Interviewer:
Please introduce yourself.
Curtis:
Hi, my name is Curtis White from OrderFlowDashPro, I'm the founder and inventor of our cutting edge AlphaReveal software.
Interviewer:
What's interesting is that you've built a program to aide the discretionary trader at a time when many traders have either given up or have switched to focus on trading systems. Can you elaborate?
Curtis:
Sure, I'm a big believer in the discretionary trading process. I believe that discretionary traders can achieve elite levels. I've also built quantitative systems and have good results with that too. I like using a mix actually, and I think that many professionals have found that a mix of strategies can work well. You know absolutely, the robots aren't better traders but they've just been aided by faster technology. Our program tends to "level" the playing field a bit, even a little bit. I've always been driven by the concept of synthesis: combining the benefits of technology with elite performance. Yes, we know psychology and mindset are important. But, I also believe that technology can play an important role in helping traders to realize the upper levels of performance. Also, I believe the futures markets are a great place to be for the retail trader now based on what I've heard about equities trading.
Interviewer:
Obviously, most people here are either already using AlphaReveal or planning to use it. I've always felt that it would be good to know where a trader's attention was during the trading process. Can you tell us what you focus on most within the AlphaReveal platform in your trading?
Curtis:
Sure, that's very good information. I focus mostly on our Order Flow Monitor running the PressureVolumeTM display, the Q-TrackerTM, Volume Inventory Tracker, Depth, and Price. I only focus on limit resistance when it flashes. I usually run the depth without numbers because I find that its distracting and not necessary. I almost always run the OrderFlow BarsTM without numbers. I primarily focus on the summary stats for the OrderFlow BarsTM. I usually use constant volume bars which makes it easier to see if the order flow is correlated. I also pay attention to the summary stats of the VIT. I also track more traditional charts outside of our platform.
Interviewer:
So, what 3 things would you say you focus on most?
Curtis:
OrderFlow Monitor running PressureVolumeTM, Q-TrackerTM, and the third would be the Volume Inventory Tracker. I must add I really like having the visual histogram depth display up. I don't focus on it but I might still be processing it. And, of course, I track price closely too.
Interviewer:
Can you share some of the order flow patterns you're seeing in the market today?
Curtis:
Sure, I believe that equities HFT bots drive a lot of the action in the (equity) e-minis these day. I believe these firms are running on day trading margin, and so they can't really hold. This sets up some various dynamics among the bots and large futures speculators who may be looking for a longer term trade. There are a lot of great patterns though in today's markets. One pattern that I talk about is how if you can get on the right side of the market it almost seems that the market is forced to play into your limit orders. In other words, there are order book imbalances and understanding when those imbalances will be taken out is very worthwhile.
Interviewer:
Let's see if I understand, you're stating that you believe that many directional moves are actually arbitrage?
Curtis:
Yes, in some cases we'll have some sort of micro-market structure that such as an order book imbalance, and smart traders won't bid into that imbalance but then the various programs will kick-in: arb programs and other program trading because they have too. Its like the market is going to go where its going to go and nothing will stop it.
Interviewer:
Can you tell us more about the types of programs that go off and maybe a specific pattern for AlphaReveal users?
Curtis:
Sure, a lot of the movement is caused by buy and sell programs that are set to go off at random times. You wouldn't think it'd be possible to profit from such things but interesting enough I feel that it is. So, I'm always trying to pay attention to these programs and how they are moving the market. One of the patterns that's always very bearish is when strong buying can't push the market higher and the market is trending lower. So, we might see 2k or even 3k buy contracts print on a single level. If the buy program doesn't tick the market higher then that's a good sign the market will trade lower. That's caused by a replenished offer.
Interviewer:
Do you have any more insight into this pattern?
Curtis:
Sure, this buying volumes appears to be composed of short traders covering. These are mostly very short term traders, such as bots or algorithms that were only trying to make a few ticks. The other part of that buying is actually institutional. You see most institutional programs are programmed to buy on a down tick and sell on an uptick. A lot of times its just one buyer who's program has been triggered to go off because the market ticked down, and as soon as that buyer is done then the market can go lower. We see the same pattern on the upside where we'll have a seller offering on a level and then as soon as that seller gets finished the market can trade higher.
Interviewer:
It seems contrary though. I thought most traders want to be with the order flow?
Curtis:
Sure, it does because trading is difficult. The order flow like price itself can be trending or mean reverting. Context is very important. In some market contexts, if you bang in with the volume you'll be rewarded right off the bat but in many cases you'll be stopped out right off the bat and that's because a larger limit order trader was absorbing all that inventory. I find the Q-TrackerTM very helpful in helping to identify which situation is which.
Interviewer:
What about retail vs institutional? What role does that play in your trading?
Curtis:
I treat all traders as professionals. Now, I could be 100% wrong but I don't feel the retail volume is significant enough to even matter. So, no I'm not trying to take advantage of retail traders nor trying to guess if its an institution or retailer on the other side of my trade. What I am trying to understand are the aggregate market dynamics. These can be very complex but that's what I love to do. It can be useful to understand the type of professional trader who is dominant in the market at any given time but its not really about retail traders for me.
Interviewer:
Now for something to close with, where do you think most new traders go wrong and what advice would you give them?
Curtis:
Most novice traders usually have very detailed trading plans but they don't have the experience to really know if their plan is reasonable or not. This is often compounded by both unrealistic learning and profit expectations. I would tell the novice to go slow, trade in the simulator, and really work to develop your craft several months before going live and then transition into live trading slowly and thoughtfully. I also think its better to have a range of goals: bronze, silver, gold, platinum instead of a single goal because single goals can cause performance anxiety around the goal line and in some cases they might be self limiting. I would also tell new traders to experiment: try different things. I do. How is one suppose to know if a large or small stop will work better? I try a lot of different strategies in my trading but I have a daily loss limit and manage the risk and am always trading to win. Know yourself! This is, of course, hard to do as most people aren't psychologically as prepared to handle a loss as they believe. For me, I know that I want to "stay in the game" which means managing my risk and making a profit. I've encouraged the few traders I've trained to really wrestle with this question of whether or not they plan to "stay in the game"..
Also, one of the most ridiculous things I hear is doing the opposite of what you think or feel -- such as be bold when you feel timid. Listen, any good discretionary trader knows that our greatest asset is our ability to know when we're more right then wrong. I only add when I'm more confident. I may be up or down but I only add when confident. Never when less confident!! So, don't listen to such nonsense. Learn to recognize when you are right or wrong. Learn to do things the right way.