Focus or Money Management?

[Trader333]

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

Yes that is what I have thought as a general rule but I wonder where algo trading impacts things like value area etc so do you have any thoughts on this ?

 

[darktone]

Day trading on very short times frames.
Tick, 1 min charts, etc or the DOM.

What is more important to you?
Focus or money management.
Love to hear other traders thinking or thoughts.

Hmmm
Id start with a smidge of lack of distraction, so I can be available.
For mains id have a huuuuge helping of sound psychology.
Desert would be a lite money management.
Focus is after dinner mint stuff when youve had a great main. :cheesy:

 

[postman]

....
For mains id have a huuuuge helping of sound psychology.
...

The recommendation of "Sound psychology" from someone with a forum name of 'darktone' and an avatar of an evil looking Halloween pumpkin.

 

[SpreadDoctor]

Ostensibly I am talking about a set-up here where short(er) term participants are testing to see where value lies from the long(er) term participants and therefore trading a reversal which is often (but not always) in line with a trend on a higher TF.

Think about how a trend often starts. There is a sell-off and for a few days after there are attempts to push lower. However you see that although there is higher selling activity (look at volume), the price is trading in a range. This is long term participants building a position. Then once all the sellers have gone, what is left? A demand/supply imbalance. Then price starts to go up and then momentum traders get on the bandwagon and add fuel to the move. Who is selling into them all the way up? Is the the participants who built the initial position? To do this you need a lot of money operating over longer timeframes.

In control means exactly what is says - are the long term traders in control in the current session or the short term traders? Yes it is quantifiable as you can see it in the form of the value areas that are created.

With the indices, futures market often leads the cash market, especially on S&P500 IMO.

I have been thinking about this post the last couple of days as it shows very good insight and I would guess that you have been trading a long time to figure this out. either a long time or you are from a trading family. It is very similar to my belief about why the markets move as they do. I don't value areas per se but I am very aware of them and my analysis is very similar in some ways. I also focus on times of the day/week/month and how price reacts to scheduled/unscheduled data. GLGT

 

[SpreadDoctor]

Don't forget, I trade a product that is exchange based (futures) and so I have visibility and transparency of what is going on. FX is an interbank product with none of this visibility. It is why I don't go near FX. Why would I want to disadvantage myself like that?

I realise the above was a rhetorical question however I actually view things the other way around. I trade FX purely because it is so opaque and is more open to manipulation. The larger traders individually and collectively get away with so much in FX and if you can work out what they are up to I believe there is a ton of juice to be had. GLGT

 

[robster970]

I have been thinking about this post the last couple of days as it shows very good insight and I would guess that you have been trading a long time to figure this out. either a long time or you are from a trading family. It is very similar to my belief about why the markets move as they do. I don't value areas per se but I am very aware of them and my analysis is very similar in some ways. I also focus on times of the day/week/month and how price reacts to scheduled/unscheduled data. GLGT

6 years and yes, I got help from professionals although they are not family. Time of day is important to me as well, reaction to news itself is not but how news is used to mask intent and trigger events I do pay attention to.

I realise the above was a rhetorical question however I actually view things the other way around. I trade FX purely because it is so opaque and is more open to manipulation. The larger traders individually and collectively get away with so much in FX and if you can work out what they are up to I believe there is a ton of juice to be had. GLGT

That is interesting - can you share some insights or examples to contextualize this (without giving too much away)?

 

[darktone]

The recommendation of "Sound psychology" from someone with a forum name of 'darktone' and an avatar of an evil looking Halloween pumpkin.

Good point, I forgot to mentions the drinks.
A couple of rounds of 'remind yourself every day that you know nothing' to wash it all down.

 

[SpreadDoctor]

That is interesting - can you share some insights or examples to contextualize this (without giving too much away)?

Without giving too much away lol. ok here is a titbit. so specifically why I find more juice in FX than equity indices. FX is a 24/5 market. I know equity indices trade on globex pretty much 24/5 however with FX you have the Asian dealing range which can be used to a speculators advantage. Longer term positions are handed over from London desk to NY desk to HK desk then back to London etc. However a great deal of the Asian session dealers will want to go home flat. You also have to consider that the markets are thinner during the Asian session so any sharp moves should be viewed with suspicion. Care needs to be taken when markets are trending strongly due to fundamental aspects but I believe with the above info a profitable trading career can be forged, all before 9am London.

GL

 

[robster970]

I see parallels on ES/Globex like this. Often trends start in the European session (rather than in the Asian session). Ironically, I can see Eurostoxx and DAX opportunities popping up through ES holding known levels that European indices are not strong enough to bully........

