Trading: Choppiest environment in 50 years !

This is a discussion on Trading: Choppiest environment in 50 years ! within the General Trading Chat forums, part of the Reception category; GJ, I suppose I'm just a big friend of KISS, of keeping it as simple as possible while still getting ...

Reply
 
LinkBack Thread Tools Search this Thread
Old Aug 27, 2008, 11:21am   #21
BSD
 
BSD's Avatar
Joined Feb 2006
BSD started this thread GJ, I suppose I'm just a big friend of KISS, of keeping it as simple as possible while still getting the desired results.

I think in a way that simple charting - or tape reading as say Livermore called it, only difference being ones depiction of price was numerical while mine is visual - has the advantage that it basically always has and always will work on a net profitable basis as long as there is sufficient movement in markets.

And, on top of that, it's an area where I think you don't have all that much competition, I'd presume that these days not all but definitely most hedge funds for example use some form of data mined correlations and computer driven models they base their trading on.

Another detriment down that road is that you'd be competing with them in an area where their success is already diminishing as too many of them are all doing the same thing largely, and at the same time, and in the same markets.

I think Renaissance Technologies, who definitely showed that mathematical computer driven models can be very successful, started a real catch-me-if-you-can race in the latest big thing, but as always too much competition offering the same gizmo is not good for business.

Finally, those people may exist, but on all these mechanical systems sites like wealthlab or tradestation etc etc, when I was starting out fishing for answers there, I have never seen or heard of a programmer who was able to get a programme to do the same very simple stuff I do visually on a chart...

It was always, well, patterns may look easy, but easy to programme they are not.

So using simple price patterns that worked a hundred years ago and still work today would seem to be an advantage I believe.

But then I must admit that it is years ago that I went looking for answers there.

Are you and your group mainly mining data for inter / intra market relationships etc and using mathematical models in your proprietary trading ?

Or do you also have people just doing basic charting ?
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Old Oct 28, 2008, 3:17pm   #22
BSD
 
BSD's Avatar
Joined Feb 2006
BSD started this thread "Five Trading Behaviors I'm Seeing Among Traders Making Money Now

TraderFeed
FRIDAY, OCTOBER 24, 2008

As I'm writing this, the ES futures are lock limit down and my email count is off the charts. Lots of fear, not much greed: fear, not only for one's trading, but for retirement savings and the economy. Most of people's money is tied up in some combination of stocks, bonds, and residential real estate. That means that many, many people are worth 25+% less than they had been just a year or so ago.

It is difficult to insulate those fears and concerns from one's trading. And yet, I do hear from traders who are making money in these markets. There *is* volatility, and there can be opportunity. Here are ten factors that stand out among the traders I talk with who are making money in the current environment:

1) Patience - The ones who are afraid of missing moves, who chase moves as a result, are getting hurt. The ones who wait for clear signals and good reward-to-risk opportunities can take advantage of the volatility. The successful traders aren't afraid of missing a move; they know, in this volatile environment, other opportunities will arise.

2) Position Sizing - Trading smaller when markets are moving more means that one or two losing trades won't knock you out for the day or the week. The successful traders tell me they're making plenty of money with smaller size simply because we're moving triple digits in the Dow just about every day.

3) Resilience - When you're wrong in these markets, you can really be wrong. My first trade yesterday lost over 20 S&P points; I wound up the day solidly in the green. By managing risk, you also manage emotions and can stay in the game. The successful traders are in there, making trades. They get off the canvas when they're wrong and they play defense, even as they look for opportunity.

4) Minimizing Distractions - One thing I noticed is that the successful traders in this environment have taken active measures to protect their personal finances. The less successful ones have been distracted by losses they're incurring outside of trading. It is difficult to focus on trading if you're worried about unemployment or loss of savings; addressing personal security helps maximize focus during trading.

5) Self-Maintenance - It's easy to get run down following markets through the day, every day, and then tracking them overnight and overseas. One troubled trader told me he was living, eating, and breathing trading. That is a risk factor for burnout, lessened concentration, and bad decision making. The successful traders aren't afraid to step away from the screens; once again, they know opportunity is not going to go away.

I'm finding that execution is the better part of success in these times. If you have a good idea, but the timing of your entry is wrong or your position is too large, you're likely to get stopped out at the worst conceivable time. By waiting for markets to put in a seeming high or low, waiting for a bounce or pullback that can't make a new price extreme, and *then* getting into a position, you can minimize the heat you take on trades. That, I'm finding, is half the battle."


LINK:
TraderFeed: Five Trading Behaviors I'm Seeing Among Traders Making Money Now
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Old Nov 25, 2008, 12:12pm   #23
BSD
 
BSD's Avatar
Joined Feb 2006
BSD started this thread "Rockier Than 1929

BARRON'S

By STEVEN M. SEARS

Market volatility has outpaced 1987's, and is set to surpass 1929's.

TODAY'S STOCK MARKET IS POISED to surpass 1929's as the most volatile ever.

Goldman Sachs derivatives strategists told clients on Friday that Standard & Poor's 500 three-month realized volatility is now 66%, surpassing levels of the 1987 crash and the economic malaise of the 1930s. Volatility now rests within striking distance of a moment in stock-market history that has defined financial crisis for almost 100 years.

"During 1929, realized volatility peaked at 68%. We will likely pass that number in short order. That will make the current market the highest sustained volatility environment in S&P 500 history," says Goldman's Krag "Buzz" Gregory, an options strategist.


Click the image to open in full size.

Current options volatility exceeds the experience of everyone trading options. The average peak in volatility during the last nine bear markets since 1950 was 30%, with a high of 64% in 1987. The persistent increase in options volatility is causing havoc for traders taught to believe that options volatility behaves like a rubber band. When stretched to an extreme, volatility snaps back. In this market, the rubber band keeps stretching.

