Proprietary Trading

[anonymous-user]

DonkeyApple said:

I'll be honest here and say that some of the things you mention above are a little concerning. Being incentivised through rebates is extremely dangerous and indicates that the firm is focussing on flow rather than performance/fees. That is only ever going to lead to fund destruction. Your mentor sounds like he is earning off your flow, so he is going to be running with a bias that will make him want you to create volume rather than profits.

Also, what does your $2.5/month buy you?

Maybe I didn't make it 100% clear. The shop isn't giving me incentives, it's purely a new trader thing from the CME group. My shop has nothing to do with it.

I have no doubt the shop is earning a pretty penny off every trader in rebates but equally they have some great traders here who I'm trying to learn from. Apparently one guy does 10% of the SPI volume most days, dreamy!

My mentor is just a complete tt some days who doesn't give anything other than tough love.

[R11ysf]

Mr fox said:

I'm sorry, but I have to disagree with March being an unreliable month. It has been absolutely fantastic if you know what your doing.
But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.

Regards
Mr Fox

What products are you trading and how are you trading it? Timeframes?

For someone like the OP who is talking about professional proprietary trading the biggest importance is volume. He is trading around 100 times a day and for that "not knowing how to read a chart" is rubbish. It is much more on volume and flow than knowing your head and shoulders.

If you look at volumes across all bond markets they have fallen dramatically since mid-march. Feb was an all time record for some LIFFE STIRs and March was probably 30-50% volume of Feb due to the uncertainty since Italian elections and the Cyprus issue. That is a massive drop off.

For people trading and not buy and hold investing, March and the start of this month has been slow. And that's from all the people I know in both futures and options.

[R11ysf]

FadeTrade said:

Apparently one guy does 10% of the SPI volume most days, dreamy!

Swiss Index or S&P?

Again, the reason shops tell you this kind of stuff is because they make money off volume. Find your own way to trade and remember volume and profit are not always linked.

We've had a few guys who've overtraded with different results. One guy came to us from a prop shop and couldn't help but click at Eurex the moment he was bored. I kept showing him that he was wasting money - as a trader you can only control 2 things: how much comes in and how much goes out! I showed him one week that he had traded more Eurex than the top 3 guys in the room combined and that our p&l was 25 times his. He didn't listen and in the end we fired him.

Another guy kept trading the 10yr too much and we pointed out how much he was dong in costs. He changed his style and in 1 quarter cut his 10yr volume by 25% and put his profits up 50%.

DOnkeyApply i sent you a PM.

[Mr fox]

FadeTrade said:

Mr fox said:

I'm sorry, but I have to disagree with March being an unreliable month. It has been absolutely fantastic if you know what your doing.
But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.

Regards
Mr Fox

Eh? Who said anyone was using a trending strategy?

No one, and neither did I. I was giving a very basic example to a reply to Donkeyapple whom said
"The market character changed in March after a pretty reliable 4-5 month focus"....Thus making the markets unreliable.

Regards
Mr Fox.

[Mr fox]

R11ysf said:

Mr fox said:

I'm sorry, but I have to disagree with March being an unreliable month. It has been absolutely fantastic if you know what your doing.
But if your using a trending strategy for a consolidating market for eg, then your making the most basic of errors which is you dont know how to read a chart.
P.S. Sorry for the thread hijack.

Regards
Mr Fox

What products are you trading and how are you trading it? Timeframes?

For someone like the OP who is talking about professional proprietary trading the biggest importance is volume. He is trading around 100 times a day and for that "not knowing how to read a chart" is rubbish. It is much more on volume and flow than knowing your head and shoulders.

If you look at volumes across all bond markets they have fallen dramatically since mid-march. Feb was an all time record for some LIFFE STIRs and March was probably 30-50% volume of Feb due to the uncertainty since Italian elections and the Cyprus issue. That is a massive drop off.

For people trading and not buy and hold investing, March and the start of this month has been slow. And that's from all the people I know in both futures and options.

I trade mainly £/$, but do look at 3 other FX pairs, FTSE, S&P, and US Oil. All over a 200tick timeframe. I would'nt class myself as an investor, but a amateur trader.

Regards
Mr Fox.

[R11ysf]

Mr fox said:

I trade mainly £/$, but do look at 3 other FX pairs, FTSE, S&P, and US Oil. All over a 200tick timeframe. I would'nt class myself as an investor, but a amateur trader.

200 tick timeframe is not the same as what the OP does. In my mind that's a long term trader, OP is a scalper who would have been long and short 100+ times in 200 tick ranges.

