Tag Archives: Quant opinion

High Frequency Trading: Wired Magazine’s take on it

Wired has written a long, widely-quoted and referenced article on HFT.

It’s a long one, but a good read over a cup of coffee if you’re so inclined.

The article includes some nice graphics showing just where the main HFT areas are (New York and Chicago are 3.9 milliseconds apart at the speed of light) and details the arms race between competing firms to get their data just a fraction ahead of the competition.

Would you believe that some firms are even considering using drones carrying microwave relay stations to ferry data signals across the Atlantic at the fastest possible speeds?

And that some entities have been trying to sabotage upstart exchanges competing with the traditional, long-established exchanges?

And that one day some hedge fund will want a particle accelerator to generate earth-penetrating neutrinos to ensure a faster time to exchanges on the other side of the planet?

To enjoy the original article, go here now:

Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading

 

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Fed up with high frequency criticisms? You’ll love this HFT rebuttal

Financial blogger Kid Dynamite has a great take on the real impact of HFT and blasts Chris Sparrow, a misinformed high frequency trading “expert” on many key points.

Some extracts from his post, the whole of which is well worth reading:

Sparrow complains that information distribution is unequal:

“It’s a fact of physics that someone will always have the information first.  I covered this more than two years ago and I see no reason to rehash it … The current disparity of ‘temporal access to information’ has been narrowed from 20 or more minutes to fractions of a second. That cannot possibly be the problem.

Sparrow claims that investors are losing confidence in today’s markets:

“We keep hearing about how investors are/(should be) losing faith/(confidence) in our markets.  The main reason they’re losing confidence in our markets is because people keep telling them that they should lose confidence in our markets.  Guess what – the retail investor positively DOES NOT CARE if some HFT algos want to quote a stock a million times a second.  Seriously – it has ZERO impact on us – we can’t even see it!”

Sparrow complains that HFT creates fragmentation:

“[Addressing price discrepancies across fragmented markets is] precisely the role that many HFT algos fill: arbing prices and maintaining order across trading venues – a necessity due to fragmentation! Market fragmentation occurred when firms began competing with the NYSE … “How do you put the fragmentation genie back in the bottle?”

Go and read the rest of this post so you’ll be armed with plenty of great rebuttals the next time someone takes you to task over the “evils” of high frequency trading as popularized by most of the mainstream media these days.

To read the original article, go here now:

Oh No – Another Post About High Frequency Trading?

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Quant opinion: Why 95% of novice traders lose their money within 1 year

Why 95% of novice traders lose their money within 1 year

blog.iticsoftware.com

It’s well known that 95% of novice traders lose their money within 1 year. But is this actually true and if it is, why is this happening? I believe it is true. And here’s why.More than 95% of

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Trading is hard, really hard and that is why most novice traders lose money. The fact that there are pretty much no barriers to entry is another key factor. Most other professions, you don’t compete against experience professionals from day one.

Everybody thinks they will be different – that they can skip the learning curve (myself included when I started) but the market usually tells you otherwise.

Another big problem is that novices want to leverage up right at the start and we all know what

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Why would anyone think it is easy to trade? In what other area of life can you spend a weekend training and then generate an income? People are far more lazy than they know, and want to be told what to do. I started as an options trader,and have done ok having enjoyed the learning and the trading journey.
I have offered many times to mentor other traders for free, but after one session they realize it is hard work. There is a small army of wannabe forex traders and I have yet to meet anyone who makes much out of directional trading, it is too hard to take the losses for most people. For us it’s

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I believe the 95% failure rate is true. And the biggest reason why the rate is so high is that the new trader has no idea how to manage risk properly……and they do not understand probabilities.

And of course they are usually under capitalized!!!!

The typical newbie is taught to seek 2:1 reward to risk trades from the beginning and that by itself will make them a losing trader from the onset…..or at best….a break even trader. And perhaps that would work if their win to loss ratio was high……but it won’t be….it will be inconsistent and low in the beginning.

And as far as risk is concerned….they will be taught to risk 2 to 4% on EACH trade…..and even at that…..they will ignore it and trade themselves into a hole and blow up the account in no time.

From there they will seek the latest and greatest indicator or magic system. And instead of sticking with one system and one market….they will bounce around looking for the Holy Grail.

