Friday, 29 April 2011

Have They Moved Your Cheese?

About 10 years ago I read a book titled "Who Moved My Cheese". It was about change and how to cope with it.

Well, the speed of information and peoples' reaction to it is making itself felt with volatility changes. I am finding that I need to change the size of my range bars much more often. I also change the sensitivity of Flo in line with what I am seeing. The basic methodology does not change, but by making these range bar changes and how aggressive I am in my entries I find that I am reacting to the now.

This highlights the necessity for a structured methodology. As I have chronicled over and over, I have two basic trades: inside out and outside in. My inside out trades are trades where I have identified a change in trend and trade the pull back. The outside in trades are leaning against support and resistance and identifying order flow failure. It is that simple. I said "simple", not "easy". By putting a structured checklist and identifiable pictures into my trading plan I am carrying out something that is measurable and quantifiable and thus repeatable consistently. I use Flo to leverage these things.

Not really working today - the Royal Wedding is making London into a party town and I'm going to Italy for the week-end with Mrs EL. Monday will be quiet with the May Day holiday in Europe, but let's see if there is something happening. I'm again going to be doing some video blogs starting next week, going over charts to show the day's trades.

1 comment:

  1. Dear EL - Clearly you are on top of your game, but I cant help feeling you are getting caught up in the 'algo/HFT fear hype'. It's just a phase. They have just replaced your old job as a local as liquidity providers. Off floor traders always used to moan about (you)locals with their (your) unfair edge just like day and position traders moan about HFT today. Nothing new.
    Real market direction (order flow) is still provided by the buy side contributing to real OI. Always has, always will. Nothing has changed which is where your years of experience come through. If a market is showing no buy side interest, just locals/HFT churning, I thought you would have looked at another market rather than change your range bars and scalp - lowering your cost/profit profile. Go trade Corn or Cattle. Loads a vol, little HFT - just buy side - paradise!!