Thursday, 30 June 2011

Dynamic Trading Related to Context

Optimum trading results are achieved when entries and exits are dynamic. Dynamic means that the targets and exits are related to both market volatility and context. For example, if I have a drop dead stop $300 away but there is a support only $150 below, my stop can be tightened (dynamic) to a break of that support. This way, I can save an extra $150 loss. The same with targets. If I have back tested and my best average target is $150 but in a particular trade I see no resistance before $225 away, I can look to see whether the further target can be reached or touched or whether it fails on the way there. I may be able to exit with a $175 target, $50 better than my average back tested target.

The stock indices were very quiet in the morning, London time. Its hard to be prepared for action when there hasn't been any for hours. Another benefit of algo entry. The first trade on the chart was OK but the others were a wash until the Purchasing Managers came to the rescue with their announcement which awoke the bulls. CHARGE!!!!!!!!


  1. EL, I've been going back over your blog little by little and it's really helping to reread a lot of the stuff you've written.
    Thanks so much for the push start...even though it's taken me a long time to get to CP, it's now very much worth it~

  2. Hi EL,

    Can you give an example of hoe you handle a situation where flo puts you in a trade that you don't like.
    Handling losers is a real issue for me, first acknowledge it's a loser, then how to best scratch it.


  3. YW, its not any different to me putting myself into a trade that I don't like anymore. I either scratch it straight away or take a small hit. I remember one of the partners at the stockbrokers I used in 1966 telling me "your first loss is your best loss". It took a while before I really understood what this means: I had to realise I had a bad trade.

  4. Hi EL
    How you read the ORDER FLOW, how you know when the flow is up or down? Iknow that we have to check the context (VA's, IB,s Singles, etc) in MP. But WHERE is the Flow?


  5. This is tough, especially when you have another setup immediately after the loss.