If they were taught how to manage risk properly from the beginning and they were funded properly, they would have a chance. And then if they understood how to use multiple time frames to manage risk on the smaller time frames….and capturing higher profit expectations from the higher time frames…..well then they would have a chance to mature and become profitable.

The best advice for a newbie is to keep their daily risk down very low….like 2% per day maximum……and trade Forex with one market and use micro lots to keep the risk low and don’t think about the money. Just concentrate on proper execution, trade management and pips gained.

From there it will always be the same trades over and over again……except as the risk management allows….the lot size would increase over time….and the profits will grow at a very nice pace.

And the final word of advice for a newbie would be……use an exit system. Every trader concentrates on entry systems and hardly ever think of the exit.

Using a Parabolic SAR set at .02, .20 is very fast trailing stop and all by itself would show a newbie how to protect profits and remain disciplined on managing the trade. I use that setting on three time frames and manage my trades in 1/3rd’s…..except I stay 1 or 2 bars back from the current PSAR to prevent getting tagged by accident. I watch it real close when the price is approaching it……but will stay back a little just in case.

But by using a stop that is based on math…..you are not relying on emotions…..which is our biggest enemy.

And after all of that being said….it is pretty remarkable that something simple like a 50/50 game…..buy or sell…..win or lose……can yield a 95% failure rate.

It is if nothing else, a very humbling vocation 🙂

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Sorry…a correction for the settings on the PSAR above…..it should have been .05, .20. This step is faster but for a newbie they have a better chance of less whip saws and more profits.

I use it on three time frames so it works real well for me. (5 min, 15 min and 60 min) I enter with 3…..1/3rd positions and get to break even on the low time frame. Then 1/3rd uses the 5 min PSAR, 1/3rd uses the 15 min PSAR and the last 1/3rd uses the 60 min PSAR.

That allows the trade to run and grab higher reward trades……but the 5 min will put funds back into the account on a regular basis to finance the risk and the break even trades.

Sorry about the stting mistake above 🙂

 

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Quant opinion: A frikin Bakery?

Quant opinion: A frikin Bakery?

How does “opening a bakery” relate to Prop Traders???? What a shame. Adios Prop Traders

 

It’s a business,plain and simple and frankly I’ve met more dumb traders than dumb bakers.

 

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Youtube video quant opinion: Future meetups on how to trade with huge profits

Youtube video quant opinion: Future meetups on how to trade with huge profits

http://quantlabs.net/membership.htm

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

Quant opinion: Little hope for little trader streetcoup.com

Quant opinion: Little hope for little trader streetcoup.com

Traders that are new to the industry are too easily scammed into dubious trading products or subscriptions. So-called trading gurus permeate our society to exploit the starry-eyed eagerness of a trader trying to learn. It is…

 

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It is true that every where we look, someone is trying to sell us a new system or magical indicator. Some of these folks make their living that way because if they were honest you would find that they actually do not make that much money in trading. But they do make quite a bit selling indicators or courses.

Then the flip of that coin is that as traders, we all know how tough it is to learn how to trade. There are no short cuts either because it takes a lot of screen time and a lot of actual trading in order to find your methodology. And most traders are very willing to help new traders or other traders get on the right path. So not every one out there willing to help is a scammer…..but there sure are a lot of them.

I have followed so many top traders and their methods and after 12 years I would have to say that there are two that in my eye’s are worthy of being called a guru. Actually I could probably name six but two of them in my eyes have helped so much in how I view the markets…..that I just totally respect them and are extremely grateful that they shared their methods with people like me.

But in their eyes they are anti guru’s. And in fact both have developed tools to assist in trading as well, but it is not the tools that would bring you success…..it’s their belief that trading is a business and should be treated exactly that way.

If you ever wanted to explore what they have to offer….don’t rush and buy their products….instead research them and then buy their books. Learn what their method is…how they think….why they think that way. And during the course of researching them, you will be changed for the good in how you think as a trader. And they have articles that are out there that are free as well. So check out Robert Miner and Cynthia Kase. They are easy to find.

And I wish you all the best with your trading journey!!!!

