When Trading Meets DividendWarrior

[CookieMonsta88]

Hmm? It's not about who's on which side of the trend; market-making algorithms skew their price depending on whether the algo itself is long or short. If the algo gets long, it'll move its price lower relative to the market at large so that it can get paid; vice versa if it gets short.



If your average trade lasts a month, then trying to chisel an extra tick or two out of the spread (and risking not getting filled) isn't a good idea. Don't worry about fancy market-making stuff. Just pay the offer.

when there is strong sentiment or fundamentals then the market trends, otherwise in markets with neutral sentiment, markets are more prone to false breakouts which mm hunts stops to make markets to satisfy the market participants, so it depends on the state of the sentiment, which defines the method of operating, so shading in trending markets is telling, of where the stops can be too and gives an edge as to where they market may head towards in the short term, perhaps for the 5min swings, if daytrading is part of ur bread and butter, this u must learn too.

well, its a method to cover my ass when things go wrong mainly. coz if i get the direction right, trading spot is much more profitable than options, its a way to control the risk reward.

 

[Shiny Things]

so it depends on the state of the sentiment, which defines the method of operating, so shading in trending markets is telling, of where the stops can be too and gives an edge as to where they market may head towards in the short term, perhaps for the 5min swings

This doesn't sound right. Firstly, I'm gonna assume you're talking about human market-makers. Algorithmic market-makers aren't programmed to hunt stops: they're designed to get given positions (as opposed to actively taking positions) and then get out of them as fast as possible. Hunting stops requires taking a position, and you never want your algos to be actively taking positions; you leave that to the human traders.

But even with human traders, skewing your prices isn't going to help to ping stops; you need to actively pay the offers/hit the bids, instead of just passively adding liquidity.

Think about it this way. Let's say you're a market-maker, and you've got stops above the market. If you shade your price higher, to move the price toward those stops, you're going to get given because you're bidding better than the market. But the problem there is that now you're long, so buying more (to trigger the stops) is going to get you really long - longer than your risk limits will allow, usually.

When you're hunting stops, you have to actively buy - you have to pay the offer, to push the price higher, so that you can sell to the buy-stop orders when you push the price high enough to set them off. If you just sit there on the bid and let the sellers come to you, you'll end up long, but you won't be actually pushing the price higher.

(And, worse, if you just sit there on the bid instead of paying the offer, you're going to get completely f*cked if someone comes in and hits your bid. That's not what you want to happen.)

well, its a method to cover my ass when things go wrong mainly. coz if i get the direction right, trading spot is much more profitable than options, its a way to control the risk reward.

Hang on - you're talking about market-making, right? Market-making is inherently always going to leave you on the wrong side if things go wrong: market-makers are selling options (in the form of liquidity provision). I'm confused here - how is market-making going to cover your ass?

 

[CookieMonsta88]

This doesn't sound right. Firstly, I'm gonna assume you're talking about human market-makers. Algorithmic market-makers aren't programmed to hunt stops: they're designed to get given positions (as opposed to actively taking positions) and then get out of them as fast as possible. Hunting stops requires taking a position, and you never want your algos to be actively taking positions; you leave that to the human traders.

But even with human traders, skewing your prices isn't going to help to ping stops; you need to actively pay the offers/hit the bids, instead of just passively adding liquidity.

Think about it this way. Let's say you're a market-maker, and you've got stops above the market. If you shade your price higher, to move the price toward those stops, you're going to get given because you're bidding better than the market. But the problem there is that now you're long, so buying more (to trigger the stops) is going to get you really long - longer than your risk limits will allow, usually.

When you're hunting stops, you have to actively buy - you have to pay the offer, to push the price higher, so that you can sell to the buy-stop orders when you push the price high enough to set them off. If you just sit there on the bid and let the sellers come to you, you'll end up long, but you won't be actually pushing the price higher.

(And, worse, if you just sit there on the bid instead of paying the offer, you're going to get completely f*cked if someone comes in and hits your bid. That's not what you want to happen.)



Hang on - you're talking about market-making, right? Market-making is inherently always going to leave you on the wrong side if things go wrong: market-makers are selling options (in the form of liquidity provision). I'm confused here - how is market-making going to cover your ass?

