Everything Looks Perfect From Far Away

Added on by C. Maoxian.

Great cover ... love this girl's voice, reminds me of Tracyanne Campbell's (of Camera Obscura) ... hilarious crowd shots in this video ... when I was a kid, we took a trip to Scandinavia and were in Finland ... we took a public bus somewhere and had to walk to the back of the bus, and when we got to the back, my family spontaneously burst into laughter because we'd never seen a more grim-looking group of people in one spot -- sort of like this crowd of killjoys. The hipster band's energy offsets them well. 

Notes for Chat with Traders, Episode 148

Added on by C. Maoxian.

Episode 148 ... John Grady (83:26)

  • 41 years old
  • Learned about Level 2 at prop firm in Colorado
  • Next worked at prop firm in Chicago
  • In Chicago was the first time he saw Depth of Market (DOM) for futures
  • [Has a southern twang, wonder where he's from?]
  • Look for big orders
  • Guys on the floor weren't geniuses, they just understood order flow
  • Left prop firm, on his own now for ten years
  • Order book also know as Depth of Market (DOM) matrix
  • When you see market orders wiping out limit orders, you know someone is moving size
  • Volume is most important, price chart doesn't represent volume as well as the DOM
  • Important volume to watch is at each price within the DOM (horizontal bar) 
  • Jigsaw is the DOM he uses
  • Trades Treasuries exclusively
  • Treasuries are liquid, logical and steady ... bank-traded and the banks are trading spreads 
  • Crude oil, for example, is thin and erratic ... easily manipulated
  • Can't ramp up your size trading gold, for example, you'll max your size at 10 or 20 contracts
  • With Treasuries you can trade 100 or 200 contracts the same way you can trade a ten lot
  • He trades outrights, only watches the spreads, doesn't trade them
  • Market context is important, depending on the regular news releases
  • No real average number of trades for him, can go from two to twenty trades a day
  • Extraordinarily boring to take three trades a day as an order flow trader, but that's the job
  • Trading requires tremendous patience and discipline
  • Almost all of his losses are the result of forcing trades out of boredom
  • People who trade from home need ten times the discipline (no in-office banter to distract them)
  • You start surfing the net out of boredom, that's the exact moment a trade sets up
  • When you see you've missed the trade, you chase, and end up losing (of course)
  • He might hold a trade for ten seconds to ten, twelve, twenty minutes
  • Market moves two ticks in his favor, he can always scratch the trade
  • On average holds trades three to twelve minutes
  • Retail traders try to trail a stop instead of just taking a trade off -- a mistake
  • If he gets out too early, he'll instantly re-enter
  • He figures out his trade size based on the situation
  • He think in terms of ticks, how many ticks will he possibly lose, sizes appropriately
  • Sometimes you need five ticks of leeway, just have to give it room, size appropriately 
  • Never move your stop loss
  • Don't turn a planned three tick loss into an eight tick loss by pulling your stop
  • He always places an emergency stop loss in the market (3-5 ticks away)
  • Manually figures out the exit, Treasuries liquid enough to do this
  • He markets out, doesn't want to chase out with a limit order
  • He always wants to use a limit order, but often circumstances don't allow
  • Use a market order to get the fill, sometimes you just have to pay up
  • He goes all in and all out, no scaling
  • Don't screw up your risk reward by scaling in or scaling out
  • Most people screw up scaling, they average losers and minimize their winners
  • Big differences among markets ... must choose the right market to trade
  • To trade DAX you need orders in the book, it can reverse in seconds ... too thin!
  • Automated orders are essential in thin markets like DAX or Gold
  • Liquid markets like Treasuries, S&P, Bobl, Eurostoxx, can use discretion, manually adjust orders
  • Try to watch total amount of contracts at each price
  • Specialize in one market, study that one DOM and only that
  • Same players in the same markets every day, they behave consistently
  • You must record your trading screen or do market replay
  • Pay attention to market turning points when you're watching the replay
  • Fast forward, rewind, pause ... study the replay closely.
  • You will learn more from watching replays for a month than you will from journaling trades for a year
  • You need a lot of study and screen time with a good DOM
  • Only three good depth of market providers:
  1. Jigsaw has inside columns, uptick/downtick splits are key column, exlcusive to them ($50 a month, stupid cheap)
  2. TT's X_Trader
  3. CQG
  • No subsititute for screen time
  • When learning, watch two to three hours a day, don't watch all day
  • Then open a live account and start trading one lots, enter the fire
  • Anyone trading a longer time frame doesn't need the DOM
  • Most people shouldn't swing trade: too many things can happen to take you out
  • HFT can spike things up and down in seconds
  • If you think you know where the market will be in two hours, you're delusional
  • People who understand fundamentals, that's a different kind of trading
  • Swing trading is the worst, just crazy that people try to do it
  • He's never met a successful swing trader, and he's been around awhile [me too]
  • You can predict the next six minutes better than you can the next sixty minutes
  • If you trade size, you can scalp for six cents ... sensible only with serious size
  • Fifteen or even ten years ago, the speed of trading very different
  • You could hit a big order as it was leaving, not anymore!
  • HFTs try to be in a breakeven trade immediately
  • HFTs will instantly scratch if they think they're on the wrong side [they never reveal scratch rate]
  • HFTs want to risk nothing to make something 
  • You need to be able to anticipate so much more in the age of HFT
  • There's a lack of volatility today too, so much volume now, nothing can run anymore
  • His edge is in his discretion
  • If AI develops that can replicate that human discretion, the human traders will not be able to compete
  • Best AI can already beat best human chess players, trading similar to chess
  • The big guys have the speed locked down, huge unfair advantage
  • Market makers game the time-price priority of the book
  • HFT get a free look from their constant partial fills [the bastards], you can't compete with that
  • By knowing your market, you can spot the spoof orders more easily
  • Spoofing happens all day every day
  • "Order Flow Basics" -- basic principles video
  • "Order Flow Scalping" -- a popular video of his
  • www.nobsdaytrading.com
  • Twitter: @nobsdaytrading

