How To Trade: Full Stop

[avasfx]

I do not follow sectors anymore, but I used to a lot, in fact, I used to watch every tick on the SOX, NBI, GHA, etc, etc, etc

One of the main things that a trader must learn, is to quickly distinguish between what works best, and what does not.

The majority of daytraders will trade as follows.

1. Look for lead sectors.
2. Look for leaders in the lead sectors.
3. Buy breakouts of PDH
4. Sell breakdowns of PDL

Fewer will add the following.

5. Scalp the TICK reversals
6. Scalp the narrow ranges

Very few daytraders will do what needs to be done for the best trades, and we should all know by know what the best definition of "the best trade" is:?:

I agree with you, nowadays we have access to a lot of information, which is definately too much. We have to cut all that we don't need, and leave only the essence

 

[tss42]

These clues look like anagrams.

 

[The Expert]

These clues look like anagrams.

OK then, how about some thinking instead!

What can happen in the Futures vs. Cash that may be significant, and what is the significance!

 

[tss42]

OK then, how about some thinking instead!

What can happen in the Futures vs. Cash that may be significant, and what is the significance!

The first thing I can think of is them getting out of step and being brought in step by arbitrage.

The second is the players are different. There are no pensions funds or mutual funds doing futures.

Third, stocks have a long bias, because the public and the pension funds are always long, and the exchanges usually have their uptick rules. By contrast futures is freely shortable. Because the public is always long, stocks fall hard and go up slowly, which again may cause cash to get out of step with futures.

 

[The Expert]

The first thing I can think of is them getting out of step and being brought in step by arbitrage.

The second is the players are different. There are no pensions funds or mutual funds doing futures.

Third, stocks have a long bias, because the public and the pension funds are always long, and the exchanges usually have their uptick rules. By contrast futures is freely shortable. Because the public is always long, stocks fall hard and go up slowly, which again may cause cash to get out of step with futures.

Good post TS,

The public are insignificant in the trading game. It is The Generals that move the markets. When The Generals move the "service providers" take the opportunity to cash in and bring the books back into balance.

Alongside the "service providers" we have the "sidekicks", who can cause the "service providers" a big headache.

Now, let us forget about FV, Arb & Programme Trading, and ask ourselves, as the insignificant public traders, what will make a difference to our trading in relation to the Futures vs. Cash?

What can possibly be of any real value to us as daytraders?

TE

 

[Trader333]

and the exchanges usually have their uptick rules

Do they ? Which ones are you referring to as I thought that rule had gone ?


Paul

 

[Trader333]

what will make a difference to our trading in relation to the Futures vs. Cash?

Could it be that when one is significantly out of synch with the other they will come back into alignment and the bigger the difference the larger the move back will be.


Paul

 

[The Expert]

Could it be that when one is significantly out of synch with the other they will come back into alignment and the bigger the difference the larger the move back will be.


Paul

Obviously, if you catch a misalignment then you can probably capitalize, but they do not last that long due to automated trading.

Something else maybe!

 

[DionysusToast]

I will give a hint for what I meant about the Futures vs. Cash, and the hint is related to my past words about Barry Rudd and A.N.Other, and the hint is,

The baby is carried around in a nice warm place and can jump out at anytime

Initial thoughts on Barry Rudd and A.N.Other.

Barry Rudd - Wiggle
A.N.Other - J.M.Hurst

The wiggle & Hursts work are related... Not got an answer to the riddle yet - but am thinking...

 

[tss42]

Do they ? Which ones are you referring to as I thought that rule had gone ?


Paul

I should have said exchanges favour uptick rules. I know the NYSE rule is gone now, but there is always talk, especially amongst the politicians, to bring it back.

 

[tss42]

It is The Generals that move the markets. When The Generals move the "service providers" take the opportunity to cash in and bring the books back into balance.

Alongside the "service providers" we have the "sidekicks", who can cause the "service providers" a big headache.

'Service provider' sounds like the lead market maker in a market at a time.

