Thursday, 17 December 2009

Markets are Always the Same

Yes, markets are always the same, they keep on changing.

Markets usually maintain, what I call, their fingerprint. This fingerprint is related to the way it trades, its' rhythm, its' style. This is I think, because the people or types of people who trade them are the same and have the same objectives day in and day out.

But, and there's always a "but", every now and then the tiger changes its stripes. Sometimes slowly, sometimes quickly, sometimes temporarily and sometimes permanently.

Last year we had the temporary leap in volatility, now we seem to have a move of the action eastwards. If you look at the charts today, again there was a good move that began at about 01:40 am London time and finished at about 07:48.

The point of this post is a lesson to Kiki to not be complacent. As information processors, our job is to process all information including what happens, what doesn't happen and what changes. Our methodology needs to be robust enough to deal with all these changes without us having to rebuild it. This is not to say that our targets and stop losses do not change because they do, in line with volatility or because testing some new ideas of money management shows we can improve profitability. But the trading method stays the same. As discretionary traders, we automatically look at different things and place a different weight on different pieces of information. This is normal and correct. As markets change, this process continues. But the trading method stays the same. Occasionally, very occasionally, I make a discovery that I incorporate into my methodology, but usually, I am trying to delete rather than add in a search for even more simplicity.

Trading the ES again.

Click to enlarge


  1. I see that on your second entry, the CVD shows a strong run-up, yet you enter a short trade. What is your rationale for the second trade ?

  2. Nice trades, as usual. Glad to get some volatility back on this side of the pond - possibly a trend day to boot. May be the action will move back here, as the next change in market body language. Plus ça change, plus c'est la même chose, as they say in the French lingo.

  3. Johnny, CVD often lags as I have saaid. It was lagging all day today. But the VB and momentum showed the ball was coming down from the top of its bounce. The candle was engulfing.

  4. Well, so much for the anticipated expansion of range.... Business as usual, so far despite an encouraging start. Seriously considering getting up at 2:00am ET for the London open (Forex and perhaps even US stock indices).

  5. Hello Boss,

    Okay I looked at your chart and ledger probably way to long.
    On the first trade marked at 9:37 price was about 1102? On your
    sheet it shows your first trade at 9:37 and 10:37? Knowing that you
    scale out and not in I am going to guess that is incorrect? The exits look
    okay but the entry looks off. So you either had more points then you
    think if you entered at 9:37 or, If you did enter at 10:37 at 1100
    you were late on your signal, Lol.

    My head hurts,


  6. Rinom Thanks. The change in templates lost in translation. Phat phingers too.

    Fixed now. Charts are fine, the spreafor something more audsheets lost some digits. Once the trading from the charts is perfect in MD, I won't need to put the trade prices inm just the P&L. I am waiting til its out of beta for that.

  7. Geo, I did the getting up in the night thing for a couple of yeard. Couldn't keep it going. I'm no good on a night shift, hence the move to London.

  8. Tom, could you how you move stops after the first scale out. You mentioned once that you move it to BE, but I don't think that this is the case. Maybe I got it wrong.


  9. Tom, in a clear downtrend like yesterday do you ever fade the trend or do you wait for price to cross the fast EMA before considering longs?

  10. timokrates, I always move stops to break even after the second scale. I sometimes move it to BE after the first scale if its a bigger scale or I see something in the chart. Also, my BE stops are mental because I want to see what's happening. There is always a drop dead stop in the mareket.

    Mans, most of the trades on the blog are from the inside out. The fade trades are outside in trades and Kiki does not trade those yet. Those types of trades are slightly lower probability for me and harder to qualify setups. There is something about this in one of the previous posts.