Movies Watched -- The Dark Horse

Added on by C. Maoxian.

124 minutes long so at least 24 to 34 minutes too long. A W.D. By movie (written and directed by the same person). It started off well. About a mentally ill Maori guy (New Zealand) ... one-time chess champion. You feel bad for him, mental illness is no joke. I was not aware of the whole Maori underclass thing, so that was enlightening. "Genesis" ends up finding some purpose in life by coaching a chess club for poor Maori kids. 

There are some good lines, some good scenes, but it ran too long. And it was kind of hit you over the head preachy in the end. I loved it at first, then only started liking it, and by the end, I wasn't that thrilled with it. If you're interested in mental illness, the Maori underclass, or chess, you might want to see it ... otherwise avoid it.

A king for a king

A king for a king

280 Killed Twitter

Added on by C. Maoxian.

Since Twitter rolled out the 280 character limit, my timeline has been destroyed. All of the charm and cleverness that the service once had is gone. I follow around 295 people ... about 25 have them have quit Twitter (since T___p was elected), and a half dozen or so have unfollowed me since I said I'd block anyone who tweeted >140.

This month I will systematically go through my following list and unfollow anyone who is tweeting over 140. I might end up following no one this way, but so be it.  You can rest assured that none of my tweets will ever exceed 140 characters. 

deadtwitter.jpg

Movies Watched -- Eye in the Sky

Added on by C. Maoxian.

Under the sacred 100 minute mark, so it had that going for it ... the end credits were like 10 minutes long. Sort of reverse War Porn but I wasn't buying any of it. Somali Al-Shabaab Islamic crazies in Kenya ... Colonel "Big Balls" Mirren has finally tracked down several people on the "kill list" and it's time to take 'em out with a drone strike. Trouble is a bunch of Guardian-reading British politicians throw a spanner in the works when the collateral damage estimate comes in a tad high. They have to keep "referring up" to a higher level of Guardian reader to know "where we stand legally."

Jesse Pinkman is the weepy American drone operator accompanied by some big-eyed girl also given to tears. Look, the real drone guys would be high fiving each other given this opportunity... they would be chomping at the bit to blow away some bad guys after doing *years* of boring surveillance runs. Finally, finally we get to kill some people! Oh, there are some kids playing in the street nearby? Tough shit, this is war. The pan flute and violin score ain't going to tug on these heartstrings.

Do we have the authority to prosecute the target? Hell yes! And why are you talking like a lawyer, asshole? 

You remember we dropped two *atomic* bombs on cities *full* of civilians, yes? And you remember we fire-bombed every major Japanese city for THIRTY days straight (and the rotten bastards still wouldn't surrender?). Remember when we dropped hundreds of thousands of gallons of *napalm* (thanks, Dow Chemical) across the Vietnamese jungle? We're not going to go all weak in the knees because there's one kid selling a loaf of bread nearby. Got-damn weak Baby Boomers have ruined everything!

There are no beetle- or bird-sized drones. We don't have that technology yet. Shameless pandering to China scene where the US Secretary of State is playing ping pong there ... thankfully brief. Can't recommend this one ... it's unrealistic, the premise is bullshit ... and though it was not overly long, it could have been even shorter. 

Jesse Pinkman, teary-eyed drone operator

Jesse Pinkman, teary-eyed drone operator

Configurable Buttons at Interactive Brokers

Added on by C. Maoxian.

