View Full Version : Question for Elroy-E-Mini's

03-24-2002, 11:21 AM
Elroy, I just started trading the E-mini's to get my feet wet. Can you steer me to any online sites with either trading strategies or anything pertinent you would consider worth reading?

I've read many books on the subject, but I'm always looking for new and different ideas.

I use Interactive Brokers trading platform, and I like it a lot--are you familiar with it? What do you use?

Pit Bull is one of my favorite trading books, by the way. Marty Schwartz is great, and very funny.

"I'm going for the gold-Audrey! I'm going for the gold!"

(Read the book and the above line will make sense--funniest line in the book)

03-24-2002, 12:19 PM
The reason I recommended the old Paltalk.com e-mini chat room (I don't know where they are now), and Teachtrade, is because it's nice for once to, instead of just seeing the ticks on your screen, to hear people actually talking about buying and selling, to go with the ticks.

The other problem is that most of these traders who happen upon a way to make money, they don't really have any decent theory as to why what they are doing works. They have certain odd rules and habits - like don't buy after lunch during earnings season - but how much any one of these things actually adds to their bottom line is tough to separate.

The one thing I would recommend would be to start out working with 1-tick bars(!). And even, using Tradestation, try developing strategies and back-testing them on 1-tick and 10-tick bars. You probably won't find any algorithms that really make money, but writing and back-testing algorithms - and then seeing how various charts hit those algorithms - helps you develop sort of a concrete, systematic way of looking at charts.

Course, the primary problem with developing algorithms in the super-fast/micro profit window where individuals are king is that I don't know of any prepackaged software that timestamps ticks by any finer than minute resolution. And stocks do exhibit rhythm primarily in actual time, rather than in tick time.

My only thoughts on the platform are that 1) it doesn't take up too much space on your screen, if you are have limited screens, and 2) that the system the platform is attached to doesn't go down, obviously. And IB is not known to be very crashy, or even to get congested. IB's fine, and fast as lightening, I just like Refco, it's an irrational prejudice, I guess.

Only, I wouldn't know what IB's platform looks like today, I can't think of any broker that their platform has been constant over any length of time! Also, you should look into Tradestation, because they may offer you a better combined deal on quotes and executions.

Really, I guess the last thing I can recommend, if you aren't that familiar with trading, is that you can deduce where the unfilled buyers and sellers are by where the market does go, and where it doesn't go. You have to do a little mind-reading and say, if I were a buyer, I would hold out hope for the market to pull back to about here. If the market doesn't get there, there are buyers.

Then you have to ask yourself, okay, the market missed a pullback in rhythm, and instead rocketed upwards. Now, how did that up move hit trend traders, how many of them did it pick up? The margin of error between when hidden buyers miss, and when trend buyers front-running them hit, is very, very, very, very narrow.

In most situations, just using the charts, you will safely be able to say that about 12 buyers missed, and about 12 trend traders hit, for instance. So what? Meaning, it's pretty efficient. And my guess would be that Bradley Sullivan at Teachtrade plays this game as well as anybody, and he hasn't been exactly reeling it in lately.

But then you have this guy


and this guy


and 12 million dollars is a lot of money to push around, in S&P's, and still break even. And these guys are strict mechanical trend/chart, and way longer than the 1-minute timeframe.

But, keep in mind, all that advice is if you want to make a living, and pay a mortgage. If you just want to have some fun, and catch the kind of trades like Dr. Bill and I were talking about with that short on Friday, you gotta just cut loose and finesse it. If you can read minds on the macro level with any consistency, you can leave every other computer on Earth, and most other traders, in the dust.

Oh, one more rule. Figuring out where there are buyers and sellers, and when they will hit, are two different things. Like, I could say I think buyers would come in after lunch in this situation. But if there aren't any buyers, none will come in, even if they would come in there.

This finer point becomes more obvious when you think of, like, a Fed announcement. You don't have to be a rocket scientist to figure that whoever is lurking, they will hit after the announcement, or the next morning, so the trick becomes figuring out who is lurking, not when they will hit.

Finally, good luck. If you hope to make a fortune, you will be as disappointed as you would be if you hoped to make a fortune at the poker table. Your surviving opponents really don't make too many errors in the S&P, they pretty much walk the tightrope.

Oh, one last thing. If you can predict the day's range, you can make money. Because then all you have to do is predict when other people's systems will get all thrown into a tizzy expecting more action than actually materializes, and trade countertrend. So trade counter-trend after wide range days, or something, experiment. As long as you experiment with mini's, and don't get too confident:)


03-24-2002, 04:38 PM