Wednesday, 19 May 2010

Hyde Park Corner

In London there is a large park called Hyde Park. On one of it's corners, every Sunday, you can see people standing on wooden boxes espousing their opinion on various things from religion to politics. It's called Speakers Corner. The blog is my Speakers Corner today.

Another bad decision by the financial regulators who seem to have either a huge lack of knowledge of the way the financial systems work or they are just trying to promote so called solutions to appease the masses.

I don't know who the hedgers think takes the other side of their trade. It was about 30 years ago that Pete Steidlayer showed me how long time frame traders don't trade with long time frame traders.

We have a quite a simple solution to most of the ills that the regulators should be trying to protect the public against - force all derivative transactions onto regulated exchanges that require margining. I don't think that this will happen because there are too many people with influence making too much money maintaining the lack of transparency of pricing. Once you have transactions on an exchange, the market prices fairly. The only non regulated non exchange market that seems efficient is the Forex market but the lack of an exchange allows some dealers, as distinct from pure brokers, to price unfairly at specific moments when they have taken the other side of your captive trade.

The higher the volume traded, the fairer the price. On May 6, it now seems that part of the problem was that many of the HFT trading firms went dark - the 'bots were switched off. This created a vacuum in liquidity and one of the main reasons why the markets became disorderly.

Short sellers are risk takers. At some point they have to cover at a profit or a loss. Enforcing margining just makes them more accountable which is a good thing. A marker participant is a market participant and as long as we are all as financially accountable as each other, the position created by our trade is irrelevant as far as the market fairness is concerned.

Gap Trade Today: The Gap trade worked like a charm today. I had the single prints of the 17th to lean on. An early entry was a buy at 1113.00, 1114.75 was certain but less profitable. There was no reason to totally get out at yesterday's close and the overshoot gave extra profits. I think Dalton called it an Open Drive. This strong buying tail (I'm writing this in the first half hour of RTH) will be useful for the rest of the session.

That was an understatement. The volatility continues. I find myself doing what I haven't for a long time: listening to CNBC instead of my usual Classic FM, as the different rumours swing the markets around. The turn was not difficult to spot as the change in momentum was clearly signaled by the market and visible using our usual charts. Having said that, it did take my breath away for a moment. It's moves like this that you can be thankful for all the hundreds of hours of really boring SIM trading and a lifetime of screen time. I had a mental image of Sumo wrestling, countering the moves of the market with my own. Weird huh?

Note: Anyone using MarketDelta: The new beta has a re-written routine for the Volume Breakdown that stops a lot of superfluous calculation when you re-use it in the CVD and other derivatives. Good news for those running lots of charts and who noticed the latency before. Looks OK now.


  1. Tom, I continue to daily enjoy your blog, but due to your offer to teach your methods for financial gain you are getting beaten around on different websites.
    Please take the time to go through a live market calling session for one day. No need to teach any method on that day but it will give confidence back to a base of people who have enjoyed your blog and will add to this great base of people who enjoy what you do everyday.

    Regards, Cory

  2. Hi Cory, Seems like a lot of people want everything for nothing. My methods are here in the blog for all to see, no charge. What I am charging $5,000 for is almost 4 months of my time to help people become consistently profitable. This is an opportunity that people can take advantage of or not. What hobby traders say on different web sites really doesn't matter. I'm not doing this as a business, just to help some people and some charities. I really don't feel I have anything to prove to anyone. The traders doing the training will see three weeks live not just a day.

  3. It wasnt that long ago when a few hedge funds got ironed out short selling Volkswagon shares - it works both ways.

    Have you met Pete Steidlayer personally?

    Also have you ever compared/used VAP instead of traditional market profile?

    Cheers Marcus

  4. Regarding Cory's comment -- Keep in mind that most trading websites/forums claim to be a source of trading knowledge; but are, in fact, populated 99% by rank beginners and bitter losing traders. EL, on the other hand, appears to be exactly what he says is: a consistently profitable trader with 30 years of experience. EL has shown us his methodolgy in this blog and given us a chance to get a sense of who he is as a person through his posts and emails. My trading has improved tremendously from carefully studying the blog. I hope to take my trading to the next level through the training. Everybody has to make their own judgement about EL, but I've signed up for the training and I have no second thoughts about it.

  5. Marcus, I was fortunate to have been taught my Market Profile stuff by Pete in the 1980s.

  6. I posted some stuff on these sites. They seem full of people that dont't know anything about trading.


  7. Cory,

    The people who really need this bolg will not read it. The ones who don't need it will learn from EL. Just like anything else in life.


  8. Hyde Park... ahhh, good memories... just remind me how much time I wan't in London...