Took me about six months to set up my buttons the way I like them in Interactive Brokers' Trader Workstation (TWS). Here are all the things you have to figure out ... useful ones are Add Target Limit Order, Buy, Sell, Duplicate, Increase and Decrease (size): Modify, and Presets. 

button01b.jpg

Movies Watched -- Arrival

Added on by C. Maoxian.

116 minutes long so at least 16 to 26 minutes too long.

SPOILERS. Mind-bender movie. Alien invasion. If I understood it correctly, the aliens give the gift of their squid-ink language because they're going to need our help in 3,000 years time. For learners of their language, time becomes non-linear. Does this make sense? Wouldn't that change the whole nature of life on earth? I wasn't thrilled with this. 

Have I seen Amy Adams in anything before? Can't remember. Also stars Jeremy "Ugly Bourne" Renner, Forest "Sleepy Eye" Whitaker -- a token black guy who surprisingly isn't killed, and the charming Jewish mobster, Arnold Rothstein -- here a CIA agent. I recognized no one else.

There's a large and annoying part given to China and their "General Shang" in a shameless kowtowing attempt to be chosen as one of the handful of American movies that the Chicoms allow into their protected market. On par with "The Martian's" kowtowing -- disgusting.

If it were 20 minutes shorter and cut out the Chinese, I could give it a sort of weak yellow rating, but as it is, this gets a red AVOID rating. 

"If you had your life to live over again...."

"If you had your life to live over again...."

Movies Watched -- The Witch

Added on by C. Maoxian.

I haven't watched *any* movies from 2016 so I'll start to work my way through the top 100 now. 

92 minutes so within the sacred 100 minute mark. I was a little leery since The Witch is a W.D. By movie (written and directed by the same person, which means it's their baby, for good or ill). Surprisingly, I enjoyed this one. I'm not big on horror but there were no jump-scares or other cheap ticks in this movie, thankfully ... it's more of a witchcraft thing ... 1630s America, you know, 60 years before the Salem Witch Trials. Well plotted, well acted, well done ... and scary. 

Don't see it if you're sensitive ... kids definitely should NOT see this ... but if you're a jaded old guy like me, you will enjoy it. 

Wouldst thou like to see the world?

Wouldst thou like to see the world?

Notes for Chat with Traders, Episode 89

Added on by C. Maoxian.

Episode 89 ... Blake Morrow (80:41)

  • Lives in Phoenix, Arizona
  • Went to college after getting out of military
  • Mid-1990s, stockbroker friend asked him to join firm since he had gift of gab
  • Got the job, got Series 7 and 63
  • He was good at selling over the phone but he wasn't interested in the job
  • Stockbroker friend sat with market maker for several months, learned to trade
  • SOES Bandits from Block Trading made front cover of Inc. Magazine [I remember it well]
  • Went to Scottsdale office of Block Trading and started day trading
  • Lost 60% of his account in first six months, rich guy had staked him
  • Turned things around, did well for himself [doesn't say how?]
  • Moved to Dallas, opened a day trading office
  • Sold direct access trading company to Wize Trading Group
  • Been with Wize Trading Group ever since
  • No Pattern Day Trader rule when he started
  • Was using 20:1 margin in the early days
  • No one traded from home, didn't have the technology, would go to an office
  • First book he read was Mark Douglas' Disciplined Trader
  • Rich guy who staked him also paid for Blake's education with various chartists
  • Rich guy wasn't too alarmed when Blake lost 70% of his money in six months
  • Blake was 26 or 27 when he started [born 1970?]
  • Dot com boom bailed him out, Blake did well, rich guy did well
  • Blake ate a lot of ramen noodles, peanut butter, and bread during lean times
  • Mom had a rental property in Phoenix which she let him use at favorable rate
  • If you want to trade for a living, can't be stressed out by the money
  • Blake was young, no family, no kids, could take a lot of risks
  • He was lucky to have caught some dot com stocks which gave him a cushion
  • Backbone of his trading: patience, waiting for the market to set up
  • No trader education back then, he just learned by trial and error
  • Let the trade come to you, don't chase
  • Risk-reward a concept he picked up early in his career
  • His buddy who sat next to him acted as drill sargeant and trading companion
  • Learned by studying charts, which were taboo at the time
  • 2003-2004 stopped trading stocks, started trading currencies exclusively
  • His analysis isn't fancy, same as 20 years ago
  • Matches up indicators and trendlines which causes him to act
  • Looks for pullbacks, Fibonacci levels 38% 50% 62%
  • Matches Fib levels with trendlines and indicators like the RSI
  • Trading isn't glamorous, it's boring
  • Everything in nature has some Fibonacci relationship
  • Human emotions also have Fibonacci ratios [things that make you go hmmm]
  • Fibonacci retracements and extensions places where human emotions are
  • Fibonacci confluence or clusters are things you look for
  • He wants to buy what people are selling and sell what people are buying
  • Managing risk an important part of trading
  • Looks at Fibonacci clusters as a "zone"
  • Japanese candlesticks are valuable tools, esp. the daily candle
  • Loves trading the markets, in front of screen 15 hours a day
  • Gets up extremely early since he's in Arizona
  • Has company called Forex Analytix with Nicola Duke and others
  • He's Chief Currency Strategist at Wize Trade Group, hosts webinars
  • Markets not like a bike, if you get off, you won't remember how to ride it
  • Have to stay engaged with the markets or you'll fall out of touch
  • Likes ForexFactory calendar
  • Likes ForexLive website
  • First question always: What is my risk? Where do you get out when you're wrong?
  • Don't risk more than 1% in a single trade
  • Don't paper trade, trade micro-lots instead
  • Have to feel the pain of losing $5
  • Save your money, you need more than the "minimum" to start trading
  • Practice using the platform with tiny amounts
  • Stay with big name currency brokers that are highly regulated
  • Swiss National Bank surprise decision wrecked some big UK-based currency brokers
  • Blake says some kind things to Aaron in parting
  • www.forexanalytix.com
  • Twitter: @PipCzar

