DH7 Trades the Bond Futures

[Modest]

An important quote by Mike Bellafiore " Is this trade worth my risk".

Some thing I should keep in my head.

His book one good trade was one of the earliest books on the topic of trading I ever picked up... You have motivated me to re-read it over the weekend.

 

[darkhorse70]

Ive got both his books. Actually I just watched a random vid of his today and thats where I got the quote from.

The trainer from Aliom said smb's days are over. He said all equity traders these days are struggling. Not sure hwo true that statement is but he said thats why they offer all these courses. So they can make some sort of revenue.

 

[darkhorse70]

Equities going down. Notes are pushing up real hard. This is going to be a really wild night. The notes has moved up nearly 30 points in the last 2 hours. Thats nearly 2 times the ATR.

Lets see what the equities are going to do.

 

[darkhorse70]

Those lows could be tested which were made last year around August.

Either a great trade back to value or a huge trend night.

 

[darkhorse70]

Total profit for week = 12.5 points/$750USD

10 Total Trade

8 Positive

1 Negative

1 B/E Trade


Total days traded = 3

 

[VSntchr]

The trainer from Aliom said smb's days are over. He said all equity traders these days are struggling. Not sure hwo true that statement is but he said thats why they offer all these courses. So they can make some sort of revenue.

That's a big call. I've cut my teeth trading equities and have noticed changes in the market making mean reversion a little tricky, but conditions for directional news event trading have been superb...just my opinion of course.

 

[darkhorse70]

Hey VS, I think his statement was in response to why prop shops are trading bonds and spread rather than outright equities.

Most likely just defending his argument.

 

[CanOz]

Ive got both his books. Actually I just watched a random vid of his today and thats where I got the quote from.

The trainer from Aliom said smb's days are over. He said all equity traders these days are struggling. Not sure hwo true that statement is but he said thats why they offer all these courses. So they can make some sort of revenue.

Seems Aliom was the struggling, Epoch bought them out.

 

[Trembling Hand]

Hey VS, I think his statement was in response to why prop shops are trading bonds and spread rather than outright equities.

Most likely just defending his argument.

They do it because its a high brokerage, high cost, low risk method. Consider this,

They get 10% back of your bro cost in GST rebates they don't pass on to you,
They get a similar rebate from the clearer on clearing cost,
They Get all the ASX new prop trader brokerage rebates for the first year,
They get a good slice of the platform cost they charge you for TT or CQG,
They charge you $500-$1000 desk fee per month.

Then they say you have to hedge out all risk on positions!!!!! Probably get $10,000 to $15,000 out of each trader if they are flat come the end of the year.

High cost - low to no reward......... trader cracks after a year..... just get in a new class...

 

[darkhorse70]

Wow CAN, I wonder if some of the guys I knew are still trading there.


TH, basically your saying it's a big con job, at least from the perspective of a trainee.

The fuunny thing is when I asked my trainer about rebates, he said there was no such thing. I like to think they cut me from the program because I was asking all the "wrong" questions.

 

[darkhorse70]

A rough review sheet I created.

From next week on I'll be doing a pre analysis of market action, recordings of all trades (whether long or short),
post analysis of performance and some possible scenario plans of how I could trade the day.

The most crucial part is identifying the long/short trades.

From past experience, I havent always been great at trading long positions. Naturally I feel as though short plays are quicker to move while long positions takes more balls of steel/discipline etc.

In conjunction to this, understanding the market behavior of the day is important.
Obviously the behavior of the market changes as different markets around the world open and close so its hard to say the markets were trending all day or doing this or that. The best you can do is identify the market behavior for that period of time and your trading style for that period of time.

A critical part of becoming better is removing the things which hold you back. I guess it's the most difficult part about trading. Refining yourself as much as possible as well as becoming party systematic.

I dont think creating a stop loss before hand and sticking to it is really that feasible. To me the markets are constantly feeding us with new information. I think its slightly absurd to put a stop loss and say well if this is hit, im out. I believe in being reactive and as new information is presented, so to does my hypothesis.