Are the 'sidekicks' the other market makers?

Edit: Ah wait, stocks have market makers, futures don't. Is that the significant difference? If the Generals assign the lead market maker the duty of accumulating or distributing stocks on their behalf, that should be visible on the level 2 screen, but that behaviour won't be reflected on the futures contract.

Edit 2: If I was a 'general', and I already have a plan to accumulate a certain stock today morning, I wouldn't buy it unless it represents 'value' in some respect. I wouldn't want to pay over the odds. So would relative weakness against the futures be something I'd be interested to see?

 

[Charlton]

Well I haven’t been able to make the necessary neural connections yet, but here are some random ideas that may or may not trigger some in other people’s minds. Certainly some of the suggestions that have been provided by others already are along the lines that I am thinking.

Pity about the COT suggestion, which you seemed to dismiss, as the Commitment of Traders report, is very much concerned with the relationship between large and small contracts, the Generals and the rest.

Barry & A.N.Other were of immense help in limited scope.

The baby is located in a region where HE lives, and HE, being fond of Ganndolf, went and made a Butterfly with one of the Marx brothers!

Rudd’s work deals with patterns of price action and you warned us to read it, note it and then put it away. I think I would agree with DT that A.N.Other would be Hurst, so we are being told that these works are limited in their scope and presumably our understanding of what is happening in the market.

Ganndolf might make us think of the Tolkien Wizard, but he was not a “tall story”, but in fact short. A wizard casts spells, but is not spelt like this (Gandalf). So we are probably talking about Gann and his work. We are told it is a tall story, which suggests that it is a lie.

Butterfly makes us think of butterfly patterns, which has some connection to Rudd’s work and also the work of Gartley. It examines price patterns near areas of S/R/

However butterflys might refer to chaos theory (flapping of butterfly wings on the other side of the world).

The names of the various Marx brothers in comedy don’t strike me as relevant, but perhaps this is a different Marx, namely, Karl. Did he have siblings ?

Anyway, I don’t know if any of these concepts might help others

Charlton

 

[DionysusToast]

No No No, you are barking up the wrong tree altogether!

Barry & A.N.Other were of immense help in limited scope.

The baby is located in a region where HE lives, and HE, being fond of Ganndolf, went and made a Butterfly with one of the Marx brothers!

HE = Salvador Dali or Andre Breton who wanted to make a movie with Harpo including

"Proposed scenes include a horde of burning giraffes wearing gas masks, cyclists balancing loaves on their heads and Harpo catching dwarves with a butterfly net. "

Dali is dead & buried in Catalonia. Breton is similarly no longer breathing and is buried in Ile-de-France.

As for 'fond of Gandolf' - according to the urban dictionary :

Gandolf
The act of getting hammered on a fun night out with the ladies, when everyone else is only having a few sociable drinks.

(The Gandolfer will include making a fool of themselves, relying on others to stand, finishing everyones drinks, puking, going home with randoms/inviting randoms to their friends' houses, getting rowdy, puking anywhere, and perhaps keeping everyone up in the night.)

2. Someone who is a borderline alcoholic, and only hangs out with friends if they have booze and/or weed. Their lives tend to revolve around these substances.
1. "ooohh looks like crystal is pulling a huge gandolf tonight, ughhhh"

2. "Miranda is such a gandolf, she needs to go to aa soon."


Shurely shome mishtake ??

 

[avasfx]

Still thinking of the way of analizing your pdf's. We have daily range, and we know behaviour of the price in the past, then we can expect price to move the next day similar range (more often than not), so we can trade it, we know that it have some movements during a day, and use it in our favour. What's your thought process about it?

And also what can you say about stocks that have no significant range - for example in flat base - that's not the best candidate to daytrade (but i always watch such stocks, even a few weeks for breakout, just waiting), but when this base is broken - we have nice movement, for example DRV.


