Futures and CFD trading

[Trembling Hand]

Whats your point Wysiwyg? You saying this game is hard

 

[G-fer]

Doesn't trust MMs perhaps .......

 

[Trembling Hand]

Doesn't trust MMs perhaps .......

The problem is that its in the fut......

 

[nomore4s]

Below is a classic example of what happens to bump traders off.Any longs in at 10550 with a stop loss up to 26 points gets bumped off with a spike.After seeing this happen many times it is the classic "asylum" move that would do anyones head in.Now someone say `oh don`t put your stop loss in an obvious place`.What rubbish.

I didn`t spend a penny on it just enlightening to what can happen before a move either way.Like I said I call it the asylum play.

If you're so sure this is happening why not trade it or develop a strategy to use it to your advantage?

 

[CanOz]

Thats a classic candle pattern, why not wait until after the sellers quit to even place an order, and use that new low as the stop?

Nice correlation between the made market and fut, maybe they're in Cahoots together....

Cheers,


CanOz

 

[Wysiwyg]

Whats your point Wysiwyg? You saying this game is hard

Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530

If you're so sure this is happening why not trade it or develop a strategy to use it to your advantage?

Thats a classic candle pattern, why not wait until after the sellers quit to even place an order, and use that new low as the stop?

Nice correlation between the made market and fut, maybe they're in Cahoots together....

Cheers,

CanOz

Yes nomore 400m and CanOz, a spike of 20-30 points past the resistance/support levels could definately be worth patience and setting a limit order for.Probably the only counter to the spikes.

 

[Trembling Hand]

Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530
.

OMG. are you still suggesting that the CFDs were fudged??

 

[rub92me]

Based on the limited information you've given us, the main problem seems to be timing of your entries.
To test your 'evil market maker' theory, why not do the following:
Use your exact same strategy, but this time on a simulator (or if that's not available: papertrade). Do this for about 30 setups. Does the same thing happen? If so: back to the drawing board, if not: you may have a point.

 

[skyQuake]

Yes, and thankyou for the futures chart which shows the spike down pulled up above 10530

Looks like IG Mkts, were u trading YM Cash or YM Futures? If you overlay your chart over TH's futures chart you can see everything is slightly lower.
Granted, the spike down seemed a bit excessive.

 

[Trembling Hand]

Granted, the spike down seemed a bit excessive.

thats because its a bid chart not a trade chart like the futs are.

 

[barney]

.Probably the only counter to the spikes.

Hi Wysiwyg, I think what most of us "small" traders do wrong, is think like "small traders" ................. I also noticed these kinds of spikes showing up all over the place a while back .............. so I asked myself, if I was a "big" trader, how would I go about extracting the most I could out of the market?

In this instance (and in most from what I see), the spike happened after a steady trend ............. The big players are looking to get the last drop out of the downtrend before they start buying again, so when they get the chance, (ie liquidity/momentum is low/slowing ) ..... they only have to dump a "relatively" small amount of trades on market .... which artificially pushes the price way below value, ............. sellers jump in (probably the last of the "small traders"!! ...... last ditch stops are hit creating more volume ..... and they promptly buy up everything in sight, pushing the price straight back up, and create an immediate gap up/buffer for their position in the process .......... If I was a big player, thats what I would do as well ..............

If the above is correct, then the volume of trades relative to the direction of the market (on all time frames) is the key to being on the right side of the market/trade .................

TH may tell me whether I am barking up the wrong tree, or whether I am actually starting to learn something ....... at last !!

 

[Wysiwyg]

Hi there Barney, Just read your post and I do not think that big player strategy you suggest happens.

However I do believe highs and lows of a trend are revisited to `squeeze` out any good entries and this was particularly evident on last nights DOW index as the previous session low was revisited when in all likelyhood there would be a bounce.There was a bounce after would be low pickers were sqeezed out of positions.

This I think is done on purpose and has cost me a pot or two when going for the longer term hold.(last night entry for 1 long at 7495 squeezed out)

I have come to the conclusion that CFD`s are not for longer term holds and can understand why scalping and 20 point/pip exits are all too common.

Though I have had a lucky multi hundred point move, the nature of index trading doesn`t allow for longer term holds.

 

[MRC & Co]

No doubt sometimes big players will do this (or a lot of the times you will just see a V-bottom, which is when a large institution is scaling in I believe and is harder to catch). But you cannot always wait for it, sometimes they will just go to town at any level. Some of the ways they try to get filled for their orders are TERRIBLE, would sack their traders if I was the manager! They just give free money to all the intraday traders there front-running their size which is not being clipped from the other side.

You see the same things happen on smaller scales too, with much lower volume and large traders in that market doing it themselves, setting off stops and then covering.