The problem is, when cr@p hits the fan and your not cutting your losses and you take a huge hit, its mentally hard to recover from as well as financially.

 

[darkhorse70]

My biggest fear of trading is, that its all one big lie. That markets can't really be beaten permanently. Atleast not on a longer term scale.

Sorry to say this, but there are so many members on trading forums and most of them have been studying or trading for a long time. Like TH said, he hasnt really seen many people atleast on an intra day level make it.

Is it really feasible to win this game?

I need to believe so in order to continue but Not sure. It's definitely possible but perhaps not likely.

I don't really get excited anymore. Iv'e been there, done that and its a disappointment.

Just take things one day at a time, hopefully be prepared enough to make some money and get out of this rat race we call life.

 

[Trendnomics]

My biggest fear of trading is, that its all one big lie. That markets can't really be beaten permanently. Atleast not on a longer term scale.

Sorry to say this, but there are so many members on trading forums and most of them have been studying or trading for a long time. Like TH said, he hasnt really seen many people atleast on an intra day level make it.

Is it really feasible to win this game?

I need to believe so in order to continue but Not sure. It's definitely possible but perhaps not likely.

I don't really get excited anymore. Iv'e been there, done that and its a disappointment.

Just take things one day at a time, hopefully be prepared enough to make some money and get out of this rat race we call life.

The question of system trading validity and longevity plagues me from time to time. Any doubts of mine are eliminated, by reminding myself of the robust back-testing that was performed and my place in the trading ecosystem.

From my years of studies and back-tests, I would say that short term trading is not the place for an everyday retail trader (tough trading ecosystem to survive in - just think who you are competing with?).

Most long-term surviving retail traders I know of, have thrived in the world of long only equities.

 

[Triathlete]

My biggest fear of trading is, that its all one big lie. That markets can't really be beaten permanently. Atleast not on a longer term scale.

Sorry to say this, but there are so many members on trading forums and most of them have been studying or trading for a long time. Like TH said, he hasnt really seen many people atleast on an intra day level make it.
Is it really feasible to win this game?

I need to believe so in order to continue but Not sure. It's definitely possible but perhaps not likely.

I don't really get excited anymore. Iv'e been there, done that and its a disappointment.

Just take things one day at a time, hopefully be prepared enough to make some money and get out of this rat race we call life.

I do not trade intraday or really short term so not sure how valid this comment is but I do remember listening to a Professional trader say that it is difficult for an average trader to beat the markets over these very short time frames and one reason he gave was the fact that you are up against the very fast computer trading systems which can trade upwards of 10000 trades a minute where we can maybe do one.

He went on to say that most traders should look to trade longer time frames because these computer systems do not really effect you when taking positions into the future months etc.

He also made these comments......Your job as a trader is to predict the future, thus predicting what will be in the newspaper in 6 - 12 months time.
Professional traders buy or sell assets now, so that in 6-12 months time when the news becomes mainstream, and the story is over, they can use the liquidity of the traders that are " late to trade" ( Retail Traders ) to get out.

Those that trade intraday of course are trying to make a living from there trading but for any new trader starting out needs to realise that these short time frames are also the most difficult to be successful at. Most traders are under capitalised so they also need to take greater risks with there trading in pursuit of trying to make a living from their trading. This puts a great deal of stress onto the trader which can cause many mistakes in there trading.

 

[darkhorse70]

Hey Trendnomics, I tried pursuing the art of programming and back testing a while ago on amibroker but a) I didnt know what i was trying to test and b) That art requires a whole new skill which requires time.

The question regarding going long, long term equity investing, how much of it is luck?

If most established businesses listed on the asx200 grow over time, a good portfolio is going to grow. So how much of it was based off actual skill and how much was off luck.

To me, short term trading requires skill in the long run to survive. Im not saying long term investors dont have skill but I know that if I can master short term trading, its a skill that can never be taken away. Just like receiving a degree at uni.

