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There are many things that come into play when trading the SnP and money
isn't one of them. If your money management system or account size
won't let you trade then stay out. If you are a trader you don't
think in terms of money you think in terms of points or units or
deltas. The risk has already been calculated before you even started trading
the contract. That is the reason they give you chips in Vegas, so
that you won't think of the money. A chip has no value. There
are upstairs traders that are doing nothing but trading the spread between
the index and the future, using baskets of stock to represent the index.
There are traders in the pits that wait for very thin action to run the
markets up or down to trigger stops. The location of stops is no
big deal to figure out. There are those that are trading against
an options position. Remember one thing and that is that those traders
in the pit are always on the wrong side of the action. They are going
against what the paper flow into the pit is. If the public and upstairs
traders are buying, they are selling and vise versa. There are no
contracts to begin with, they are all created on the floor. Volatility
comes when the pit doesn't want to take the risk at the price. The
the price rises or falls till value is attained in the eyes of the trader
that justifies the risk he is taking or until an upstairs trader sees the
opportunity to trade the baskets. As long as there is a free
market the volatility and risk will vary depending upon the envisioned
risk to the trader. The reason they are better traders is because
they make those decisions ever minute and we only have to make them when
we want to. If they weren't good they wouldn't last very long, the wolves
would devour them. good trading, Ira
<P>Steven Buss wrote:
<BLOCKQUOTE TYPE=CITE> <FONT SIZE=-1>One often reads that in deciding
to trade the sp futures contract one is deciding to trade against the best
traders. (A statement to this effect was made recently on this list.)</FONT> <FONT SIZE=-1>My
question is this. In what specific (empirically verifiable) way(s)
is the sp contract different from others such that it is qualitatively
more difficult to daytrade? I'm interested in answers along the lines
of:</FONT> <FONT SIZE=-1>- The sp contract has a
greater dollar per average true range of bars that are day traded such
that one can lose a good deal of money quickly.</FONT><FONT SIZE=-1>-
The sp contract has a greater tendency for intra-day reversals than other
contracts.</FONT><FONT SIZE=-1>- The sp contract impacts
and in turn is impacted by a large range of other indices, markets, etc.
and it is difficult to monitor all these other markets at once.</FONT> <FONT SIZE=-1>Please
note that the question answers listed above are mere speculation on my
part about how the sp might be more difficult to daytrade than other contracts.
All these answers above may be correct; they also may all be wrong.
I have no idea. I just listed them to provide a sample of the kind
of answers to the question I was interested in.</FONT> <FONT COLOR="#000000"><FONT SIZE=-1>Thanks....</FONT></FONT>
<P><FONT COLOR="#000000"><FONT SIZE=-1>Steven Buss</FONT></FONT>
<BR><FONT COLOR="#000000"><FONT SIZE=-1>sbuss@xxxxxxxxxxx</FONT></FONT>
<BR><FONT COLOR="#000000"><FONT SIZE=-1>Walnut Creek, CA, USA</FONT></FONT></BLOCKQUOTE>
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</x-html>From ???@??? Thu Nov 26 12:44:37 1998
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Subject: Re: Why are the Big Pond Big Fish so Dangerous?
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<DIV><FONT color=#000000 face="" size=2>Although every market exhibits its own
personality I don't think that trading the SPOOZ is any more difficult than
trading other markets in fact it may be easier because of the greater liquidity.
