The transition to Futures trading

[chops_a_must]

This?

That's the one!

 

[pavilion103]

My book arrived just now. I'm like a little kid in a candy store when I get books in the mail!

Btw thanks for the input into this thread. I'll have a more in depth look soon. Great work.

Minor knee operation yesterday = plenty of reading time!!!

 

[CanOz]

My book arrived just now. I'm like a little kid in a candy store when I get books in the mail!

View attachment 51619

$15.37 on Kindle!

I reckon you could have got at least as much from a few on here that actually know a thing or two about the futures markets though. But if you like reading its a great way to pass the time, and Larry Williams wouldn't steer you wrong that often.

CanOz

 

[pavilion103]

I'll take what I can get at the moment in terms of education. May be handy as someone completely new to futures!

Someone I respect recommended that book so I'll take their word for it!

 

[CanOz]

Not liking that level so far today, tested the pre-cash high...

 

[CanOz]

Here's a 'pattern' that i don't see this obvious very often, nor do they present themselves as well as this for a trade either.

This ice berg was huge, price came up and tried to go thru several times and it just sat there soaking up the buyers...lol

Unfortunately i was stuck on sim, thru my VPN until i can sort out my connection...

They don't get much easier than this.

CanOz

 

[pavilion103]

That last one is interesting....


I've read 200 pages of the Futures book. A lot of it is basics I am already well aware of but the background and basic mechanics of futures contracts is interesting. Although I won't be trading everything under the sun, the sections that talk about the various futures contracts available was beneficial. It's just good to be aware of what is out there, the market hours, the minimum price movements etc. I left the Indexes bit at the end for the minute because I want to go over that in the detail it deserves.


Just returning to the FTSE out of interest, I was watching this 5 min chart (in conjunction with the three minute chart) yesterday evening. I drew in the lines for the triangle very early on and then identified the break to the upside as most likely false. Then it was a nice little run down. Some preliminary support in the first pattern before a base formed after the high volume near the bottom pattern.

 

[pavilion103]

I'll do a bit of research on the Euro Stoxx 50, as I hadn't come across it prior to this thread.

This is a stimulating aside for me, breaking up the study of stocks, although probably just an aside at the moment. Enjoying this thread

 

[CanOz]

The latest version of my Jigsaw DOM has a handy highlight feature for larger than average size in the depth (for us older folks)....will see how it goes on the DAX today, some great spoofs in that market at times...Trying to do a video lately too.

CanOz

 

[pavilion103]

Just a quick update of tonight's FTSE on the simulator.

I took a short at around 6,259 (the shaded red area on the chart), so this is up close to 60 points @ $15 = $900 profit.
Initial stop was 9 points away from entry = 9 x $15 = $135 risk.

I'm wishing I had put a few of the trades through on the real account this week, but I'm not one to jump the gun!

Things I'm noticing so far:
1) These consolidations patterns have worked this week
2) They also coincide with low volume testing at high volume areas.

I am continually on the look out for price behaviour which repeats itself. It will take months and countless charts to really begin to understand this.

 

[CanOz]

There has been a few trend days lately, volitility is has really picked up, that's when the little consolidation patterns will likely perform better.



CanOz

 

[pavilion103]

There has been a few trend days lately, volitility is has really picked up, that's when the little consolidation patterns will likely perform better.



CanOz

That's what I figured. I'll continue to monitor in various market conditions. With these trends it's handy to get a good entry like this one. Almost 7R profit, which would allow a few losses in between.

Do these index futures often trend in one direction like this frequently? Or is it just the current market conditions? Is it usually more range bound?

I just had a look through that book again too.
It talked about:
S&P 500
S&P 500 E-mini
EuroStoxx 50
FTSE 100
NEKKEI
SPI 200

At least gives me a basic overview of some of the main ones. What was just names before and terminology is starting to make some sense.

 

[CanOz]

That's what I figured. I'll continue to monitor in various market conditions. With these trends it's handy to get a good entry like this one. Almost 7R profit, which would allow a few losses in between.

Do these index futures often trend in one direction like this frequently? Or is it just the current market conditions? Is it usually more range bound?

I just had a look through that book again too.
It talked about:
S&P 500
S&P 500 E-mini
EuroStoxx 50
FTSE 100
NEKKEI
SPI 200

At least gives me a basic overview of some of the main ones. What was just names before and terminology is starting to make some sense.

Typically in a bull market the days are tight ranges stacked on top of each other to form a trend up.

As we break out of a bracket, range or consolidation as we have, volatility picks up as longs liquidate/shorts cover etc., etc...this gives you big swings to work with. A mean reversion traders worst nightmare is trying to fade a big trend like today...luckily you can learn to pick up some signs and try to either get on a trend like that or not try and pick the bottom.