Hmm, OK, coz I was thinking human market makers when they are net long, can purposely bid prices higher just to reach the net level of buy stops and liquidate to them to square down, I played these setups before, quite profitable, they do it before big news releases to cover exposures. Its these moves I'm looking for.

Nop, I'm looking it as a possibility for risk control purposes, not really for market making

 

[Shiny Things]

Hmm, OK, coz I was thinking human market makers when they are net long, can purposely bid prices higher just to reach the net level of buy stops and liquidate to them to square down,

Yeah, there's a couple of things here:

1) If you're a small-time retail FX punter, your trades never get seen by a human. The thing on the other side of your trades will always be a machine; at the shop I used to work at, anything under $20mio went straight to the machine, and I know at bigger shops the cutoff is $50mio.

2) No no no no no. If a human market maker is already long, they won't get even longer to trigger a stop unless the stop is gigantic. If they're long, a market maker will try to sell to square up; that's what MMs do, they don't run positions.

Buying a truckload of spot to trigger stops is incredibly risky; you won't do this unless the stops are either monstrously large or very close by (within a tick or two), because the cost of getting it wrong is so huge.

 

[wahkao3]

Yeah, there's a couple of things here:

1) If you're a small-time retail FX punter, your trades never get seen by a human. The thing on the other side of your trades will always be a machine; at the shop I used to work at, anything under $20mio went straight to the machine, and I know at bigger shops the cutoff is $50mio.

2) No no no no no. If a human market maker is already long, they won't get even longer to trigger a stop unless the stop is gigantic. If they're long, a market maker will try to sell to square up; that's what MMs do, they don't run positions.

Buying a truckload of spot to trigger stops is incredibly risky; you won't do this unless the stops are either monstrously large or very close by (within a tick or two), because the cost of getting it wrong is so huge.

i heard there are dealer banks who market make in tiers of 20mil, 50mil, 100mil

you call them up and they quote you their spread. Then u You decide to buy or sell.


all in all, they go through all the effort to make 1 pip.

 

[neanea]

What is forex forward? How and where to buy this ?

 

[CookieMonsta88]

Yeah, there's a couple of things here:

1) If you're a small-time retail FX punter, your trades never get seen by a human. The thing on the other side of your trades will always be a machine; at the shop I used to work at, anything under $20mio went straight to the machine, and I know at bigger shops the cutoff is $50mio.

2) No no no no no. If a human market maker is already long, they won't get even longer to trigger a stop unless the stop is gigantic. If they're long, a market maker will try to sell to square up; that's what MMs do, they don't run positions.

Buying a truckload of spot to trigger stops is incredibly risky; you won't do this unless the stops are either monstrously large or very close by (within a tick or two), because the cost of getting it wrong is so huge.

1) doesn't matter if my trades are seen by human or not, i am not specifically and exclusively trading like them, i am trying to understand the information flow through them, and deciding what the next best course of action is, I'm looking at the large specs and market makers and sensing the information through the charts. the fact is, its possible to spot high probability areas which have clusters of stops around just by eyeballing the bare charts, as well as limit orders, just after the fact when the formation forms, to a high degree of accuracy. thats why double bottoms and double tops and the like even appear in the first place. coupling that with fundamental sentiments of the pair, its possible to understand what are the large spec and mm trying to do, all u need is to think like them, walk a day in their shoes and u will eventually trade like them. my style of trading is to feel the momentum and identify the stops, and create a trade plan from them. by being in harmony with the market makers and the large specs, u will understand their intentions and be able to trade with them, essentially its alternating between the mm and large specs seeing who is currently in control and going with them.

2) yes they will if they are desperate to liquidate their position into a huge amount of stops to square down, say 1hr or 30mins before gdp numbers release or nfp numbers release, by bidding up, and targeting stops above, say the 00 levels and liquidating into the stops there as for the other participants, they may not operate before the news or already have their position in already, and they too are waiting for the numbers and may not want to get in the way too as that itself is a lot of risk. either that, or they are initiating positions for orders coming in from large specs themselves, and i am saying that market makers are doing it to square down, so it will have to be large enough for them to square down otherwise why will they even do it and increase risk exposure in the first place?