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agree with your opinion about Robert Miner,

 

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And yet I have offered to mentor newbies for free-but when you mention options,their eyes glaze over. It is very hard work learning how to trade-as Van Tharp will tell you. I am happy to teach, passionate about trading and…I make money!
99% of people who express an interest are dead lazy and want someone to tell them what to do.Thinking that a weekend course will make them into a trader is absurd,yet they turn up to the snake oil salesman courses in their hundreds

 

 

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Quant Opinion: Liquidity Centers Are the First Step Toward Industry Utilities

Quant Opinion: Liquidity Centers Are the First Step Toward Industry Utilities

Liquidity centers will eventually become liquidity and utility centers for the equities markets.

Perhaps the term “liquidity center” is hype, Orwellian double-speak masking the fact that liquidity is no longer centered anywhere. Perhaps it is just clever marketing — a way to make data center sales sexier. Or perhaps it represents the opportunity to create the next-generation financial center.

wallstreetandtech.com

 

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There are parallels between what occurred in U.S. equity markets over the past decade and the opposing fates of city and suburban populations. Cities suffered net losses, in part because newly built infrastructure and transportation enabled worker mobility. In equities trading, cheap bandwidth, storage and computational power — coupled with well-documented regulatory mandates — allowed liquidity to shift to an increasing number of disparate execution venues. In the short-term, everything seemed swell: Kids had bigger backyards and spreads tightened.

 

 

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

Finding the idea trading mentor with this quant opinion

 

Finding the idea trading mentor with this quant opinion

streetcoup.com

If you adopt other people’s trading strategies, you are likely having a tougher time than figuring out a strategy on your own. Why couldn’t I simply signal my entries and exits for you to follow along? The strategy works for me…

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Trying to figure out a strategy on your own could take years..Why not shadow an experience trader to shorten the learning experience and at the same time develop your own unique trading style. I have developed a strategy which works for me, but I still feel it would be massively beneficial if I could test it againts an experienced traders own strategy. Theres always room for improvement I think.

 

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Your idea is precisely what I suggested. What is beneficial is to have a guide, but what can be harmful is to follow someone’s trades without understanding or a lack of willingness to understand the theories behind. The ultimate outcome must be a strategy that suits you personally,

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I’m actually looking for a mentor at the moment, but having difficulties finding one that trades currencies. Do you trade for a company or for yourself? What market(s) are you involved in

 

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I trade for myself and specialize on indices (futures and ETF). The principles of trend trading are the same in any market, though. Perhaps you can find someone who knows currencies inside out, otherwise you are welcome to contact me anytime.

 

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Tom Alexander at Alexander Trading Group is your man! Valid methodologies and a great mentor.

 

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To learn how to trade, you need to trade. I have not seen a good mentor yet!
I learned the hard way, all the money that was paid for instructors was a waist.

 

 

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

Quant opinion: Little hope for the little trader

Quant opinion: Little hope for the little trader

streetcoup.com

Traders that are new to the industry are too easily scammed into dubious trading products or subscriptions. So-called trading gurus permeate our society to exploit the starry-eyed eagerness of a trader trying to learn. It is…

http://www.streetcoup.com/2012/01/little-hope-for-the-little-trader/

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It is true that every where we look, someone is trying to sell us a new system or magical indicator. Some of these folks make their living that way because if they were honest you would find that they actually do not make that much money in trading. But they do make quite a bit selling indicators or courses.

Then the flip of that coin is that as traders, we all know how tough it is to learn how to trade. There are no short cuts either because it takes a lot of screen time and a lot of actual trading in order to find your methodology. And most traders are very willing to help new traders or other traders get on the right path. So not every one out there willing to help is a scammer…..but there sure are a lot of them.

I have followed so many top traders and their methods and after 12 years I would have to say that there are two that in my eye’s are worthy of being called a guru. Actually I could probably name six but two of them in my eyes have helped so much in how I view the markets…..that I just totally respect them and are extremely grateful that they shared their methods with people like me.

But in their eyes they are anti guru’s. And in fact both have developed tools to assist in trading as well, but it is not the tools that would bring you success…..it’s their belief that trading is a business and should be treated exactly that way.

If you ever wanted to explore what they have to offer….don’t rush and buy their products….instead research them and then buy their books. Learn what their method is…how they think….why they think that way. And during the course of researching them, you will be changed for the good in how you think as a trader. And they have articles that are out there that are free as well. So check out Robert Miner and Cynthia Kase. They are easy to find.

And I wish you all the best with your trading journey!!!!

 

 

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!