Notes for Chat with Traders, Episode 44

Added on by C. Maoxian.

Episode 44 ... Michelle Koenig (66:57)

  • Has a finance degree from Montana State U.
  • Went into pharmaceutical sales
  • Got office manager job at Edward Jones
  • Went into software sales
  • Started trading part-time on her own 
  • Trial by fire, read message boards, had no plan at first
  • Started reading books on technical analysis
  • When she started, had no chat rooms, no mentors available
  • Longer learning curve back then, no one to bounce ideas off of
  • Software company she was working for ran out of money
  • Husband had full-time job, she had a backstop
  • Went from trading part-time to full-time
  • Started with $40K and more than doubled it to $100K within six months
  • Filled with overconfidence as a result
  • Got sloppy and lost all those gains and then some
  • Craved independence that trading gave her, has an entrepreneurial spirit
  • Need to be stubborn and resilient to make it as a trader, can't give up
  • Need to treat trading like a business: need a plan, strategy, rules, working capital
  • Keep losses small and move forward
  • Have to be able to take losses, can't "hold and hope"
  • Took three to four years before she became consistent
  • Emotional roller coaster of trading: euphoria to depression
  • Time in the seat helps with controlling emotions
  • Technical swing trader: flags, triangles, rectangles
  • Starts with daily chart, drills down to 60  minute chart, finds a level that makes sense
  • Uses 50 period EMA on 60 minute chart
  • Doesn't discriminate between high price low price, big float small float, etc.
  • Wants the move to happen quickly, ten days max
  • Swing trading is a more relaxed style, giving the trade time to work
  • Overnight risk of swing trading ... gaps above or below stops
  • Never holds through earnings
  • Likes bull and bear flag patterns best, and triangles too
  • If only had one thing to trade would be 50 EMA on 60 minute chart
  • Uses Stockcharts.com, been a member for 13 years
  • Loves looking at charts, like putting together a puzzle
  • Puts a number of indicators on daily charts: RSI, MACD, moving averages
  • On her 60 minute charts uses slow stochastic and 50 EMA
  • 95% technicals, 5% fundamentals -- will look at float, short interest, institutional ownership
  • Uses finviz.com to look at those fundamental statistics
  • Her day trading usually news-based
  • Winning day trades becomes swing trades
  • Exits hardest part of the trade for her
  • Uses combination of trend lines and moving averages to move stops up once profitable
  • Flags and triangles give a measured move
  • Give trades room and time to work, the trailing stop will take her out
  • Tries to keep things simple, don't want to be paralyzed
  • She's not floofy or fancy, likes things to be simple and clean
  • Looks at 300-600 charts a day ... antiquated process of flipping through them
  • Looks at percentage gainers for day trades at finviz.com, looks through charts manually
  • Uses ThinkOrSwim, loves the charting there
  • Chasing an entry is never a good idea
  • Don't try to catch the bottom or the top, just catch the middle of the move
  • Patience is important ... set your risk, follow your plan
  • Easy to be impatient when you're staring at a screen which is blinking constantly
  • New traders think that trading is easy -- they're WRONG
  • New traders don't understand their personality type and how it matches a trading style
  • New traders have no plan
  • New traders want alerts
  • New traders mix up their styles, try both day trading and swing trading at once
  • New traders jump from one strategy to the next
  • New traders want to trade stocks and options and futures all at once
  • Market extracts a tuition cost from every new trader
  • Down time very important for traders, get away from the screens
  • She walks away at the market close, might come back to screens in evening
  • Afternoons for riding horses, fishing, hiking, cleaning stalls [lives in Montana]
  • You need balance, don't be tied to the screens 12 hours a day 7 days a week
  • Taking breaks during the day also very important, go throw the dog a ball
  • Trading is lonely ... you're a hobbit in your cave
  • Participates in Traders For A Cause, Las Vegas event to raise charity money
  • Runs swing trading service, chat room, private Twitter feed, and has DVD for sale
  • www.tradeonthefly.com
  • Twitter: OffshoreHunters

Notes for Chat with Traders, Episode 94

Added on by C. Maoxian.

