Cash or Crash?

The trading blog read only by very nice people!

Archive for January, 2010

Cold, and getting colder!

Posted by robbiechicago on January 9, 2010

Like most of you, I’ve done no trading for what seems like ages thanks to the freezing weather.  Most days have had just one meeting, a scenario which makes for unusual and unpredictable trading, so I left well alone.  I also ignored those days with two meetings just to be on the safe side.  I can see lots of frustrated traders all clamouring for action which could lead to more weird happenings.  So Chicago Trading Central has been a quiet place of late.  I have considered looking at other markets, but I am reluctant to get involved with much in play trading.  Perhaps this is something I should look to change as I know that many successful traders do spread their talents widely, Peter Webb being a prominent member of this club, something he commented on today.

Something else I’ve been working on is spending time analysing the relationship between weight of money and price movements.  I have come to realise over the last couple of weeks that my trading is based far too much on hunches and reactionary moves, and not enough on considered reading of market data.  I know now that this has to change if I am to be successful.  Relationships between WoM and price can be seen, but I wonder how indicative they are in real time as opposed to after the event when the whole market can be seen.  What I mean by that is it’s easy to say “yes, that spike in WoM clearly contributes to the price drifting” when you can see the full extent of the WoM and the complete drift.  But what about all the smaller spikes and troughs that, in the bigger picture, are easy to ignore?  How does one filter these out in real time?  It all goes back to my previous post about finding a way to ascertain what is a genuine move and what is red herring.

The prospect of trading in the near future looks slim.  The weather looks set to continue to disrupt things at the courses, and now it’s also scuppered things for me.  My boiler packed up yesterday, so now I have no central heating or hot water.  This would be bad enough in such cold weather, but the fact that the damned things is less than 2 and a half years old makes it even worse.  And getting a plumber out seems to be more difficult than it should be.  I may end up retreating to my mum and step-dad’s house for a while until the temperature increases.  The problem with that is that their internet connection isn’t all that great so even if there is more action with the horses I’d probably not risk trading.

Hey ho!  Lets hope things improve soon.  Brrrr!

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Frozen out

Posted by robbiechicago on January 4, 2010

Happy New year everyone!  Shame there’s only one meeting today.  I think I’m going to take the day off as I would imagine having such little action the markets will be a bit weird.  So I’m going out to play.  If only there were some snow…

Thanks to those of you who commented on my previous post.  But the consensus view that I should be using small stakes only serves to highlight the utter frustration I sometimes feel.  I did exactly that not long ago, dropping back to £2 stakes, starting from scratch, going back to basics.  That went pretty well, I reeled things in nicely and, after a few weeks, began to up my stakes again.  I’ve been there and done that.  Do I really want to go back?  I’m not sure, but I guess if I have to then I have to.

The other point about finding an edge is very important.  I think this baffles me a bit, to be honest.  I know how certain races are likely to behave, but that’s about it, to be honest.  What I can’t seem to do is predict which way a swing is likely to go, or filter out the real swings from the red herrings.  I am sure the successful traders don’t hang around and wait to see if a move will develop into a full swing.  If they did, they’d miss most of the move.  So how do people know?  Maybe they don’t.  Maybe they jump on any move and get out immediately if it doesn’t instantly progress.  Again, this gets to the nub of one of my problems, in that I get hammered in volatile markets.  If it starts to move I’ll leap in.  I’ll maybe pick up a couple of ticks, and then they’re gone straight away and the market moves the other way.  So I get out and try again, time after time, with the same result.  This leads to several small losses which, of course, added together, make a bigger loss.  Not only do I not know how to profit in such an environment, I also don’t know how to identify this market until it’s too late.  I’ve seen, and been burned by, false swings by the time the volatility becomes apparent.

So, do you play the waiting game, watch the market and see what it’s doing before entering, but risk missing out on what maybe the only decent swing?  Or do you take any opportunity you see in order to maximise your chances of catching a move, but risk hitting a string of false swings?

This all needs some thought.  Any successful traders out there have space for a spectator?  I’d love to see how it should be done.

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