Friday, 26 November 2010

The First Snow

We had the first snow of the year last night here in France and it's snowing now as I write. The ski season is really close, maybe here already. I can almost not stand the wait. I have my skis waxed, my boots ready and my season pass bought. Bring it on. The official date for the start of the lifts is December 18, but they have said that they will open the lifts on the weekend if there is enough snow. Looks like I may get to ski afterall.

I've been playing around with Flo some more. I am using Flo in the DAX to enter trades and then I manage them manually. The DAX can be a market on steroids, and I find that I can concentrate less and not miss entries. The converse is that I get put into trades that I would not have entered manually. But I manage them, and on the whole not missing trades seems to be more beneficial than having to scratch trades that I don't want to be in. I'll let you know how this progresses. It may suit some of you to use this technique if you want to be a bit more mechanical but still manage the trade. I am still finding that the exits for Flo are the most problematic in terms of maximizing profits. There are so many more ways of exiting than entering. I'm used to taking profits and finding re-entries on the trend or swing and that's the rub with Flo. To a certain extent it's the periodicity.

The Gap trade for the ESTX50 is a trade I look for on most days. It's the Eurex traded Dow Euro 50 stock index, for those not familiar with it. It's the European eMini ES. Trades 1 million-ish contracts a day on average.

You can see today's chart shows the attempt to fill the Gap at the open. I leaned against my one and only Fib number, which held - Long at 2740. It traded up to almost close the Gap, but yesterday's POC held and I exited there - 2751. This was a scale out point in any case. I then had a short picture at the 33EMA - Short at 2746 and rode it down, scaling out as it retreated downwards. The sequence continued with a scale out at 2727 after the market became oversold and I prepared to exit the balance. Covered more at 2721 and then the low of a couple of days ago at 2720 broke sharply. I ran out of bullets at 2715 and prepared for the next trade.

This stuff is not hard to do if you create a structure within which to trade. Knowing in advance where you want to do business is part of the secret. Envisioning what can happen is another part, even if you're wrong, because what doesn't happen tells you a lot too.


  1. EL,

    Thanks for the useful insights on this blog.

    Regarding today's trades, the 127% Fib line is labeled as 2733, and the low labeled for trade 1 is just above that. Your blog posts notes a long entry at 2730. Is that a typo?



  2. Thanks Dave, phat phingers. It's fixed now.

  3. Are you charthing ET from 2am CST to 10:30 am CST?

    Very nice short -- great picture.

  4. Anon 00:00, I chart ET from 8.00 until 22.00 German time and a second set from 9.00 until 17.30 to coincide with the underlying stock market hours. I run the Gap strategy on either or both separately.

  5. Hi EL,
    Great blog, thanks for the insights. Any plan to resume daily video recaps at some point ?
    I live in Annecy, was in Chamonix yesterday, looks like you have a great winter coming !

  6. Hi Sylvain, a little too much snow. Today's all fog. Ah well, maybe we will have some sun during the week. Yes, I hope to re-start the video blogs again at the beginning of 2011. I think they are very descriptive of what I was looking for.

  7. Hi EL, fantastic educational resource here. You have mentioned your Euro, ES, DAX and Eurostoxx 50 trading here, whats your preference in the Asian time zone. If you were based in AUstralia, what market suits your methods best in your mind. SPI? Kospi? Hang Seng?