A zoomed-in perspective
Last 2 days, was trading at a rate of about 40 round trips a day. The impact of some stuff are magnified when trading at that rate, compared to higher and slower timeframes. Just jotting down what I learnt...
Focus, focus, focus: Need to be focussed on the charts, because opportunity may come any second. Need to have an eye on the charts, even while goofing off and doing other stuff.
Rules, rules, pre-defined rules: At that rate of trading, it is difficult to make subjective decisions checking perspective on higher timeframes. For right entries and exits, may need to zoom-in too close into the 1-min charts - sometimes just 10 bars. Need to have per-defined rules that tell you exactly what to execute in every scenario. More doing, and less thinking during trading hours. Thinking outside of trading hours.
Hard wiring the brain: When I switched from long only option trades, to both way trading in Futures, I had hell of a time adjusting to the change. For a long time, in my head, Buy meant entries and adds, and sell meant exits. Took time to get used to it. So, practice, practice and reach the comfort level.
Software: Software that I use could be better... The laundry list:
- RKSV does not provide Market and SL-M orders. Those would have made my life so much easier. With SL orders, need to fill 2 prices - wastes precious time, and causes mistakes.
- in NOW, need to refresh everytime to check current positions and margins. Why is there no option to auto-refresh? I guess they did not have speed traders in mind while designing the software.
- No auto trading for retail - regulatory baby sitting
I wish softwares like this
http://www.traderji.com/risk-money-management/6529-any-paper-trading-sites-2.html#post770243.
Or
http://www.youtube.com/watch?v=5aiWIwaUPWk
Or MD Trader
http://www.youtube.com/watch?v=NGK99jlKNnE (skip the first 15-20 minutes of this video and then watch 30 minutes. MD Trader is focused on the scalper/executor. Doesn't even care much about charts - but they are improving that)
Interactive Brokers? Sure, let me become hugely profitable first...
Data feed: Speed of Global Datafeeds, about 1 sec delay - not an issue for me. But missing ticks are an issue frequently. Order gets executed, and the tick never shows up in the charts. How do I ever integrate it with the trading software and automate? Chart will not be aware of the order execution without querying the software.
Ambience: Affects big time. Sometimes move about with my laptop around the house. But with this frequency, minor change in ambience tense me up. So, i try not to move when trading with this frequency. i tell my family in advance that I should not be disturbed. Posture - This trading is not good for posture. I shift chairs, and get up and move about. But still need to keep an eye on charts, and tenses up the body. Staring at the same screen for long is another pain. I try to mitigate that by putting up the same chart on a second monitor, so I can look far or near to check the price. relaxes the eye.
Execution: Since rules are pre-decided, this is the main thing. i am surprised about the number of things that affect execution in this frequency. It is just not the 40+ trades that were executed. It is also the trailing stop orders updated, sometimes multiple times a minute. Early on, I realized that the best way to execute this was using SL orders, so I can relax more than at Market on touch of tick. Order preference like order type, quantity, MIS/NRML... all need to be set ahead. No clutter or confusion at point of execution. Changeover from MIS to NRML at cut-off time is a big headache.
When I changed from options to futures, i thought it would be much easier, because I needed to watch just one chart. But things happened differently. First of all, my brain was wired the wrong way. Then for each order - courtesy, RKSV not providing Market and SL-M types - I had to enter 6 digits 2 times to complete an SL order. At this frequency, it matters that the Futures price has an extra digit compared to the options price!! Try modifying the order multiple times in a minute. Also, check current positions and margins when market action is at its peak - F11 or Shift+CTRL+V, and click refresh - no auto refresh... Bad.
Slippage and Liquidity: Liquidity was one of the reason I shifted from Options to Futures - the main reason being the option delta. Slippage can be controlled to a certain extent my updating the 2 prices in the SL order, and that's a lot of typing. Even then, price moved a couple of times without filling my SL orders.
Margins: Trading Futures is a pain, checking margins after each order. The MIS to NRML position conversion is big circus in NOW. Need to convert individual orders by going to the Trade Book (In NEST, it can be done directly in the Admin positions). If needed, back-up funds need to be ready in the Bank. Lucky, that the transfer from the bank is instantaneous.
Trading Options is much better on this parameter.
Costs: The RKSV Freedom plan suits this style, because there is no need to worry about the extra cost of doing multiple trades with small number of lots.