prop firm traders...

[Technically Fundamental]

What are the methods used for trading at prop firms?

Is it mainly technical analysis or is it statistcal analysis and financial mathematics?

 

[rawrschach]

Tf there is 100 bid, you get in front of it and take half a tick.

Then walk around telling everyone about it. Later you'll sell the double top on the monthly and take a half a tick. Then walk around telling everyone about it. etc.

 

[arabianights]

Run your losers, cut your winners, and average

 

[N Rothschild]

Tf there is 100 bid, you get in front of it and take half a tick.

Then walk around telling everyone about it. Later you'll sell the double top on the monthly and take a half a tick. Then walk around telling everyone about it. etc.

was that dante?

 

[vinicius]

You guys are cruel!

He is an accountant, not a trader (yet)!

 

[Technically Fundamental]

come on you f--ks I'm actually interested in this...

 

[gooseman]

please define what you mena by prop firm

 

[Technically Fundamental]

Trading capital invested by "employees" or just company funds. Just not traders working for a bank or major hedge fund.

 

[gooseman]

depends on the style of the business. could be TA, relative value, arbitrage, anything.

question is a bit general to be honest mate.

almost like saying what type of accounting do firms do.

 

[Technically Fundamental]

I mean are are you going to get a prop firm trader who just bangs a few lines on a chart, watches candles and clicks enter or is it standard procedure in professional trading to back up technical analysis with the complex risk calculations and statistical probabilities of reaching your targets?

 

[gooseman]

if you are trading in any professional environment you should always have risk limits in place.

yes there is the occasion where if it's on an S or R and you think sod it i'll lift some futures or whatever but if you're going into a big trade then you simply have to abide by risk limits.

i guess it depends on the scale of things. if you are just jobbing around then it's no problem but if you really want to go on a big directional trade then you really have to be sure of all outcomes and have stops/targets etc in place.

 

[Technically Fundamental]

Hmmm makes sense.

I'm just trying to understand what maths lies behind trading at a professional level. They always want graduates from quantative disciplines so I was thinking there must be a lot of math involved in trading (compared to what I've been learning on here) but I suppose the level of complexity correlates with the size of trades.

 

[gooseman]

it depends what you are trading too mate.

too many clowns on here think it's simply price up and down. yes, it can be but then you can go towhatever depth/complexity you wish. eg swaptions or an FX swap.

at the end of the day yes it is just buy low sell high (or vice versa) but to trade an instrument you should really understand the pricing of it which is where the maths cmoes in.

of course i will be lambasted for this but if you are a pro trader chucking someone elses money about (swinging the bat ) then you'd better be bloody sure of what you are doing.

 

[Technically Fundamental]

Was that you who said i think im swinging the bat? WTF does that mean lol.

Hmm now here's where I get lost. What do you mean by pricing? The level its trading at? I was under the assumption that the market price is what is being bid on the floor. These quants etc might say yeh risk blah blah we buy in here because of such and such but on a day to day basis doesnt the floor control the pricing? Incidently, I've started using bid price on my charting rather than mid of bid/ask which comes as standard. Any difference?

 

[Hotch]

Is there a difference between big/ask and bid?...yeah...half the spread...

 

[Technically Fundamental]

I know that lol. I mean in terms of understanding the markets and getting an indication of whats going to happen is it better so watch the bid/ask price over the mid

 

[gooseman]

yes and it means trading in decent size.

well everything has a price and a value. You look at the intrinsic value in comparison to the price and decide whether to trade. i.e. is something underpriced and therefore cheap, or overpriced and therefore expensive.

now i know these things might pass by some on here but if you are trading someone's cash you have to havea reason behind doing it.

take an example in crude oil. you think crude oil for september delivery will be $65 due to OPEC cuts and increasing demand towards the end of the year. Sep crude is trading right now at $53.85 so you buy it. You have to have a reason for doing that trade. You could look at another example, say US interest rates. You would like to expresss your view that rates will go up by December and you wish to do it through options. What options structure do you use? Put spread, puts, put fly etc then you have to understand the risks invoved with that trade i.e how much will it cost to put the trade on, how will the cash flow from the exchange/clearer work over the life of the option, things like this.

depends on the liquidity of the market. if GBPUSD is 1.4893/1.4898 then fine but if say some AIM stock is listed with a 70p bid offer spread on a £2 stock then you have to wonder what use just the bid price is.

 

[Technically Fundamental]

So slowing you down a bit there, ask would be best to check against intrisic value if you wanted a long position and vice versa?

 

[gooseman]

personally i'd want to know bid, ask and if it has traded at all and if so where.

 

[Technically Fundamental]

You have to have a reason for doing that trade... What options structure do you use? Put spread, puts, put fly etc then you have to understand the risks invoved with that trade i.e how much will it cost to put the trade on, how will the cash flow from the exchange/clearer work over the life of the option, things like this.

So this is where macro/fundamentals and the maths comes in. I have no idea what those option structures are by the way lol.

depends on the liquidity of the market. if GBPUSD is 1.4893/1.4898 then fine but if say some AIM stock is listed with a 70p bid offer spread on a £2 stock then you have to wonder what use just the bid price is.

I get ya...

So when you have DMA what does that show? bid/ask/mid?