Episode 94 ... Kenny Glick (80:28)

A funny interview with a guy who must be right around my age, clearly a Gen-Xer. 

  • From Sheepshead Bay, Brooklyn
  • Did stand-up comedy when 19 years old
  • Opened up for Andrew Dice Clay, the "thrill of his life"
  • Did internship at Saturday Night Live
  • Hung out with Adam Sandler, had a lot of fun
  • Answered phone with stupid voice, got fired
  • "Who fires a slave?"
  • Worked on Jon Stewart show pre-Daily Show
  • Trading is hard but stand-up is harder
  • 5th grade math teacher did stock market project, Kenny got interested
  • Guy in suit at comedy club asked him to come sell stocks on Long Island
  • Turned out to be a boiler room, Kenny had to make 300 calls a day, paid $400 a week, hated it
  • Some guys from this Long Island boiler room opened another room, sponsored Kenny for Series 7
  • Kenny went 30 days without smoking weed before Series 7 exam
  • Kenny got 93 on Series 7, expected them to hold a parade for him, they laughed at him instead
  • Boiler rooms super shady, just pure fraud
  • "Don't put any of your friends or your family into this stock."
  • Kenny breaks into the schpiel he used as a boiler room man [I'm falling off my chair laughing]
  • Built a book of 80-100 clients, which was pretty good in 18 months
  • Noticed all slot machines in Vegas made by IGT
  • Recommended IGT to all his clients, one guy wanted to buy $100K worth
  • Movie Boiler Room dead-on, completely accurate
  • Knucklehead friend Ben made $25K a month doing boiler room sales, bought a Ferrari
  • "Rebuttal Book" the key to Ben's sales, no matter what the client said, he had a comeback
  • Kenny didn't like ripping people's heads off, he was just a funny guy, enjoyed schmoozing clients
  • 1992-1993, this was pre-SOES, pre-day trading
  • 1997-1998 Kenny started SOES trading with his Bar Mitzvah money 
  • 1998 Kenny started trading stocks on his own, quit the boiler rooms
  • Dawn of the Internet, mentions Netscape, Iomega, RealNetworks, Doubleclick
  • Saw the internet stocks jumping 10% a day, incredible
  • Adaptec, the SCSI drive, all these things started flying
  • "Once I learned about options, I got in trouble"
  • Developed a gambling habit with options
  • Got in a bad situation, wandered the earth 
  • Grew a beard, wore jeans shorts, Timberlands & Grateful Dead t-shirt [he hit rock bottom]
  • 1999 -- All you had to do was buy breaks of the previous day's high
  • Made $5-$10K a day, quit by 11 AM, would go to the park, smoke weed, and play hacky sack
  • Buddies at trading firm taught Kenny to think in "If Then" statements 
  • Trading buddy "Isaac" taught him never to rush
  • "It's better to be late and right than early and wrong." [Isaac is a wise man]
  • Isaac taught him about the "dash for trash" at the end of a bull market
  • Isaac told him in February 2000, "the end is near" 
  • Mentions CMRC, Crossroads, CMGI, SDLI ... Kenny started shorting them
  • Kenny made a lot of money on the dot com crash
  • But then he bought all the dot com stocks after they dropped 90% ... and then they went to zero
  • Akamai (AKAM) the only survivor that he still holds from that era
  • 2007 he had friends at Bear Stearns, they asked Kenny if he could find them a job
  • "Why are you asking an idiot day trader for a job?"
  • Shorted Bear Stearns on the basis of this
  • Didn't do as well on the 2008 Crash as he did on the 2000 Crash
  • Tried to pick a top in QQQ in March of 2011 or 2012?, position size 50x larger than usual
  • Got crushed, dry mouth, sweaty hands ... took only half off into the close
  • Gapped up the next day, ripped higher, his loss grew even larger
  • This experience turned him into a megabull
  • "The reason I day trade is to find swing trades"
  • Kenny tries to identify "exhaustion situations"
  • Trade from one consolidation range to the next consolidation range
  • "Analysts are paid shills"
  • Analysts only upgrade or downgrade stocks at the end of a move
  • Losers take a losing day trade and turn it into a losing swing trade
  • Losers take a losing swing trade and turn it into a losing investment
  • Kenny likes to take winning day trades and turn them into winning swing trades
  • Kenny will take off 80% of his winning day trade and hold remaining 20% as a swing trade
  • If the swing trade is a winning trade, then Kenny will buy call options 
  • Kenny prefers holding options instead of large stock positions
  • Once you find something that works, just do it over and over again
  • Trading should be boring
  • "I appreciate you having me on and shooting the shit like this"
  • Don't short until you see something gap up, roll over, and go red
  • "Let the top pick itself" -- another Isaac-ism [Isaac is a wise man]
  • You're never going to pick the top, so don't go broke trying
  • If you ever say "let's see what happens," get the hell out [tears of laughter rolling down my face]
  • You hear someone say they're stuck in a stock, you think, "Really? Rip the Band-aid off!"
  • If you're in a losing trade and mutter "let's see what happens," get out!
  • "What's the worst that can happen?" Get out!
  • Kenny has a list of stocks that he has "banned," refuses to trade them
  • Don't hang around all day watching the market
  • Once you win the money, you leave 
  • You don't need to trade constantly
  • Not trading is a position
  • If you're sitting at your computer between 11:30 and 12:30 or 2:30 PM, you're sick
  • "Flat, my friends, is a position."
  • Kenny runs a private chat
  • People can come and hang out with Kenny in his trading room for a month for free
  • "I'm a Jewish fellow [but] can make an amazing ravioli"
  • Can pay a one-time membership fee to be friends with Kenny
  • The hardest part is sticking to the concepts that you know work
  • Kenny says some kind things to Aaron in parting
  • www.hitthebid.com
  • Twitter: @HitTheBidRadio

