate and what they do.

 

[RayDunzl]

Then again, the liquidity in ES looks really poor too. Clearly the Sunday night of a holiday weekend.

Liquidity is not too much of an issue if you are trading one contract and not 100 or 10,000 like the big boys...

I haven't seen gaps during non-extremely-volatile times.

 

[RayDunzl]

I think we're in agreement regarding the action in ES. As I said, your contract will be far less impacted by the big boys and systematic traders. That said the info in your last post is slightly concerning with your YM contract showing only 5 up on the bid side and 3 on the offered - that's really illiquid.

I've not seen more than an occasional two-tick spread, usually one, and my limit orders have all been filled when touched.

So... ???

Is there an automated market-maker lurking with orders to fill any holes that might pop up?

 

[GD Fan]

I got converted over to Schwab on the Options X takeover too. They have a pretty professional grade platform but you have to go looking for it to access it. I think it's called Street Smart. On the website the link appears on the upper right side when I log in to my accounts. You might look for that. I also have accounts at Interactive Brokers whose trader workstation is a professional level interface. They are among the best for execution, market access, order types, etc. Even the mobile app is really solid. But if you ever need customer service they'll make you want to redeem your account...

 

[GD Fan]

I've not seen more than an occasional two-tick spread, usually one, and my limit orders have all been filled when touched.

So... ???

Is there an automated market-maker lurking with orders to fill any holes that might pop up?

Given the low open interest and (at the moment, overnight on a holiday weekend) really low liquidity, in the event anyone tried to position in size they'd exhaust the order book all at once. That kind of illiquidity also allows for games to be more easily played, e.g. if the market makers want to run the stops overnight. That happened to me a ton when I left stops in overnight. Come the morning my market would appear unchanged but I'd have a big realized loss when the stops were run on some BS specious move at 3am.

To your last question I would not count on a systematic market maker in such a thin market. Those programs need liquidity and almost all step aside at the first instance of liquidity drying up. There are a growing number of "alternative markets" funds that the CTAs are raising but I think they're trading more OTC than less liquid listed stuff.