Scaling Up Size

Every trader should start trading 1 lots but once you regularly achieve the sort of highwin rates we are aiming for obviously we want to increase our size to make moremoney. First point to make here is only increase your size if you are hitting a win rateof around 70% and above. If you increase … Read more

Two-way Flow

As stated earlier, market makes are students of liquidity and base many of ourdecisions around liquidity. Another vital aspect of this relates to two-way flow inmarkets.Two- way flow means there are sellers hitting the bid and buyers lifting offers at thatmoment. For market making style scalpers it is essential that we see this type ofactivity … Read more

Faster Markets – Trading the Chop vs Trading Moves

Earlier, when discussing order placement in faster markets I explained the techniqueof placing orders a few ticks away. We should use this technique after value hasmoved. For faster contracts though, it is important to differentiate between moves andjust the normal ‘chop’ that takes place.Faster/thinner markets (Dax etc) often chop around. For example, 15…18..16…18..15etc This type … Read more

How We Set Up Trades & Scratching

I now want to recap the ideas from the last few chapters and put them together intowhat a trade should look like when it is filled.We start off by judging liquidity and value. These require a few pieces ofinformation. If we have decided to join the 15bid bid on a 15b/16o spread with agood queue … Read more

Value

Having explained how to place orders, I now need to explain why we place orders.What makes us decide to go long or short at any given time?I call this topic understanding value. The job of a market maker is to understand thevalue of his contract right now and then work out can he buy cheaper … Read more

Liquidity & Order Flow and How it Affects our Orders

Market makers need to be very aware of liquidity and the level of liquidity will havesignificant implications for their trading. In this way they are, yet again, far deeperthinkers than chart traders whose analysis methods make no provision for liquidity.This is an area that very few retail traders think about, so it may take some … Read more

Queue Position

No matter what market you trade, if you want to enjoy sustained success, you need tounderstand the mechanics of the market; how it works. In the old days of pit tradingfor example, in order to get the best trades, a market maker needed to have a goodposition in the pit and be on friendly terms … Read more

Using the Bid/Offer Spread

At the core of how market makers trade is the way they use the bid/offer spread. Mostretail traders are taught to buy from the offer side of the market and sell to the bidside. They are told that if they want to get trades executed then they will need to tradein this way. After all, … Read more

Before You Start – Due Diligence

Before any trader starts to trade a contract he/se should learn as much as possibleabout it. In order to construct a good watch-list you will need to know how yourmarket correlates with other markets; what connections it has with the world aroundit. Some correlations work on many days while others just pop up as important … Read more