3) i don't think u get my point though, because i never said my method is purely market making methods, coz its not, what it is is to understand the actions of market makers and large specs, and finding a way to trade along side them, and the best way is to be familiar with their method of operating, including stop hunting and more. as a small retail fx trader, the odds are stacked against u, so best way is to play it smart, and know when to press and when to bail, and the only way to do this is to recognise and read the situation the market is in, by having an innate understand and ability to look at the charts and understand the actions of each side of the camp bar by bar, and this is the essence of tape reading. if u can't win in terms of money, u have to win in terms of skill and timing.

 

[CookieMonsta88]

Sorry if I had skipped your main points. Interestingly, you have brought up a point: Whether someone with $10 mio will underperform someone with $20mio, solely on percentage basis?

not really, at that scale if anything, the 20mio guy might run into liquidity problems in less liquid products, so the 10mio guy may perform much better than the 20mio guy, but if we assume liquidity is not a problem, then both should perform just as well, the problem only kicks in when u have less than $1000 and each lot is say $300 margin and u need the extra cash to cushion paper losses, so the problem is undercapitalisation to be able to handle the short term market swings.

account size makes no difference at all if both traders have the necessary skills to be profitable. but when u are starting from a very very low funded position, say $100, and u are trying to make money in the markets, and even a little whipsaw from the markets can take u out, then u have no choice but to either 1) put in more money so u can handle the whipsaw 2) time the markets better and get into a low risk position because the big traders are defending the position with the limits, like resistance and support which just held and in the process of turning currently. seeing as 1) is not possible, u can only use skill and timing to be profitable.

but then when both traders are not as skilled, odds are the 20mio guy will outperform the 10mio guy primarily by sheer luck, just coz he got more staying power than the 10mio guy, and can take that extra 1-2 trades which could be big winners, which the 10mio guy can't

there would be the argument of anti-martingaling to handle such scenarios, but it depends, it definitely works on 20mio and such numbers, but for very small accounts, there is a limit to how small the minimum trade size gets, and even if u don't increase ur size, ur account size can grow smaller than ur minimum trade size, and that itself becomes a form of unintentional martingaling.

so it depends on ur account sizing. for me, I'm running small accounts assuming I'm being financially wrecked and can only afford $100, and see how long it takes me to bring $100 to whatever sum of money i can bring it to.

so end of the day, its dependent on ur account size, and how much risk ur method requires u to take and if u are well capitalised for the method.

 

[klarklar]

lol... You mistaken lah.

Yes, I do have great trades, but not all my trades are profitable.

Overall, my annual return from trading is around 2.5 times.

My investment portfolio return is between 7%-12%, inclusive of dividend.

Shiny has a fun club is because he's knowledgable and willing to share.

I'm not as knowledgable as him, so don't dare to share.

May I ask if your trading account is much smaller than your investment account? Is that why your trading gains in terms of % is so much more?

Wouldn't it make sense to allocate more capital to your trading account since it is vastly more profitable than the investment account?

 

[kazejin]

Guess trading opportunities tend to be more limited.
e.g. Can dump millions into a blue chip and hardly change market dynamics.

 

[CookieMonsta88]

May I ask if your trading account is much smaller than your investment account? Is that why your trading gains in terms of % is so much more?

Wouldn't it make sense to allocate more capital to your trading account since it is vastly more profitable than the investment account?

doesnt make sense to lump everything in trading unless u already have stable income of some sort else where unrelated to trading, investment gives u a safe guard, so even if u make -1% for that year, ur investment is giving u passive income so u can feed urself and maintain ur lifestyle, and sometimes if something happens in ur life which requires ur attention, and trading needs to take a backseat, u can go and handle it while ur passive income feeds u.

 

[alexchia01]

May I ask if your trading account is much smaller than your investment account? Is that why your trading gains in terms of % is so much more?

Wouldn't it make sense to allocate more capital to your trading account since it is vastly more profitable than the investment account?

My main objective is to use trading income to build investment wealth.

