Thursday, 24 March 2011

Stayed at the Dance Too Long?

As a discretionary trader, one of the decisions I have to make is how long to trade a trend. Remember that my trend is the trend of the chart I am trading, none other. Once I have identified the trend, I trade in its direction with inside-out trades.

My style of trading is to trade the peaks to troughs and then re-enter in the direction of the trend - I only trade outside-in trades when I can lean on support or resistance and identify a turn in the order flow - so I have to continually decide how far into the trend I should trade. I've written about the fact that I start being very watchful after the this trade and often I'll pass on more than that unless its a clear trend day.

It was interesting to test this idea with Flo. I can control how far into a trend she will trade- it depends on how I enter. There are lots of entries in a trend and the answer to the question is not the number of trades, but the number of bars and the aggressiveness of the trend. This is where the Hybrid Trading comes in. I can throttle Flo but I can also release her to trade longer in a trend. Using Flo in this Hybrid way has added a lot of power to my trading. 

The fact that I can make changes on the fly has become a big part of my trading. I find that I need to make fewer manual interventions if I make changes in Flo's setup before I start for the session. I have an idea of volatility and can make the necessary changes which means she can work well on her own. Today's ES in RTH is a good example. It was easy stress free and relaxed trading. I started Flo and sat there and then turned her off when I decided to stop.

Had I seen anything going wrong, I could easily override but the idea is to have the setup right and how to do that is a separate learning experience.


  1. EL,

    I am sure this questions was asked before, so forgive me if I am redundant. As you are consistently profitable and stable trader, why aren't you raising OPM via CTA or hedge fund? Is it a matter of scalability of your method?


  2. Ales, why in the world would I want to work for someone else. Life's great. I work how and when I want to. I wouldn't change this for anything.