I'm posting this message as a reply to Eric, though I don't mean to direct it at him - or, for that matter, to anyone else in particular. Just a general statement which, I'm quite sure, most of you folks will blow off and, hell, maybe you should. This is just one man's opinion, of course.
I think that learning the very, very detailed nuances of when and where a market maker has liability, what he has to have and do when he gets a SelectNet order, how many seconds he has to do this or that, and generally memorizing all the Series 55 material is a major, major waste of time and, in all, quite foolish.
Yes, it's important to know what the new SOES will do, the variations of Island orders, etc., but that's on YOUR side. There are simply too many things going on out there on most trading desks for you to gain much advantage beyond appreciation of a market maker's job by studying it to such depth. To me, doing so is analogous to becoming an auto mechanic as a prerequisite for driving school.
In fact, the whole practice of watching market maker movements - with the exceptions of the large ECN's and wholesalers (and even them, quite often), was a futile effort long before some of those joke trading books and training courses sang praises of such practices: first of all, you can't and never will see exactly what happens behind the scenes, and second, dealers were trying to fool one another long before hh's came along. Therefore, with the exception of when things get really hectic (leaving no time for headfakes) or when an issue is really, really liquid, it's usually wasted time and effort.
I'd say, among other things, learn technical analysis, and look for relationships between sectors and certain issues [It didn't take being inside a market makers head to see that when the Microsoft rulings were pending, any of their internet or OS (Linux) enemies were going to move on the news]. Don't fight the Fed or average down, remember that most good shorts start out as good longs, the trend is your friend, and never short a dull market. Gaps almost always fill themselves. Yes, all the platitudes.
Read a few, carefully selected books, AVOID THE SNAKEOIL SALESMEN, and by all means - most important of all - try to spend weeks or months with real, proven traders; if at all possible, at a place where your profit and loss - not commissions - are the express interest of the firm and therefore aligned with your own.
Come up with a plan, stick to it, learn when to say when. Talk to other traders, and protect yourself at all times. Don't rush yourself, let anyone rush you, or overtrade.
But in my opinion, getting wrapped around the axle over piddly stuff that tells half a story is nothing short of a waste of time and energy. There is far, far more to be gained in the company of proven, professional traders; learning technical analysis; and, investigating relationships and trends within the market.
IMO, of course.
LPS5
P.S. Visit my new thread sometime, "Boxing: The Sweet Science." |
