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Kevin et all:
Lary Williams may be the "Ghuru de jour" when it comes to trading
imaginary $10,000.00 accounts into even more imaginary fantasy
$1,000,000.00 portfolios...
Any "old-timers" remember what happened to LW's last wildly
publicized "mega fund"? He was well on the way to destroying a
multi-million dollar discretionary account in less than 3 months
before they took the account away from him. How does the old
adage go? Those that can do & those that can't teach!
I have also heard that if he trades at all he actually "ghost"
trades. He hires CTA's to trade for him and then he claims the
credit & glory!
As an albeit neophyte "in the trenches style" trader I can take
my mistakes, "newbie" clumsiness, inexperience, and any
reasonable losses and drawdowns in my stride.
But nothing drives me into a fury more than "slippage". Spending
hours working on an approriate "strategy" on how to enter a
market, only to have my profits eaten away by some floor trader
getting fat "trading forward" on my stops! That just get's my
goat.
Nothing sends me to "DefCon 1" faster than seeing those early
morning "spikes" as the floor traders "run the stops" and blow me
out of a position that took me days to get into.
There is something extremely suspicious about the fact that my
broker only ever sounds "happy" whenever he calls in a fill
report with yet another $100, $200, $300 "slippage".
My day is then ruined by my havng to challenge the fill, asking
for official "Time & Sales" print-outs, filing a CFTC complaint,
etc. and then eventually settling for 50 percent of my own money
while my broker and the floor broker pockets the other 50 percent
of my money.
There just had to be another way, yet all the "ghurus" all echoed
the same dreary chorus "Only losers enter on limit orders".
Hmmm, then it struck me, "consider the source". None of these
"turkeys" actually trade! So why not do what the real life
traders do?
Well I tried entering on limit orders coupla times, my broker
even tried to talk me out of it (I wonder why?) and guess what?
"slippage" has totally disappeared. Sometimes I even get
"slippage" in my favor, and if the trade goes against me, my
losses are less than before.
The real reward is when my broker calls me back with my fill
report, in a disappointed, sulky, pouty, pissy voice that I got
"my price" yet again. The poor bastard is miserable because he
can't steal from me any more!
Whenever my broker is pissed off & miserable, I know I'm making
money.
Good trading to you all!
Tony
Kevin Morgan wrote:
>
> Subject: Re: Enter on Stops ?
>
> I have some alternative points of view re: entering on stops.
>
> I believe that Larry Williams' statement about "people using limit and
> market order entries are usually the losing traders" isn't a statement so
> much about limit and market order entries, as it is about the propensity
> of traders with limited experience and knowledge to use those techniques.
> I don't think it's appropriate to conclude from his viewpoint that therefore
> limit and market position entries are "not good" (in case anyone had),
> although Williams overall does seem to prefer stop entries himself.
>
> I usually (not always, usually) enter using limits, not stops. (And if
> I'm not entering on a limit, I'm usually entering on a market order.) My
> reasons for doing so are:
>
> * I get zero or negative slippage; I get in at or better than the price
> I want (and yes, sometimes I don't get in, and if I think the risk of
> that is high and I really want in, I use a market order; more below
> on that).
>
> * I usually get in at the bottom of the trading range, not the top. Since
> markets trade in ranges (even when trending) more frequently than they move
> in a "thin line", assuming ranging behavior and entering at the edge of the
> range is "safer" than assuming significant directional movement and
> entering on a stop when that directional movement occurs. To put it
> more specifically; when is a "resumption of trend after a retracement"
> really that versus the start of lateral ranging motion? In which case,
> I've probably just entered on a stop on the wrong side of the range.
> I've done that alot.
>
> * Relative to a "structural" (versus relative to entry price) target, I make
> more profit.
>
> * Relative to a "structural" (versus relative to entry price) stop, I
> suffer less loss.
>
> An example of such a trade is my short entry into December coffee today on a
> limit at 112.50. I think the market is going to range sideways a bit here, and
> I wanted in on the "upper" side of the probable range. Turns out todays high
> high was...113.00, I got lucky and called it pretty close (well, for today,
> we'll see what tomorrow brings!) With this entry
> I have the choice of scalping and exiting with a quick 500-700 profit
> (price closed at 110.45, so I've got an open $750 profit, which could
> disappear in a nanosecond tomorrow morning!), or hanging in there waiting
> for a resumption of a downmove. I'm going to do the latter, and I'll probably
> shoot for a profit target in the 106-108 range, which would give me a tasty
> (I like coffee!) 1500-2400 profit, IF things go per plan.
>
> I also entered today on a market order, short the December swiss franc.
> With Friday's big downmove, it appears (to me) likely that sometime in the
> next few days, SF8Z will get down to at least .6664 or so. It's got alot of
> momentum down. Given the size of Friday's move, I wasn't comfortable guessing
> todays level of retracement; indeed, none was possible. So I just dove in,
> with a pre-placed stop and a pre-placed limit buy for profit taking. Here
> I'm shooting for a very short term, quick $400-500 profit. Didn't
> hit the profit target today, but I have some confidence I'll get it in the
> next day or three.
>
> As for the point of view that entering a limit order means entering when
> the market is going against you: yes, tis true, from an intraday perspective.
> (In fact, a nice order would be a "limit-stop" order, wouldn't it?) But I
> don't view price action that way. I view it as a stream of vertical bars, and
> my point of view as a daily bar trader is to enter on the far side of the
> current (or expected) range, relative to where I expect the range to drift.
> So whether the price was moving up or down when I entered isn't too important
> to me. When I'm not expecting ranging behavior, and I think a move is afoot,
> that's when I tend toward market order entries.
>
> So there's some alternative points of view (with examples) to the "enter on
> stops" philosophy, which I find FOR ME as often as not lead to positions I end
> up not liking. It is a personal taste, experience, and philosophy of trading
> kind of thing, imo, not a right/wrong kind of thing. Maybe it's just that
> I don't feel comfortable with my skill identifying the lower risk stop
> entry points, but I do feel comfortable with my skill identifying the lower
> risk limit entry points. I have every respect for successful stop entry
> traders.
>
> -k
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