As discussed previously on this forum you need a good sized trading budget to
trade the full size SPOOZ. Suggested minimums have been $60000 to $100000. That
doesn't mean that some aren't successful with smaller budgets but your odds
become worse and worse as your budget gets smaller. It takes time to get some
experience for trading, you just can't get it with $5000. </FONT></DIV>
<DIV><FONT color=#000000 face="" size=2><BR>Brent</FONT></DIV>
<DIV> </DIV>
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Steven Buss <<A
href="mailto:sbuss@xxxxxxxxxxx";>sbuss@xxxxxxxxxxx</A>><BR><B>To:
</B>RealTraders Discussion Group <<A
href="mailto:realtraders@xxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxx</A>><BR><B>Date:
</B>Thursday, November 26, 1998 10:40 AM<BR><B>Subject: </B>Why are the Big Pond
Big Fish so Dangerous?<BR><BR></DIV></FONT>
<DIV><FONT size=2>One often reads that in deciding to trade the sp futures
contract one is deciding to trade against the best traders. (A statement
to this effect was made recently on this list.)</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>My question is this. In what specific (empirically
verifiable) way(s) is the sp contract different from others such that it is
qualitatively more difficult to daytrade? I'm interested in answers along
the lines of:</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>- The sp contract has a greater dollar per
average true range of bars that are day traded such that one can lose a good
deal of money quickly.</FONT></DIV>
<DIV><FONT size=2>- The sp contract has a greater tendency for
intra-day reversals than other contracts.</FONT></DIV>
<DIV><FONT size=2>- The sp contract impacts and in turn is
impacted by a large range of other indices, markets, etc. and it is difficult to
monitor all these other markets at once.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Please note that the question answers listed above are mere
speculation on my part about how the sp might be more difficult to daytrade than
other contracts. All these answers above may be correct; they also may all
be wrong. I have no idea. I just listed them to provide a sample of
the kind of answers to the question I was interested in.</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT color=#000000 size=2>Thanks....</FONT></DIV>
<DIV><FONT color=#000000 size=2><BR>Steven Buss<BR><A
href="mailto:sbuss@xxxxxxxxxxx";>sbuss@xxxxxxxxxxx</A><BR>Walnut Creek, CA,
USA<BR></FONT></DIV></BODY></HTML>
</x-html>From ???@??? Thu Nov 26 14:44:33 1998
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Reply-To: ktata@xxxxxxxxxxxxx
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From: Peter G <ktata@xxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: GEN: Losing Psychology
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RTs:
Walt's tiger analogy is much like my own.. I think of cats however. Cats
will wait patiently for the right opportunity indefinitely. They are alert
to all input and are constantly evaluating the most economical expenditure
of energy possible to gain what they want. If the risk to reward looks
unfavorable they forfeit the position. They then may shake their body from
head to toe and literally "shake it all off." This way, they're already
prepared to act again. If they miss their quarry after striking, they'll
retreat to a non-threatening position and wait again. The loss means
nothing but more waiting.
My question relates to discipline and systems i.e. the discretionary versus
mechanical debate. Imagine trying to build an computerized cat. This would
be impossible with today's technonolgy. I am still trying to refine and
disclipine my psychology to the state that I want, but do not feel that I
can do this using a mechanical system.
Traders were around before systems, and markets are still non-linear today.
I have noticed a tendency for many to say that discpline can only be
evolved by using a mechanical system, however, many of the great traders
did not have this opportunity.
I tend to think that if even a simple Donchian 5-20 crossover system makes
you comfortable, then with risk control, confidence and proper application
you will probably succeeed. However, this doesn't mean that all types of
psychologies need to take this same path towards retraining their brain.
Some types of information are too complex or visual to be encompassed in a
simple Wintel platform running an Easy Language function. Some traders may
wish to follow Gann, Astrology and Wave theory, even when they are starting
out. As long as they exercise a respect for the process of losing and
control their capital wisely, they can just easily be there when the
"discplined" position arises.
In my previously mention ill-fated stab at daytrading, I was under
capitalized and was also lacking certain filters that would have stopped me
from overtrading. I was not being a cat: pouncing too often at quarry which
I could not outrun. For me to succeed, I will need to capitalize my
account, inplement modifications of my strategy and I doubt that telling
myself "I'm a loser" will help, maybe "I could lose these next 8 trades in
a row - statistically - and should be prepared for it."
PG
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