You rarely get index divergence. Merely personality differences between how the indices feel if that makes sense.

Problem for me though is I like starting work at lunch time and not 7am.......

 

[SpreadDoctor]

I see parallels on ES/Globex like this. Often trends start in the European session (rather than in the Asian session). Ironically, I can see Eurostoxx and DAX opportunities popping up through ES holding known levels that European indices are not strong enough to bully........

You rarely get index divergence. Merely personality differences between how the indices feel if that makes sense.

Problem for me though is I like starting work at lunch time and not 7am.......

I get you. Once NY is open the S&P is the master. As an aside you mentioned you don't pay attention about how price reacts to news but how news is used to mask. Here is an example. Yesterday we had 2 top tier data releases affecting cable, both were bearish and price managed to go down 59 pips during the day. Today there has been no notable news events and we are 62 pips up with the prospect of more to come on the upside before NY close. This is a great example where the big money is currently long in a bearish market, they will squeeze any remaining shorts until they bleed out before the main weekly down trend continues. The reaction to yesterdays news was important because it showed the big money was not ready to drop it and wanted to collect some more street money prior. GL

 

[robster970]

Here is an example. Yesterday we had 2 top tier data releases affecting cable, both were bearish and price managed to go down 59 pips during the day. Today there has been no notable news events and we are 62 pips up with the prospect of more to come on the upside before NY close. This is a great example where the big money is currently long in a bearish market, they will squeeze any remaining shorts until they bleed out before the main weekly down trend continues. The reaction to yesterdays news was important because it showed the big money was not ready to drop it and wanted to collect some more street money prior. GL

Exactly

I remember reading on these boards a good definition of a strong and weak hand:

"A stong hand is someone who wants to trade, a weak hand is someone who needs to trade"

Stop hunting fits this description nicely as the strong hands squeeze cheap liquidity out of the market as you say.

 

[counter_violent]

Exactly

I remember reading on these boards a good definition of a strong and weak hand:

"A stong hand is someone who wants to trade, a weak hand is someone who needs to trade"

Stop hunting fits this description nicely as the strong hands squeeze cheap liquidity out of the market as you say.

This is why it's imperative to identify on the price charts where the strong hands or smart money has been active.
All of the rest of the price action is inconsequential once the smart money has been ID'd.

 

[barjon]

This is why it's imperative to identify on the price charts where the strong hands or smart money has been active.
All of the rest of the price action is inconsequential once the smart money has been ID'd.

Well, I run this massive fund and the damn public will keep sending me money, so I've got to buy to maintain the regulator's liquidity ratio even though every fibre of my being is telling me we're going to head down. So am I strong, weak, smart or stupid ?

 

[counter_violent]

Well, I run this massive fund and the damn public will keep sending me money, so I've got to buy to maintain the regulator's liquidity ratio even though every fibre of my being is telling me we're going to head down. So am I strong, weak, smart or stupid ?

Depends what you want to be on the day I guess, but above all that, you are Barjon :clap:

 

[postman]

Well, I run this massive fund and the damn public will keep sending me money, so I've got to buy to maintain the regulator's liquidity ratio even though every fibre of my being is telling me we're going to head down. So am I strong, weak, smart or stupid ?

By robsters definition as a big money fund manager your a weak hand because you have to buy!
Never mind though, your making money hand over fist in the process.
Therefore by being stupid and just buying all the time, your actually really smart.

 

[tar]

"A strong hand is someone who wants to trade, a weak hand is someone who needs to trade"

Retail traders want to trade and they don't really need to , but they are definitely a weak hand .

 

[robster970]

Well, I run this massive fund and the damn public will keep sending me money, so I've got to buy to maintain the regulator's liquidity ratio even though every fibre of my being is telling me we're going to head down. So am I strong, weak, smart or stupid ?

That is a very, very good question.........

Are they strong or weak?

 

[darktone]

Well, I run this massive fund and the damn public will keep sending me money, so I've got to buy to maintain the regulator's liquidity ratio even though every fibre of my being is telling me we're going to head down. So am I strong, weak, smart or stupid ?

Risking OPM / collecting fees / slice of profit = :smart:

 

[darktone]

If youve ever wondered where the strong hands play, think of who just filled your last stop.

As I see things now, good trading is kinda like trampolining. You wait for them to get a little bit silly, then f**k them in the head. Although most of them do a pretty good job of f*****g themselves in the head, and the wallet.

Fido gets it!

 

[barjon]

That is a very, very good question.........

Are they strong or weak?

.............and does it matter? For short term trading it is surely enough that you can spot buying interest without worrying about whether it's weak or strong hands doing the buying.