Notes for Chat with Traders, Episode 139

Added on by C. Maoxian.

Episode 139 ... Bobby Cho (39:38)

  • Worked for Restricted Stock Partners which became Second Market, eventually bought by Nasdaq
  • Traded illiquid assets for these firms, trying to value esoteric stuff, on desk for six years
  • Discovered Bitcoin: just another opaque, illiquid market at the end of 2013
  • Worked for itBit, Bitcoin exchange domiciled in Singapore
  • Bitcoin missing infrastructure back then
  • Must establish exchange if you want to get institutional money into Bitcoin
  • itBit got first digital currency trust company charter, New York State Department of Financial Services-regulated
  • Gemini is the second company to go the trust company charter route
  • Now he works for DRW / Cumberland Mining
  • Lion's share of volume they do is Bitcoin and Ethereum
  • Cumberland Mining desk can handle institutional-sized cryptocurrency trades that exchanges can't handle
  • First thing you have to do is read the White Paper on Bitcoin
  • Bitcoin is a 24-7, global market
  • DRW Trading has a number of verticals: trading (HFT), real estate, venture capital, cryptocurrencies
  • Curious people are attracted to cryptocurrencies
  • Don Wilson is entrepreneurial and curious
  • Cumberland Mining -- no investors, shareholders or clients -- just trade their own book
  • Cumberland Mining was started in 2014
  • Market making in Bitcoin for block transactions, exchanges can't handle that size
  • Bitcoin is a push function, once you send it, it's gone ... scary to institutional investors
  • Bitcoin price discovery is still fluid, 200+ separate exchanges worldwide
  • Custody is the major issue with Bitcoin ... where to go for it? 
  • Institutional investors get nervous about custody issues, very leery of cryptocurrencies as a result
  • Top ten cryptocurrency exchanges all domiciled in different locations with different regulatory requirements
  • Liquidity completely fragmented
  • Every exchange has a different fee structure
  • Difficult even to wire money in and out of exchanges, different fees for each exchange 
  • KYC -- Know Your Customer ... all about compliance with anti-money laundering regulations
  • People are trying to arbitrage Bitcoin among exchanges, but not much of an edge there
  • People drawn to Bitcoin at first by the price volatilily -- pure speculation
  • Core investors in Bitcoin understand the technology, the ease of use, they're believers, not speculators
  • Bobby is just a Bitcoin market maker, won't speculate on its long term outlook
  • Twitter: @robertjcho

TV Shows Watched -- Fauda

Added on by C. Maoxian.

Watched season one awhile back and have been meaning to blog about it... this is the best TV show I've seen in a *long* time ... it's from Israel and it's about an Israeli counter-terrorism unit ... old readers know I'm not a fan of War Porn or anything that glorifies the Security State, but this is really well-done drama. 

Most important of all it shows you how absurd the Israeli-Palestinian conflict is. These are people who can't tell each other apart on sight, and they speak one another's language so perfectly that they can't even hear an accent! The root of the problem here can't be competing creation myths, it has to be about resources (land, water, capital, etc.)

