One affair I've learned from observing the actual trading of prop traders--those who are trading actively inwards as well as out of the marketplace through the day--is that, every bit a rule, they are drawn to motility as well as momentum. They similar to merchandise breakouts from ranges, as well as they similar to run into clear signs of forcefulness or weakness earlier they purchase or sell.
Many algorithmic (automated) programs that merchandise actively accept wages of these tendencies past times selling forcefulness as well as buying weakness. If yous imagine hundreds of computers, each programmed to locomote offers at X menstruum highs as well as locomote bids at X menstruum lows--and if yous imagine X every bit scalable across fourth dimension frames--you acquire a feel for what drives markets on the curt fourth dimension frame when directional, institutional traders are non active.
Traders tin terminate produce goodness from thinking similar the computers.
This morning time nosotros broke the overnight lows inwards the ES futures, exactly pocket-size caps were non making morning time lows; nor were other opportunity assets.
If yous were looking solely at the S&P index, yous wanted to hold out a seller as well as grab the downside breakout.
If yous were thinking similar the computer, yous were working a bid as well as profiting from the displace dorsum to the average toll inwards a hit environment.
Much short-term trading success comes from doing what doesn't come upwards naturally.
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