Trading is a job. It does not matter how much you make today, if tomorrow you stop trading, your income stop.

Investment is an asset. If i have enough portfolio that can give me a decent dividend monthly, if I stop trading tomorrow, this dividend can feed me and my family for many lifetime.

So it does not make sense to sell your asset to feed your job.

 

[Michyeosseo]

Guys..talking about dividends for passive income, i came across this article that say this Singaporean has managed to grow her portfolio to give her an annual dividend of $60K a year. I think can fight with Dividend Warrior, haha.

What's even more incredible is she manage to grow $112K to $1million in 7 years!

How a Singaporean Grew $112K to $1 Million in 7 Years | MoneyDigest.sg

Both got Starhub in their portfolio

 

[Dividends Warrior]

Guys..talking about dividends for passive income, i came across this article that say this Singaporean has managed to grow her portfolio to give her an annual dividend of $60K a year. I think can fight with Dividend Warrior, haha.

What's even more incredible is she manage to grow $112K to $1million in 7 years!

How a Singaporean Grew $112K to $1 Million in 7 Years | MoneyDigest.sg

Both got Starhub in their portfolio

I am nowhere near her level.

Her passive income is way beyond mine.

 

[frenchbriefs]

if u look at her portfolio,she bought over 400k worth of starhub stock and its nearly 70 percent of her portfolio,crazy lol.she must really love starhub from the beginning.

 

[frenchbriefs]

is it me or does her portfolio look alot like dividend warrior.....seems like everyone who invest in singapore market ends up buying most of the same crap.

 

[Perisher]

is it me or does her portfolio look alot like dividend warrior.....seems like everyone who invest in singapore market ends up buying most of the same crap.

CRAP? If only crap can earn so much. What's your problem?

 

[Perisher]

Guys..talking about dividends for passive income, i came across this article that say this Singaporean has managed to grow her portfolio to give her an annual dividend of $60K a year. I think can fight with Dividend Warrior, haha.

What's even more incredible is she manage to grow $112K to $1million in 7 years!

How a Singaporean Grew $112K to $1 Million in 7 Years | MoneyDigest.sg

Both got Starhub in their portfolio

Gotta say, my rough impression is she is kind of blindly investing and got lucky?
Holding SABANA despite the news of anchor tenant not renewing contract and 40 lots at that? She mentioned that was her worst investment and do nothing?

And going by her holdings, she goes mainly for dividend blue chip stocks and reits. Starhub is her biggest holdings, others is just reits many are holding.
Her blog, after looking for a few months of backlog, doesn't discuss anything about the companies she invested in.

Can't see any special insights but maybe like she say, she goes on a shopping spree when she see sales. That's a skill many, including me, has yet to master. And She has holding power(or simply ignoring the market completely).

Or I'm just dumb.

 

[frenchbriefs]

if u add up the original value of all her stock,ull find its somewhere slightly over 701k.....if im not wrong original value means the price paid for the stock?
in that case how can the article say she grew $110k into over 1m?can u count injected capital as part of the returns too?$700k to 1.1m is only a little under 60% return nia.in fact her cds statement says her profit is 52 percent nia.

knn overmarketing and false representation just like ho ching of temasek holdings.

 

[frenchbriefs]

Gotta say, my rough impression is she is kind of blindly investing and got lucky?
Holding SABANA despite the news of anchor tenant not renewing contract and 40 lots at that? She mentioned that was her worst investment and do nothing?

And going by her holdings, she goes mainly for dividend blue chip stocks and reits. Starhub is her biggest holdings, others is just reits many are holding.
Her blog, after looking for a few months of backlog, doesn't discuss anything about the companies she invested in.

Can't see any special insights but maybe like she say, she goes on a shopping spree when she see sales. That's a skill many, including me, has yet to master. And She has holding power(or simply ignoring the market completely).

Or I'm just dumb.

well it just shows that even the average idiot on the street can build up a nice little fortune if they do a bit of common sense investing and reading.with any luck,if u follow her path,do passive investing and save 12 to 24k a year and aim for 8 to 10% returns u will end up with 1 million dollars by the time ur 40,18 years after u start working.