Anyway, it's on Netflix and I can't recommend it highly enough. Here are my selected screenshots with comments: 

New Rules

Added on by C. Maoxian.

This young Albanian! lady (born 1995) has several 100,000,000+listens songs on Spotify, but this is the only one that I liked ... it helps that I've adapted the lyrics to incorporate all my stock trading rules: ♪♫♬My trading rules, I flout 'em.♪♫♬

Notes for Chat with Traders, Episode 71

Added on by C. Maoxian.

Episode 71 ... Eric Scott Hunsader (61:57)

  • Started programming in 1984
  • Programming then not offered in college, so he taught himself
  • Bought a book, C Primer Plus by Stephen Prata
  • Had written an oscillator in Lotus 1-2-3 spreadsheet 
  • Still uses C to this day
  • Used to read the Wall Street Journal, fascinated by that world
  • Traded for two and half years, made enough to live and buy more computers
  • Developed a love for writing software
  • Would always second-guess his trading system
  • Focused on writing code and quit trading
  • Used to use floppy disc to archive data
  • Sold that data online (long before the Internet)
  • 1989, Tom Joseph's [of Advanced GET fame] company called Trading Techniques was a data customer, hired Hunsader
  • Had real-time streaming charts using Compaq computer and a cellphone modem brick
  • CQG bought Trading Techniques and Hunsader worked for them
  • Three years later the Internet came along
  • Internet Revolution was obvious to him 
  • CQG cold to Hunsader's idea of internet-based real-time streaming charting application
  • Hunsader left and did it himself, wrote Java application called Livecharts, and desktop application called Qcharts
  • Quote.com saw Hunsader's programs and gave him a bunch of stock for the software
  • Within 18 months to two years went from 0 to 10,000 customers [and I was one of them!]
  • Lycos wanted to buy Quote.com out
  • Hunsader got Lycos stock in the buyout and he sold it all out in two weeks in December 1999 [great timing]
  • Then he founded Nanex in 2000
  • Wanted to design the ideal ticker plant, originally called it "Generation Five," with API on top of it
  • 25,000 hours later he was comfortable releasing it to first customer in 2004, called NxCore feed
  • Data Transmission Network (DTN) his partner then and still is
  • No advertising for his NxCore feed
  • Customers are hedge funds, institutional investors, high frequency traders, even the exchanges themselves
  • Working with the NxCore API is a joy 
  • An experienced programmer can quickly learn to get exactly what he wants from the NxCore feed
  • Other data feed providers normalize the data, NxCore doesn't
  • Data compression, data transmission and graphical interface all the important bits
  • "Serial latency cost" 
  • NxCore collects 20 billion data points per day, a petabyte raw
  • 1000 terabytes is a petabyte
  • Data is stored in triplicate in different locations
  • ARCA first place where he noticed penny up and down step patterns, someone testing something
  • Flash Crash the big event: May 6, 2010 ... SIP got crushed that afternoon
  • SEC couldn't even assemble the data to analyze the Flash Crash
  • Nanex could replay the entire day in real-time given their archived data
  • Analyzed the Flash Crash ... went down a rabbit hole from which he still hasn't emerged
  • ZeroHedge linked to the first analysis they posted about Flash Crash, then it all exploded
  • SIP (Security Information Processor) -- consolidated feed, should be the only feed but exchanges sell direct data feeds independently [the bastards]
  • US stock market has two data feeds, one is faster than the other
  • Reg NMS (PDF) brought high frequency trading into being
  • "Electronic trading brought down costs, high frequency trading brought down ethics"
  • High frequency trading is risk-free arbitrage, only possible since the exchanges sell direct data feeds
  • Exchanges collude with HFT by selling them direct data feed, which is faster
  • HFT has a wink-nod relationship with regulators, fined from time to time, no real change happens
  • HFT would be shut down if the regulators had any ethics
  • If there were a central limit order book, HFT wouldn't exist
  • Regulators wanted competition, multiple exchanges, tie it all together with SIP
  • HFT can front-run orders on one exchange and cancel their orders on another exchange given their faster feeds
  • When you talk about spreads, do you mean the spreads narrowest in a second or widest in a second? Can go from 1% to 1 cent in the space of second
  • "Quote-stuffing" is a term Hunsader coined ... Quote-spam
  • You slow down a data feed by quote-stuffing it ... more network traffic, like a tiny DDOS
  • Retail customers all working off the SIP ... HFT ahead of them
  • All about creating latency through quote-stuffing
  • Put noise into the system in order to slow it down
  • Must maintain latency tables ... must ping and test the limits all the time
  • HFT is theft and market-rigging ... visit the Nanex office for two hours and watch them at work in real-time
  • Everyone is a victim of HFT ... a billion paper cuts
  • You see things now, you think it's a bad tick, but it's actually 1000 trades going off, pennying down and back up in a half second
  • SEC says people shouldn't use stop orders anymore
  • Any retail investor who trades at the open is eaten alive
  • The regulators are corrupt, they get wined and dined by the firms they're going to work for when they leave the regulator
  • SEC gave Hunsader a $750,000 whistleblower award
  • The exchanges are the real culprits for selling a faster data feed for huge prices to HFT
  • Larry Leibowitz (brother of comedian Jon Stewart) is CTO at the NYSE
  • Leibowitz made fun of Hunsader as a conpiracy theorist on stage
  • Bill O'Brien has also argued with Hunsader; O'Brien a smooth talker on TV but just a soundbite bullshit artist, has no facts 
  • Exchanges are SROs (self-regulated organizations) ... means they can't be sued
  • Legal immunity exchanges enjoy has really destroyed things, the root of the problem
  • You need someone knowledgeable and with integrity at the SEC, then HFT will go away
  • Sarao being singled out like that [for the Flash Crash] is terrible
  • Hunsader offered to work at SEC for free, won't create any new rules -- offer met with dead silence
  • At least 500 trades within one second, spikes down and up, no net price change -- mini Flash Crashes happen all day long
  • Suckering people with these "poke plays" [as I call them] ... retail can't take advantage of these because they don't execute at all exchanges
  • These mini Flash Crashes never happened before 2007
  • Anyone with a standing stop order is going to get killed these days
  • Tight spreads being claimed by HFT are bogus given the constant mini Flash Crashes
  • People at IEX have integrity
  • All the exchanges' income comes from selling their faster data feeds to a select few
  • www.nanex.net 
  • Twitter: @nanexllc

