Monday, 3 January 2011

A New Year, Hybrid Trading and Longer Term Trading

I am hugely excited about the start of a new year. All the expectations, back from a good rest and new ideas for the blog and training.

First, Hybrid Trading. I have touched on HT in this blog before, but I think that it is now deserving of more attention as it's something I will be addressing in the new training materials I am preparing this year for both longer term trading and day trading.

Firstly, what is Hybrid Trading?  HT, as I refer to it, is using the computer to identify the most common entries and execute them, and then leave the management of the trade to me. In some cases, I need to exit immediately as I don't like the context. So what's the benefit? Quicker entries, not needing to be so focused, being able to trade more than one market at a time and so on. As soon as the trade is executed by the platform, I turn the auto trader off and manage the trade. I expect to do more of this as the year progresses. Our FloBot has improved a lot over the last year and to give Flo extra duty seems like a good idea for my bottom line.

I am also going to talk about some longer term trades. Trades that last a few days. The methodology for these trades is virtually the same as for my day trading, but uses daily data and MarketProfile a little differently. I use a variety of instruments in this longer term trading: futures, ETFs and options. The instrument of choice for a particular trade depends on the context of the trade. Not too complicated, but requires a little more thinking. As I'm using daily data, I only have to do this outside market hours and I have plenty of time to make my decisions. I use Flo to identify the trades, as there are more markets involved: S and P, Gold, Coffee (I'm Nespresso's favourite customer), Oil, Euro and Treasury Notes as a start. More markets to be added.

I'll keep the longer term trading in this blog, but may make a second post at around 1 am or so, New York time, as I usually do the analysis early in the morning European time. Let's see how it goes.

I'm also planning on using Twitter and StockTwits more in market related activity. Candace has some good ideas and I'll see what I can do so that readers can learn during market hours if they want.

I was skiing in the morning with Kiki (she's a board rider) so no work in the morning but the year went off to a good start with a couple of ES trades. The Gap trade did not trigger so the only way was up, as the song says. Nothing to lean against on the sell side. The pic below shows the trades.

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