[anonymous-user]

R11ysf said:

Swiss Index or S&P?

Again, the reason shops tell you this kind of stuff is because they make money off volume. Find your own way to trade and remember volume and profit are not always linked.

We've had a few guys who've overtraded with different results. One guy came to us from a prop shop and couldn't help but click at Eurex the moment he was bored. I kept showing him that he was wasting money - as a trader you can only control 2 things: how much comes in and how much goes out! I showed him one week that he had traded more Eurex than the top 3 guys in the room combined and that our p&l was 25 times his. He didn't listen and in the end we fired him.

Another guy kept trading the 10yr too much and we pointed out how much he was dong in costs. He changed his style and in 1 quarter cut his 10yr volume by 25% and put his profits up 50%.

DOnkeyApply i sent you a PM.

ASX/S&P. His limits are 1,250 Aus 10yrs and 1,500 ZN I think.

I'm definitely learning, less is more as some days I just burn brokerage. I remember the days on the sim when bro wasn't counted lol.

[anonymous-user]

R11ysf said:

200 tick timeframe is not the same as what the OP does. In my mind that's a long term trader, OP is a scalper who would have been long and short 100+ times in 200 tick ranges.

Yep, although I'd dream of a 200 tick range in ZN!

[Mr fox]

R11ysf said:

Mr fox said:

I trade mainly £/$, but do look at 3 other FX pairs, FTSE, S&P, and US Oil. All over a 200tick timeframe. I would'nt class myself as an investor, but a amateur trader.

200 tick timeframe is not the same as what the OP does. In my mind that's a long term trader, OP is a scalper who would have been long and short 100+ times in 200 tick ranges.

Ah I see. Thanks for clearing that up, but I would say that a 200tick is near enough the same as a 5 min chart, so it's not long term position trading that I do, but more intra-day.

Regards
Mr Fox.

[Mr fox]

[quote=R11ysf]

Having 25 up days in a row means you aren't trading big enough. There is no point getting to the end of good run and then only to have it wiped out in a few bad days or one day when you upsize.

I really find the above statement very perplexing, and was wondering if the author can clear this up for me.

How on earth does having 25 up days mean you are not trading big enough. Say for eg. Everyday your maximum drawdown is 2%, and every trade you risk 0.5%, and even if you just hit 0.5% every day, that means over "25 up days" your up 12.5%. How stupid would you have to be to wipe all that out in one day when you up size. Even if you double your risk %age wise your not going to increase your daily drawdown to 4% are you. If that is the case then it all comes down to very bad risk management IMHO.

Regards
Mr. Fox.

[anonymous-user]

You're thinking retail FX terms.

For me, there is no such thing as risk '0.5% ' of my a/c. For a starter, I have no balance apart from my own personal P/L. I am allocated a maximum number of lots to trade and that is reviewed based on my progress.

I'm pretty sure, R11 doesn't think in terms of % either, happy to be corrected though.

[Mr fox]

FadeTrade said:

You're thinking retail FX terms.

For me, there is no such thing as risk '0.5% ' of my a/c. For a starter, I have no balance apart from my own personal P/L. I am allocated a maximum number of lots to trade and that is reviewed based on my progress.

I'm pretty sure, R11 doesn't think in terms of % either, happy to be corrected though.

Please excuse my nievity, and intrigue, so how do you determine how much you are going to trade "risk wise" per trade.

Regards
Mr Fox

[anonymous-user]

Mr fox said:

Please excuse my nievity, and intrigue, so how do you determine how much you are going to trade "risk wise" per trade.

Regards
Mr Fox

I have a set number of lots to trade. For example, 1 lot on Aus 10yrs is currently $47 per tick. US 10yrs are $15.63 a tick. From this I have a daily stop and it is my discretion how many lots I wish to trade per clip. I usually have 3 clips, meaning I'll enter on 1 clip (i.e 5 lots) and then use a 2nd clip and sometimes a 3rd. So I'll be long or short 15 lots on the spread or an outright. I am not allowed over my daily stop so I have to use my ability to avoid that and ideally make a profit!

[Mr fox]

FadeTrade said:

Mr fox said:

Please excuse my nievity, and intrigue, so how do you determine how much you are going to trade "risk wise" per trade.

Regards
Mr Fox

I have a set number of lots to trade. For example, 1 lot on Aus 10yrs is currently $47 per tick. US 10yrs are $15.63 a tick. From this I have a daily stop and it is my discretion how many lots I wish to trade per clip. I usually have 3 clips, meaning I'll enter on 1 clip (i.e 5 lots) and then use a 2nd clip and sometimes a 3rd. So I'll be long or short 15 lots on the spread or an outright. I am not allowed over my daily stop so I have to use my ability to avoid that and ideally make a profit!

