CNN: Watch High-Speed Trading In Action
A clip from CNN on Citadel. Retail traders should be aware of what these guys do.
For years, I have told my members that the stock market nowadays is not the one before year 2000. Back then it was a game without that many mega size hedge funds and bots. Now, we are mainly playing in a eco system with bots driving the flow. There is nothing to be fearful of them though. Bots in aggregation are stupid, predictable and very easy to beat.
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Very easy for you, maybe…..
The important thing is recognizing that the bots are now a significant portion of the liquidity out there. Do not trade within their domain (sub minute moves) and wait for them to make mistakes. This means reduced # of trades with more swing plays. It feels harder because of the larger stops and lag of actions.
I dunno…I find it harder to do swing type plays, even intraday swing plays hard. I don’t find the same significant intraday reference points on HSI as often as you USA traders do. The daily gaps (2 possible gaps per day) and the markets higher tendency for momentum make swing type plays hard for me.
Harder is often a combination of market conditions and trading habits.
It is first time in a long time US stock markets printing new all time high. No one knows if it can continue or if it would collapse suddenly. Almost a whole generation of traders have not seen this. Making this environment a tough one for them to deal with.
HSI used to be easier to day trade but it is now also under the spell of bots market making. The transition makes things less stable. I have subscribers from India providing me with all the data they’ve got on Niffy and I find from their data having the same transitional problem.
To deal with that, you may have to take a step back and use substitute instruments to swing trade HSI as oppose to day trading it. Substitute means CFDs, ETFs, etc. that move in proxy to the HSI cash index and future. You will be at an disadvantage in terms of entry and exit slippage but you gain the flexibility of better control in position size in return. Hence you can swing trade with better control of the risk than using the future contract directly.