Triathlete, I agree with your statement. The only problem I see with long term trading is that it takes to long to build any real skill. For example, If I make 10 trades a day, thats 50 trades a week. Thats 2500 trades in 50 weeks. While a long term traders puts on a trade, all he can do is research other companies or research about the economies state etc.

A short term trader is building on thousands of hours worth of screen time a year, analyzing the behavior of the markets and refining their skills.

Again the chips are stacked against the short term trader.

 

[Triathlete]

To me, short term trading requires skill in the long run to survive. Im not saying long term investors dont have skill but I know that if I can master short term trading, its a skill that can never be taken away. Just like receiving a degree at uni.

Triathlete, I agree with your statement. The only problem I see with long term trading is that it takes to long to build any real skill. For example, If I make 10 trades a day, thats 50 trades a week. Thats 2500 trades in 50 weeks. While a long term traders puts on a trade, all he can do is research other companies or research about the economies state etc.

A short term trader is building on thousands of hours worth of screen time a year, analyzing the behavior of the markets and refining their skills.

Again the chips are stacked against the short term trader.

Geez darkhorse70 if you are going to do that many trades and with closing out your positions at $15 x 5000 that is $75,000 in brokerage?

I read an article once with the below message that always stuck with me.

The best traders trade well, not often and generate far more profit than those who trade frequently.

CFD providers in Australia all share the same view that traders who make the least amount of profit are those who trade intra-day or over a few days simply because they are chasing the market.

Here is a thought let us say you can find 5 stocks to trade and because I use Elliot wave and cycles theory in my analysis I see that the stock is at the beginning of a wave 3 , now with this theory I know that a wave 3 usually runs a minimum 100% but usually 162%-262% if I know this would it not be easier to follow this stock and use CFDs at 10:1 to leverage this position??

We can also use range trading which will allow you to trade with the momentum of the trend and to trade the trend until it ends. You will do less work to make more money but importantly trade with lower risk. Range trading allows you to take your capital out of the market at the earliest possible time while still enabling you to participate in the growth of the stock or market as it continues to trend in the direction you are trading.

When adding to positions the ratio of 4:2:1 is used to lower risk yet still profit from the momentum of a move. A trade will eventually move against you and when you least expect it, therefore adding in a ratio of 4:2:1 will allow you to minimise the risk you take with your capital.

 

[ThingyMajiggy]

Hey Trendnomics, I tried pursuing the art of programming and back testing a while ago on amibroker but a) I didnt know what i was trying to test and b) That art requires a whole new skill which requires time.

The question regarding going long, long term equity investing, how much of it is luck?

If most established businesses listed on the asx200 grow over time, a good portfolio is going to grow. So how much of it was based off actual skill and how much was off luck.

To me, short term trading requires skill in the long run to survive. Im not saying long term investors dont have skill but I know that if I can master short term trading, its a skill that can never be taken away. Just like receiving a degree at uni.

Triathlete, I agree with your statement. The only problem I see with long term trading is that it takes to long to build any real skill. For example, If I make 10 trades a day, thats 50 trades a week. Thats 2500 trades in 50 weeks. While a long term traders puts on a trade, all he can do is research other companies or research about the economies state etc.

A short term trader is building on thousands of hours worth of screen time a year, analyzing the behavior of the markets and refining their skills.

Again the chips are stacked against the short term trader.

Just create something that people think they need/want for their trading(Jigsaw, BookMap, Webinars, prop shop etc etc), that's probably the best way to make money out of trading Not actually trading, just selling an idea of being a successful trader, or some product that will make people SO much better traders

Who knows if it's possible in the real world or not, especially short term. I'm probably yet to see anyone who has "made it". They might have for a period of time(yeah yeah the golden days pre-GFC) but since have been a bit hit and miss. Others that do okay just dabble so not HUGE dollars, usually because they have a real life and a business as their main income which comes first anyway, and some do okay from long term investing, but that's generally a given as you mentioned as most indexes go up over a long enough time period.

But I guess to really make it in ANY field, to be one that hits the big bucks, it's all going to be just as hard, being an expert and exceeding at anything is hard, all depends on whether YOU think you can do it and if you can see the opportunity there, whatever field you choose. Who knows. We only learn from experience and we only get experience from making stupid decisions.