I suspect one thing that separates the Pros like TH and the learners like moi, is the ability to spot a trend day before you get caught trying to fade the whole thing....



CanOz

 

[fiftyeight]

Loving this thread.

Very new to trading all together (first post), but I am learning a lot or rather learning how much I need to learn.

Cheers

 

[pavilion103]

Loving this thread.

Very new to trading all together (first post), but I am learning a lot or rather learning how much I need to learn.

Cheers

Welcome to the forum mate

 

[Lone Wolf]

A mean reversion traders worst nightmare is trying to fade a big trend like today...luckily you can learn to pick up some signs and try to either get on a trend like that or not try and pick the bottom.

I suspect one thing that separates the Pros like TH and the learners like moi, is the ability to spot a trend day before you get caught trying to fade the whole thing....

I wanted to ask about that. How important is it to be able to predict in advance what sort of day it is likely to be (trending, ranging etc.)? How accurately can someone anticipate this?

Many system traders stick to one system that only works in one market type and build in a safety net to control losses when conditions aren't ideal. But does a good discretionary trader adjust their methods to match the expected market?

Finding good repeating patterns to trade is a starting point. Knowing under what conditions those patterns work is another point. Being able to anticipate when the conditions will be right for the patterns you want to trade is probably where I would struggle the most.

 

[CanOz]

Lone Wolf, Personally i don't think anyone can really predict whether or not the day will be a trend day or not, but i think there are quite a few that can tell when it looks likely that the session is developing into a trend day or not. Some likely do this by simply looking for the market to challenge and overcome the previous days highs/low etc., how effectively is the market accomplishing this, volume, pace of the tape, how aggressively are they sweeping the depth?

Quite often on the DAX and CL i've noticed that spoofing occurs when the day is a little range bound or balanced. A player, whether a local or a large trader, is posting size in the depth in an attempt to move the limit orders one way or another. On the DAX and CL these orders are usually 100 or better. On the FESX its seems to be above 2500. Sometime they'll spoof (spook) the market higher, pull the 100 lot, then unload a bunch into the bids. sometimes the big size are stops and market seems to get moved toward them, if they break the market can move several points as the stops are hit. I don't see as much of this stuff carry on when its a big trend day, although the stop runs are common.

News has such a great effect on intra-day trends, perhaps the main driver of participants other than the locals. Usually the other participants (commercial hedgers, funds) are the bigger size too, right...?

One of main frustrations with trading intra-day systematically was the inability of an algorithm to recognize the entry of the big boys, the guys that start or end trends.

Obviously the successful Prop traders can do this quite effectively by concentrating on the order flow, the auction.

One thing i have noticed though, time and time again, is that new intra-day trends start and finish on key levels. For example, last night the ES (S&P500 mini) tested the Globex session low, it bounced a little, and then a large iceberg sat there absorbing all the selling, once the sellers dried up the offers pulled and the market started its grind up off the lows. From what i've heard this morning (i haven't opened NT yet), the market tested the low one more time later in the session, and then closed well off the lows to reclaim back much of the initial losses.

These are the types of patterns that repeat, because someone is finding the advertisement of price at that level too much to resist.

CanOz

 

[pavilion103]

How important is the market depth in this type of intraday trading?
Is it absolutely vital and necessary?



I don't refer to it for my stock trading (where I hold between days and a few weeks).

 

[tech/a]

PAV

I don't use it at all.
Guys like TH won't leave home without it.
Many don't believe you can trade futures
Without it-----

There are plenty of other tools to use and timeframe
Has a bearing on depth.

My view anyway

 

[CanOz]

How important is the market depth in this type of intraday trading?
Is it absolutely vital and necessary?



I don't refer to it for my stock trading (where I hold between days and a few weeks).

Well, there's a couple of ways to think about it...

Think about the chart as "already happened", where as what is happening in the depth and on the prints is now, it IS the auction, LIVE.

If your trading style, or edge depends on what is happening now, then the depth is absolutely necessary. If you edge doesn't require the depth then you don't need it.

To me, the evidence that the "pros", that is the Prop Traders...are using the depth is overwhelming. So perhaps its worthwhile to try and see why they are using it before dismissing it altogether. If, after you start to watch it, you still find nothing useful from it...after months of watching it, then dismiss it.

Why i believe the Prop training teaches you to scalp first, is so you learn to use the depth and see the actual auction take place. Then if you can apply some market structure tools, you may be able to get into some trades with higher R:R than scalps.

Only my "learner" opinion....based on my past 18 months of learning intra-day.

CanOz