The options market's fear gauge, the Chicago Board Options Exchange's Market Volatility Index (VIX), which is calculated by measuring the implied volatility of certain Standard & Poor's 500 index options expiring in 30 days, set a new all-time closing high of 80.90 on Thursday. This spells trouble for stocks.

VIX at 80 implies a Standard & Poor's 500 average daily move of about 5%.

SOPHISTICATED INVESTORS CAN TRADE INDEX VOLATILITY, but most investors are better served by focusing on a single stock. Best Buy (ticker: BBY), a big electronics retailer, is likely to struggle as consumers curb their purchases of expensive flat-screen televisions, computers and video games.

With the stock at about $17, Best Buy's implied volatility is about 136%, compared with realized volatility of about 101%. Even at such high levels, volatility can still increase, particularly as sales data prompt investors to focus on consumer-discretionary spending, holiday sales and the state of the U.S. economy.

A Goldman Sachs study of 10 years of monthly realized volatility found that electronics retailers are some of the most volatile retail companies in November and December. Average retailers experience high volatility in August and September, a November ebb, and a modest increase for the holidays.

Best Buy recently lowered sales and financial guidance. Circuit City, another big electronic retailer, has sought bankruptcy protection.

Credit analysts are worried about Best Buy's balance sheet. Fitch Ratings revised Best Buy's outlook to negative. Standard & Poor's just lowered the electronic retailer's credit rating to BBB-minus, from BBB, one step above junk-bond status.

Best Buy's stock is down 67% this year, and it could go lower yet."


LINK:
Rockier Than 1929 - Barrons.com
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Old Nov 25, 2008, 2:52pm   #24
Joined Feb 2008
Some very interesting reads.

Aside from the few good Daytraders, Anyone else winning??? And if so, what (basic overview)strategies are working IN THIS environment???
__________________
"Trading is a percentage business. Some trades will fail but it is absolutely vital that losses are kept to a minimum." --Mr. Charts
luckyd1976 is offline   Reply With Quote
Old Nov 25, 2008, 3:14pm   #25
BSD
 
BSD's Avatar
Joined Feb 2006
BSD started this thread
Quote:
Originally Posted by luckyd1976 View Post
Some very interesting reads.

Aside from the few good Daytraders, Anyone else winning??? And if so, what (basic overview)strategies are working IN THIS environment???
My solution: short term scalping.
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Old Nov 25, 2008, 3:21pm   #26
Joined Feb 2008
Quote:
Originally Posted by BSD View Post
My solution: short term scalping.
Sucks I know. I know. But Im reluctant to rework my DT strategy for this environment SO I shelved it for the time being. Switched back on my FX. Equities were crushing me recently.
__________________
"Trading is a percentage business. Some trades will fail but it is absolutely vital that losses are kept to a minimum." --Mr. Charts
luckyd1976 is offline   Reply With Quote
Thanks! The following members like this post: BSD
Old Dec 10, 2008, 4:24pm   #27
BSD
 
BSD's Avatar
Joined Feb 2006
BSD started this thread "THE VOLATILITY BUBBLE -- AVERAGE DAILY CHANGE NOW ABOVE 4%!

A couple of weeks ago, we did a post showing that the 50-day average daily change of the S&P 500 was higher than at any other point in the index's history. After yesterday's close, another record was eclipsed when the average daily change moved above +/-4%! As shown below, this volatility blows away even the highest levels reached during the Great Depression.

Up until the start of 2008, a daily move of 4% in a 50-day period was noteworthy. From 1945 through 2007, the S&P 500 had 49 one-day moves of 4% or more, which is an average of less than one per year. This year we've had 28! For a market as big as the United States to average a 4.02% daily change over a 50-day period is truly astounding. This is the type of volatility that we see in frontier and emerging markets -- not the biggest, most developed market in the world. The volatility bubble won't last forever, and being long it at this stage of the game is a very risky bet."


Click the image to open in full size.

LINK:
Bespoke Investment Group: The Volatility Bubble -- Average Daily Change Now Above 4%!
__________________
Markus
Doing without doing
BSD is offline   Reply With Quote
Old Dec 10, 2008, 5:43pm   #28
Joined Feb 2008
Nice chart. Most people dont realise the historical magnitude of this volitility.

As traders, it's huge because trading strategies may have been working for YEARS until recently. Stops get triggered 10 times more and you get whipsawed to death. Option strategies get thrown out of wack because of the extreme moves in IV.

Damn it, back to the drawing board for a higher VIX DT system that I can turn on in these type of times.
__________________
"Trading is a percentage business. Some trades will fail but it is absolutely vital that losses are kept to a minimum." --Mr. Charts
luckyd1976 is offline   Reply With Quote
Old Dec 13, 2008, 5:36pm   #29
 
3 Posts
Joined Jun 2008
looking for backtesting software

hello,

I am a trend follower on us stocks and would like to backtest my strategy.
I am unfortunately hopeless at programming.
Could you give me a software I could use.

Thanks

florian

versailles

france
floflo is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Was it the same 70 years ago ? 0007 Psychology, Risk & Money Management 2 Aug 4, 2008 1:16am
Your trading environment JTrader Home Trader 8 Jan 13, 2008 7:42pm
Your trading environment JTrader General Trading Chat 2 Dec 23, 2007 3:59pm
9/11, Three Years On - Thought Provoking Article , not directly trading related TWI The Foyer 1 Sep 6, 2004 7:13pm
I am 14 years old and need the simple step by step guide on how to start trading. GIBBLESTHESHEEP First Steps 9 Feb 4, 2004 11:41pm

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)