 

[Trendnomics]

Hey Trendnomics, I tried pursuing the art of programming and back testing a while ago on amibroker but a) I didnt know what i was trying to test and b) That art requires a whole new skill which requires time.

The question regarding going long, long term equity investing, how much of it is luck?

If most established businesses listed on the asx200 grow over time, a good portfolio is going to grow. So how much of it was based off actual skill and how much was off luck.

To me, short term trading requires skill in the long run to survive. Im not saying long term investors dont have skill but I know that if I can master short term trading, its a skill that can never be taken away. Just like receiving a degree at uni.

Success in long term investing can be luck dependent, but it is also the path of least resistance for retail traders/investors:

• Brokerage drag less significant
• Dividend opportunities
• Tax efficiency (CGT discount + franking credits)
• Long term equity prices not greatly affected by HFT
• EOD price data easily available (compared to minute/hourly price data)
• Less screen time and no need to automate trading strategies

In a rudimentary sense, a top 200 equity index (i.e. ASX200) is a form of trend-following / relative-strength trading (i.e. weaker companies are replaced by relatively stronger companies - hold the strong, cut the weak). Skill can be measured, if you are able to outperform such an index over the longer term.

To survive and be consistently profitable in short term trading, requires absolute skill. And I agree, developing this skill is similar to obtaining a tertiary education (i.e. it can serve you in the future). The only problem is that short term price dynamics are ever changing, a skill developed today may not be valid for tomorrow (just think how HFT has changed short term pricing recently). Longer term price dynamics, has stayed relatively unchanged since the introduction of HFT - in fact HFT has assisted longer term traders with the additional intra-day liquidity provided.

 

[Trembling Hand]

Here is a thought let us say you can find 5 stocks to trade and because I use Elliot wave and cycles theory in my analysis I see that the stock is at the beginning of a wave 3 , now with this theory I know that a wave 3 usually runs a minimum 100% but usually 162%-262% if I know this would it not be easier to follow this stock and use CFDs at 10:1 to leverage this position??

We can also use range trading which will allow you to trade with the momentum of the trend and to trade the trend until it ends. You will do less work to make more money but importantly trade with lower risk. Range trading allows you to take your capital out of the market at the earliest possible time while still enabling you to participate in the growth of the stock or market as it continues to trend in the direction you are trading.

When adding to positions the ratio of 4:2:1 is used to lower risk yet still profit from the momentum of a move. A trade will eventually move against you and when you least expect it, therefore adding in a ratio of 4:2:1 will allow you to minimise the risk you take with your capital.

Triathlete would love to see you do 20 - 50 trades with this method.

 

[darkhorse70]

Triathlete, forgive me. In terms of brokerage fees, lets say I make 3/4 trades a day, 15-20 a week. I know for bills it was $5 AUD per round trade. Im assuming it will be similar for notes. So thats 5 x 2 (2 contracts for time being) = roughly 150-200$.

Now one average trading day can cover those costs for the week, assuming you ca be consistent.

I studied elliot wave by Nick Radge when I was still relatively new to trading. The concept and theory is great but there's no way I can put my faith into a system like that. Im no expert in that field but to me it would feel like throwing a coin and hoping it turns heads. However it all comes down to probability so It could work.

Hey thingy, actually after I left Aliom, I was developing a project related to trading however it was more a means to an end than a passion. I just want really getting excited about it however I understand your point. A normal business even though it has expenses and its ups and downs, money usually comes in consistently . Trading money comes and goes and you might found yourself losing more than your earning really quickly. Me and my cousin are the same age and he's got his own little business. We are really competitive and I some times get jealous when hes getting clients. More so because most businesses are much more stable than trading. On that note, I might be plateauing for years on end then suddenly every thing comes together and my profits increase exponentially. I guess its the nature of the beast.

I keep telling my parents to back off and treat this situation as me going to university to get a degree to become a doctor. They just don't understand the challenges and the steps which need to be taken before a real income can be created out of this.