It's also called a 'test' in VSA I believe. Which is irrelevent (except for a big volume move in one direction) to small illiquid markets such as SPI on intraday timeframes. Sometimes you can get a stack of contracts trading on a 1 min candle, which can simply be a couple of bigger guys covering, not a legit move.

 

[Trembling Hand]

Without actually seeing the order flow you will be lost. If you can't afford the real data (not the **** CFD stuff) you can't afford to trade Indexes.

You will be blind and from that comes "cult ideas" you know stuff like "the big boys are pushing this", "they are sweeping stops", "if we throw a virgin in the volcano the god's will be happy". Get the facts then make a judgment from them. Or go and join a cult that worships a sun god or a comet. Will be cheaper giving the chosen one 20% of your wage rather than the market.

 

[MRC & Co]

Get the facts then make a judgment from them. Or go and join a cult that worships a sun god or a comet.

ha ha ha ha ha ha.

Though, big traders do sweet stops, ALL THE DAMN TIME!!! Some make their living (and a fukcing good one at that) off it alone. When one is not trading that day, the SPI acts and looks completely different!

Here is a video sent to me by RobinHood: http://www.traderslaboratory.com/Tra...derTicker.html

It is simply a different and more graphical representation of order flow. Not so sure you need to see cancelled orders and you can get most of the rest out of the simple order book. IMHO the way the guy thinks is EXACTLY how you need to think. He is always analysing who is doing WHAT and WHEN. If it is simply a trader, or a bigger insto like a bank (who you want to take notice of) and then later on, when a few larger orders hit, is it more legit orders or simply a bigger trader covering?

Not sure how TH does it, he may disagree, but this is how I try to think while watching the order flow.

 

[MRC & Co]

WTF, not sure if the link works. If you want to watch the video, PM me.

 

[chops_a_must]

thats because its a bid chart not a trade chart like the futs are.

That's probably correct.

And why Wysy is getting so annoyed on these down spikes.

Wisy, from someone that watches the futures fairly closely, and trades them every so often, you need to realise that any down spike will widen the bid/ask spread at times.

Well, any spike in general really... If it spikes up, the ask side will widen, the opposite etc. etc.

So you need to realise that. And on the CFD's your stops are probably triggered on the spread, not the price action. So you would have to widen the stops accordingly. Also, if you are going to be making a position trade like above on the YM, buying off the low, you are probably going to need about a 50 point stop or there abouts at the moment anyway.

As to being stopped out on 10/10 trades, and the market turning on your stop... well... simply, get over it. It happens to everyone, not just you.

It also happens on the other side, where you get in the right side of the turning point as well. And if it doesn't balance out, you are doing something wrong! The more you keep blaming everything else but the method you are trading, the more you will keep sticking to a losing strategy, rather than accepting responsibility for your own trades.

 

[MRC & Co]

As to being stopped out on 10/10 trades, and the market turning on your stop... well... simply, get over it. It happens to everyone, not just you.

It also happens on the other side, where you get in the right side of the turning point as well. And if it doesn't balance out, you are doing something wrong! The more you keep blaming everything else but the method you are trading, the more you will keep sticking to a losing strategy, rather than accepting responsibility for your own trades.

ha ha ha, and isn't that the truth! Sometimes it feels like I get done on 20 trades in a row! Well close to all of them. There are days where I hard it find just to scalp a few ticks and the market is out to get you. Any logical order book or chart pattern you used to work, just does not work and you are instantly offside as soon as you execute your trade. Then you cover at the damn top or bottom of the move! Honestly feels like 'they' work out your risk tolerance, and then just squeeze you out.

But definatley have to be self critical and try and adapt to that. Stop waiting for confirmation and instead buy counter ticks, pullbacks (either wait for a squeeze in the order book or wait for a legitimate HL, or LH etc from the chart). Or if it's simply flicky mess but still trending, try and learn to position trade it instead. This is what I am currently working on. Knowing when to have conviction and having it.

 

[barney]

Hi WYS, All just a learning curve for me a present, but

Hi there Barney, Just read your post and I do not think that big player strategy you suggest happens.

However I do believe highs and lows of a trend are revisited to `squeeze` out any good entries and this was particularly evident on last nights DOW index .There was a bounce after would be low pickers were sqeezed out of positions. This I think is done on purpose

I would ask myself, who is doing the squeezing?

In my humble opinion, only the "smart money" can turn a trend, or squeeze a position, so the volume of trades, relative to the trend direction,(and the "duration" of that prevailing trend, is the only guideline we smaller traders have to indicate what is happening. Cheers.

 

[Wysiwyg]

ha ha ha, and isn't that the truth! Sometimes it feels like I get done on 20 trades in a row! Well close to all of them.

Honestly feels like 'they' work out your risk tolerance, and then just squeeze you out.

But definatley have to be self critical and try and adapt to that.

I hear you chops, barney and mrc & co.

There is so much I don`t know.