Friday, May 14, 2010

Friday Notes - Tidbits From the Jellie Tank

In today's video, I share some tips we discussed in the Jellie room today, as well as use the attached time-based P&L chart (click to enlarge) in terms of describing (1) today's market flow, (2) my style -- which despite last week's black swan won't change, and (3) the need to adapt on the fly.

I'm also very satisfied with reuniting with the Jellies in the ongoing networking room, and have put in three days of successively increasing profit since my return ... further confirming my feeling of sharpness and focus when there. 

And while I still need to ramp up the aggression, the market reads -- or adapting when wrong as discussed in the video -- have been solid.

Lastly, here's an article about the "whodunnit" trader who helped wipe out all of the ES liquidity during last week's meltdown.  Thanks to Ric from the Jellies for the link.  Now I can finally replace Bill Buckner's name on the office dartboard.

Please note I forgot to switch on the headset microphone in the video, so it was recorded via the webcam mike and is why it sounds as if I recorded it at either the Grand Canyon or the home of the Cleveland Cavs at about 10:30pm last night :-).


E-Mini Player said...

Hi Don,

How much room do you give your liquidity providing trades, and how many ticks are you typically looking to get out of them? For example, if you bought the bid, would you then immediately try to sell at the offer for 1 tick, or perhaps scale out by placing sell orders at every price up to 1-2 handles away? Or do you try to hold the liquidity providing trades for more gains? Last question, how much emphasis do you place on the DOM when executing your trades? IMO, 90% of the data displayed on the DOM is fake but curious to hear your view on it.

Thanks, and have a great weekend!

Don Miller said...

Hey there E-Mini -

I'm definitely not a single tick trader (too easy to get run over) ... instead looking for "wholesale" opportunities on various timeframes where the retail/late/losing/chasing/barfing (pick one) are trading on emotion or without anticipation.

The # of ticks depends greatly on the market, so there's no rule ... but I'm always exiting "into the flow". Today, there were MANY 2-5 point high % long opportunities. In the fall of 2008, it was 4-15!

In terms of the DOM, I use it for order entry and to "feel" the flow and liquidity, but agree the sizes are often fake ... EXCEPT in volatile markets where it's difficult for fakers to play that game as they risk getting hit.

One thing I love doing, as I did with the the ECNs when I traded stocks a decade ago, is sell large plony bids or buy large phony asks, as they're usually trying to force the action in the other direction. It's very true with the DAX.

On trend days like today (which you NEVER know until the day unfolds), I'll typically have 2-3 trades at most WITH the trend -- but hopefully hitting them hard -- as the retracements to wholesale trend points set up, and the rest of the time simply wait to take the other side when stuck traders can't stand it any longer.

As with anything, it's not perfect, but I'll go to my grave knowing trading is ALL about entering at "likely unsustainable market points" ... which can be with OR against the immediate trend.

Hope that helps.


E-Mini Player said...

Thx Don! And you're definitely right about them not faking the size in volatile markets. My charts actually froze up during last Thursday's insanity, so I was just trading off the DOM, getting in/out ahead of large size. I would never do that on a normal day. I haven't traded the DAX in years but your comment on hitting the size in DAX is applicable in the Crude Oil futures market. Once that large size gets chewed threw, price can move in that direction pretty damn quickly as stops are triggered behind the size.

Thx again, and enjoy the weekend!