Tramps Like Us

Added on by C. Maoxian.

Terrible video and audio quality, but this cover of an already great song makes it that much greater. Love that outfit too. 

TV Shows Watched -- Frontier

Added on by C. Maoxian.

Another Netflix original series ... six 45-minute episodes so not too great a time commitment ... and it wasn't terrible. I'm not usually big on "period" pieces, but the fur trade / history of the Hudson's Bay Company does interest me. One episode did have a gay porn vibe with the half-naked hero hung by his bound hands and tortured ... not that I've ever seen gay porn, but that's what I've been told it's like, by a friend, a very distant friend. 

My screencaps with comments below: 

Notes for Chat with Traders, Episode 62

Added on by C. Maoxian.

Episode 62 ... @chigrl (41:02) [recorded May 2016]

  • International relations major, Middle East focus
  • Sold medical supplies, "medical grade plastics," hated it, was living in Newport Beach
  • Quit job, moved to Chicago [what year was this?]
  • Knocked on every possible door
  • Begged for first job at a boiler room, later shut down by NFA
  • Nobody wanted to hire a woman
  • Making 200 calls a day trying to get Mom and Pop to part with 10 grand to trade options [laughing]
  • Her Dad was a commodities trader
  • Wanted to learn the industry from the inside out
  • Went from working as broker to working on trading floor
  • Clerked for Fed Funds trader
  • Moved to grains floor, was head of trading desk, when Fed Funds went to zero
  • Then moved to bonds floor
  • First ticket she ever wrote she wrote backwards, ended up being a 30K winner
  • Left the floor in 2012, started trading for prop firm, got funded
  • Being a prop trader forces you not to do "stupid shit" ... someone is watching you
  • She is an intraday, technical trader, but also has fundamental knowledge of oil market
  • She has a system, makes the same trade over and over again
  • Your worst enemy is your own head
  • If you have a system where you always take the trade, can take your head out of the equation 
  • Rotation levels, Fibonacci, volume profile, footprint -- these are what she uses
  • Fell in love with oil market, has traded for ten years straight
  • Doesn't trade crude during Asia hours ... too illiquid, a 50 lot can move the market
  • Crude is a "manic" market ... trades fast 
  • She's a market junkie ... 120 hour work week in front of the screens
  • After ten years of trading, you can "go with your gut" ... but not at the beginning
  • Government websites, esp. EIA, full of good information
  • Follow her Twitter stream since she tweets all the best information
  • [She has a smoker's laugh ... wonder if she smokes?]
  • Supply-demand drives the oil market, it's simple
  • Day traders trade what's in front of them, not the macro view
  • Twitter is invaluable, there are experienced traders on there, only dicks don't reply to your questions
  • Start with a mini contract
  • Have to find a system that works for you
  • Don't be afraid to lose money in the beginning
  • Successful traders don't care if you have two followers, they'll answer your questions
  • Key skill good traders have: patience, they wait for the market to come to them, they don't overtrade
  • She has a swing trading account and a day trading account, separately
  • Twitter: @chigrl