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Jim Noetzelman wrote:
> I trade on a short term swing timeframe. I'm convinced that on a DAILY
> basis, the floor traders have control, but can only hold it for so long. A
> great example of running stops is in the beans yesterday (Wednesday). They
> took out the low stops, and immediately took the market to the high end of
> the congestion, all done very quickly before settling down within the
> range again. They effectively have given themselves more room to play both
> sides as the range was getting smaller and smaller. Have a
> look...Sometimes I trade with physical stops, sometimes mental. Yesterday
> was mental or else I would have been taken out.....
Jim,
Having been a floor trader, I think the floor traders have minimal if any
control over the markets.
At best, they may be able to influence some fills for a few seconds during a
panic. But, in the greater scheme of things, they are really just pidgeons
waiting to be shot. The really big guns are the upstairs
money managers who usually have more money, better information, and a big
support organization, vs. the poor floor trader who is probably a self-employed
sole proprietor who can't schlep around a computer or TV so he can't be even on
equal footing for information with Joe Public Trader. The floor trader
survives strictly by his wits, proximity to the market, and ability to move
fast. It is a moment by moment survival game. One of the few tricks the floor
trader may have at his disposal is to try to play with the stops. This doesn't
mean he will be able to profit from it. But, during a difficult trading day, in
absence of Trade Station fitting in his trading jacket, triggering stops maybe
the only trick he has to play. In contrast, huge trading firms like Cargill
probably don't bother playing games with stops unless they think they can catch
an equally big fish. The big upstairs tradres concentrate on building longer
term positions in preparation for the larger swings. This is where the really
big money is made. Way to much is made out of the minutia of the market place.
Those who concentrate on such minutia are probably suffering from market
myopia. They need to step back and see the bigger picture. Suddenly, all those
little dots and pixels seem to form a picture!
Good Trading,
Norman
>
> ----------
> > From: cb <cpbow@xxxxxxxxxxxxx>
> > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > Subject: Re: Stops
> > Date: Friday, May 14, 1999 9:57 AM
> >
> > gary bodnar wrote:
> > >
> > > Hi all
> > >
> > > My gambler friend once wrote something about the stops..."It is like
> leaving
> > > your wallet on a street in New York City. You can be sure it will be
> gone."
> > > Prefer to use mental stops...
> > >
> > > Gary
> > >
> > >
> >
> > Seems to me that a mental stop only makes sense if you intend to
> > exercise a significant amount of discretion at the time it is hit, or
> > need to "work" the order because of large size. Otherwise it makes no
> > sense (to me) to not have the stop in the market. The market is going
> > to go up and down whether or not your order is in there. You might as
> > well be protected. The assumption I make is that the locals try to
> > guess what the market is going to do and part of that is guessing where
> > the stops are so they can get in ahead of time. I assume they don't
> > *know* the content of the floor brokers orders. Am I wrong??
> >
> > Are the locals doing the same things we are (a mix of trend
> > following/anticipating, support/resistance, breakout trading), just on a
> > shorter time scale? Or are they thiefs taking your money. With the
> > arguable exception of the true hedgers we're *all* trying to take money
> > from the other guy/gal. How you view the locals probably just depends
> > on how bitter you want to be.
> >
> > As a (not yet successful) moderately longterm trader, if I'm doing
> > futures I try to keep my stops out of the daily "noise" of the market
> > and even allow for some retracement. So I'm not impacted as much by the
> > intraday movement, or at least not as often. There are definately
> > exceptions, but a lot of times I am stopped out the trend has in fact
> > reversed. I may wish I had gotten out sooner, or not at the lower end
> > of the daily range that day, but many times the fact I'm out is good.
> > (Currently to due to very small size I'm just buying options - here i do
> > use a mental stop in the futures to tell me when to give back the option
> > since stops in options don't work very well.)
> >
> >
> > Conrad Bowers
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