That's not the range we want to daytrade, so based on your PDF charts we won't consider this to be our candidate for the next day.Whats your opinion on that?
Thank you
Alex

 

[trendie]

crossword puzzles aside, (I still think COT is a strong candidate!), and at fear of being pedantic, the stock candidates are still a form of TA. You are taking a previous action, ie, range of trading, and because it happened often enough, an assumption/prediction is made that the stock will behave as before. Honestly, I dont see how thats different from taking the past few hour bars direction, and extrapolating price will continue in same vein, rather than change.

That aside, having filtered down to viable short-list, with a decent daily range, some assessment still has to be made whether the range will happen to the upside, or downside.

How about Open Interest??
I have vague recollections that options are such that traders are inclined to push prices to expiry values, to get best out of them. Since options are leveraged, the cost of pushing prices to certain values are worth it.
How about looking at the most heavily trades options prices of optionable stcocks, and see of any expiries are close to certain values? And anticipate direction accordingly?

 

[tss42]

My take:
The first name of Harpo is Adolf, may have something to do with Ganndolf. Note that Tokein's wizard is Gandalf, so even accounting for the Gann bit, the 'dolf' part is a bit of a mystery.

"The baby is carried around in a nice warm place and can jump out at anytime"

The baby may be a stock that is being accumulated (or distributed), is in a nice, tight range (warm = good volume in a tight range?) and can break out as soon as the accumulation is over.

TE did mention that he had studied Rudd's work on narrow range followed by breakout.

 

[tss42]

Initial thoughts on Barry Rudd and A.N.Other.

Barry Rudd - Wiggle
A.N.Other - J.M.Hurst

Could you possibly elaborate your thought process to arrive at the link between A.N Other and Hurst? Just curious.

 

[DionysusToast]

Could you possibly elaborate your thought process to arrive at the link between A.N Other and Hurst? Just curious.

One of the first things Rudd talks about in his book is 'the wiggle' and figuring the average wiggle. J.M Hurst would more than likely call that wiggle a cycle or half a cycle, depending on how you look at it.

J.M.Hurst also has 2 initials and a 5 letter word just like A.N.Other - now perhaps TE will tell me to stop looking for things that aren't there but J M Hurst is a convenient fit.

As for relationship to babies that are carried around in a nice warm place - well that could be a COT but I tend to not carry my baby in a cot as cots are heavy and puschairs are nicer. Babies do get carried around in a nice warm womb though and then we have the rather tenuous link (which I wouldn't put past TE) to something called getting 'wiggled out' in Rudds book. OK - so neither of my kids wiggled out... not in any fair definition of the word wiggle. They certainly didn't jump but they were pushed !

This doesn't really fit in with the other clues that I can see. Perhaps it means that cycles are of immense help as it's the only overlap in the works of Rudd and J M Hurst that I know of.

Of course - if the J M Hurst is not A N Other - then this theory can go straight in the bin.

 

[DionysusToast]

OK - so the clue

"The baby is located in a region where HE lives, and HE, being fond of Ganndolf, went and made a Butterfly with one of the Marx brothers!"

perhaps breaking it down helps.

The baby
is located in a region where HE lives
HE - (note - upper case - may be an acronym)
being fond of Ganndolf
made a butterfly
with one of the Max brothers

Perhaps resolving these one by one instead of all together would help...

 

[trendie]

Marx brothers: Chico, Harpo, Groucho, (Geppo, Zummo)
http://www.marx-brothers.org/
(One of their movies was called "Monkey Business". )

Baby is in a warm place (where it can jump out).
Security blanket; cradle. Oven? (bun-in-the-oven)

Ganndolf: deliberate misspelling of Gandalf. However, references to Tolkien, and especially wizards is a tad suspicious. Remember the last wizard we had with his secret key and star chamber? The voice in my head says I'm being paranoid.

Anyway, ......
the only butterfly so far, as has been mentioned, is the Gartley.

EDIT:
HE:
Harold. Harry.
Hermann. Herbert.
Hi---
Hollandaise.
Hubert. Humphrey.

EDIT2: just occurred. all HE names are male, when female just as likely. sexist!!