Seems very confusing if you don't know all the variable's involved. I think I'll stick to retail FX, and grab my daily target of 2-4% with 0.5% risk. Well I wish you all the best, and hope it works out for you.

Regards
Mr Fox.

[R11ysf]

Mr fox said:

Seems very confusing if you don't know all the variable's involved. I think I'll stick to retail FX, and grab my daily target of 2-4% with 0.5% risk. Well I wish you all the best, and hope it works out for you.

I think Fairtrade understands what I was saying with that statement. I think when I wrote above that what you do Mr Fox is not trading as I know it and not trading as those who would call themselves professional traders would. Yours is more investing or risk allocation.

When you trade you see different levels of opportunity every day and I never have time, or would let alone dream, to figure out 0.5% risk allocation on the next trade. We react to market conditions real time.

So as an example, if the Aussie Central bank cut rates without notice then Fair Trade is going to buy as many AUD 10yr bonds as he is allowed because it is a 99:1 bet. There is no point only wanting to risk a certain allocation - it's a retirement trade. You could make 1 month's or 1 year's p&l in 1 minute.

That is trading. Looking at charts, pre-planning your entries and risk capital is investment/risk-allocation.

[Mr fox]

R11ysf said:

Mr fox said:

Seems very confusing if you don't know all the variable's involved. I think I'll stick to retail FX, and grab my daily target of 2-4% with 0.5% risk. Well I wish you all the best, and hope it works out for you.

I think Fairtrade understands what I was saying with that statement. I think when I wrote above that what you do Mr Fox is not trading as I know it and not trading as those who would call themselves professional traders would. Yours is more investing or risk allocation.

When you trade you see different levels of opportunity every day and I never have time, or would let alone dream, to figure out 0.5% risk allocation on the next trade. We react to market conditions real time.

So as an example, if the Aussie Central bank cut rates without notice then Fair Trade is going to buy as many AUD 10yr bonds as he is allowed because it is a 99:1 bet. There is no point only wanting to risk a certain allocation - it's a retirement trade. You could make 1 month's or 1 year's p&l in 1 minute.

That is trading. Looking at charts, pre-planning your entries and risk capital is investment/risk-allocation.

Ah I see. Well I'm not a professional like yourself, or others on here, but a mere amateur, so can't really argue with your definition of whats a trader, and whats a investor/risk allocator even if my thought was different, but may I just ask with the example you've gave above, would you not have a stop loss, or target at all.

Regards
Mr Fox.

[R11ysf]

Mr fox said:

Ah I see. Well I'm not a professional like yourself, or others on here, but a mere amateur, so can't really argue with your definition of whats a trader, and whats a investor/risk allocator even if my thought was different, but may I just ask with the example you've gave above, would you not have a stop loss, or target at all.

Every day is different. When you are starting out having defined rules and targets is a good idea. Once you've been doing it a while "rules" are more fluid and targets can in fact be restrictive. Some days you walk away down 10k and think you've been lucky. Some days you walk away 50k up and think you've left money on the table. It is almost impossible to go in and say "I am going to made a grand a day everyday this week" because the markets are so constantly vairable.

Stoplosses are in place because rule number 1 is you always want to live to fight another day, but again they vary between trader and trading style. Some keep them tight and cut losers quickly, other people have them wide and prefer to average or trade around their positions.

[Hoofy]

Out of interest, does your style trading involve DOM ladders? Is that what you're doing, looking at the money sitting on each side?

[anonymous-user]

Hoofy said:

Out of interest, does your style trading involve DOM ladders? Is that what you're doing, looking at the money sitting on each side?

Trading the DOM alone for me doesn't work. Too many algos and spoofing. I've heard it used to be a lot easier a while back but not so much now.

Advantage of DOM for me is seeing weak bid/offers and getting good queue in, especially as I'm such small fry. I can flick the bid/offer back and forth occasionally.

[Hoofy]

FadeTrade said:

Trading the DOM alone for me doesn't work. Too many algos and spoofing. I've heard it used to be a lot easier a while back but not so much now.

Advantage of DOM for me is seeing weak bid/offers and getting good queue in, especially as I'm such small fry. I can flick the bid/offer back and forth occasionally.

Taken out of context this is so Betfair trading.

So apart from DOM what else do you use?