Skilled or degenerate?
How would you rank your competency in the skills listed below?
Detect well disguised and sophisticated measures implemented by influential market participants designed to bait and trap traders
Uncover and exploit ever-evolving chess like multi-move plays created by participants to build short and long inventory at various price levels to fuel significant price movement
Recognise the multitude of triggers designed to elicit specific reactions of participants
Accurately anticipate the actions of other participants
Incorporate the role of shifting relative value underpinning price movement across time zones
Continually identify sufficient variables the crowd is unaware of to participate in traders being baited and forced to cover
Develop high probability hypotheses by extrapolating scenarios from multiple data studies and observations
Tape reading
Differentiate between skilled and unskilled participation
Effective use of order flow data
Accurately calculate net long verses net short inventory at varying prices
Auction theory
Understanding market edge
Scaling up positions funded by the market
Expectancy and frequency
Differentiate between price movements due to covering versus positioning
Accurately determine who is controlling the market i.e. various-machine based approaches, market makers, pure institutional volume, or combinations of machines and institutional positioning
Adapt to and exploit varying machine-based approaches that dominate markets
Everyone knows in nature, the top of the food chain identifies the weak which becomes the focus of their prey.
Many participating in markets however fail to realise in trading, the large and skilled players identify the unskilled, lead them into a particular play and then feed on them.
What's more, many unskilled fail to recognise trying to compete while lacking sufficient skills makes you what experienced poker players refer to as “a degenerate gambler”.
It takes a skilled player to differentiate between the skilled and the degenerates, and not being at the top of the market food chain, much of my trading day is spent figuring out "is this a skilled trader buying (or selling) here, or is this a degenerate?"
The more challenging part is then deciphering what their play is... Sometimes it's constructed within 30 minutes, commonly an hour or two, and then some go for days.
And then finally it's picking up on when the skilled switch from baiting to moving in for the kill, which is the crucial time of initiating my position to go along for the ride.
Trading the one instrument has afforded me the ability to identify intraday plays made by the skilled players significant enough in size to influence price movement (at the expense of the unskilled), Further, minimal heat on trades is experienced because I enter when the skilled go in for the kill.
The savvy among you will understand minimal heat translates to greater trade size which results in higher net payouts while maintaining very conservative risk parameters.