Thursday, 31 March 2011

Energizer Bunny

Looks like it's only the Energizer Bunny that keeps going and going. I'm still struggling to get better, but in the mean time, Flo is saving my bacon. The robustness of Flo is critical. During my enforced downtime, I've been surfing the web to look at what's new in auto trading. There seems to be a lot of robots being offered with what can only be curve fitted inputs. I'm seeing people saying that as soon as they go live, the robot starts losing.

The process of creating a robust and profitable algo is a lot more complex than at first meets the eye. It's not until you have failed that you can even know the questions to ask, not just the answers. It's a whole different thing. Being CP is, I think, a prerequisite to creating a successful algo, as without the real world experience it's like doing brain surgery as a computer game.

My focus in creating Flo has always been to make her logic both timeframe and market agnostic. It had to be based on the way I trade, as I know it works and won't fall apart. The wild card in any algo is the variation in volatility which impacts both stops and targets. Flo had to be profitable in spite of these variables. I advocate Hybrid Trading to take the win rate and profitability to a level that makes it possible to build on the pluses of an algo with discretionary trading.

To become a CP discretionary trader, the same testing is needed as is needed to create an algo. All the comments for algos apply equally to discretionary trading. The added value is created when you put the two together in the form of what I call Hybrid Trading.

The Euro was trading the same as it has thee last few days. It allowed an Outside in trade with very low risk: Trade #5. Order flow ran out of puff and the short rally was over and gave the opportunity.


  1. a good learning example is to know how you managed the trade number 2, where if you entered short at the end of the second candle at 1.4158 you had 15-20 ticks of room to a close on the other side of the 33 ema.
    where did you exited that trade?


  2. Tom, I've been doing well in sim for a while and started with real money on Wednessday. I trade ESTX in the morning and ES in the US RTH. I have had a rough two first days and was wondering what you think of the last couple of days of trading the indices? Love your blog, JL29.

  3. Tom,
    If you were not able to watch Flo but still wanted her to trade, what would you have programmed in as Stop loss and Exit targets for the Euro on a 5 range bar? Thanks in advance! I was in trades 4 and 5 with you today...
    El Jefe

  4. JL29, mornings have been much quieter lately.
    Jefe, stops are dynamic and depend on trade location to a certain extent. Not all trades are equal. 5 tick first target is usually hi win rate.

  5. Alex, I didn't exit - nothing had changed. First part of trade was 50% size due to context and I went to 100% in the secon entry.

  6. I´ve been trading for the past 15 years (fulltime last 10) and I just wanted to thank you for you blog. I read it every day and your insights provide both inspiration and knowledge. It´s really amazing how you can get so much wisdom in every post and I learn/relearn something new all the time.

    You write about complex things in a clear and easy manner and I think there will be a lot of traders out there who owe part of their success to your blog.

    Btw english is not my first language so bear with me regarding the grammar,spelling et c

    Best Regards

    Eurex trader