Monday, 15 August 2011


Firstly, the Algo Workshop info is in the TAB above this post.
I'm posting a bunch of charts today so you can see what can be achieved using algos as both indicators/alerts and autotrading.

I was in South America for a couple of years in the 1970's. They are huge football (soccer) fans. It's almost a religion in Brazil and Argentina. Everyone watched or listened on the radio to the games between the club they supported and the opposition. I'll never forget watching a match in the Maracana stadium in Rio de Janeiro with 100,000 people and not a spare seat. A big part of the experience is the commentary. Every time someone scores, the commentator yells loudly: GOOOAAAAALLLLLLLLLLLL!!!!!!!!!!!!

I often think about this when I'm trading and close out a trade.

There are a many successful traders out there who have a fixed daily profit goal and stop trading when they hit it. I've written about this before. The longer I trade the more attractive this idea is becoming, except for the exceptional days like we had last week when money was falling from the sky.

I know that your follow up question is: Should there be a daily loss limit? If you are new then "yes", but seasoned CP traders don't think of it in those terms.

The best time to trade is when the market is out of balance and that is usually in the opening couple of hours and then the closing hour. CP traders who have a daily profit target make it in the first hour or so. They use that opening couple of hours to make their money and their daily stop loss, within reason, is time not money.

I have and have had students whose initial goal is very modest: around $300 a day. If you have a monetary goal, work out how many points you need to make to get there and work out size and strategy to get there. Not all trades are created equal. Some pictures have a higher win rate than others. Put in your trading plan those things that you need to make your GOOOAAALLLLL!!!!!

Longer Term Trading
I had an email last night from a guy asking about longer term trading. As I have said before, all this stuff can be applied to varying time frames. The ES chart below looks just like my 1.25 range bar chart but when you look carefully, you can see that it's a 4 day daily chart. I picked the periodicity at random.

For a methodology to be sound it must be applicable to varying time frames, although it's possible to look for the nearest one to the one you want with the least noise in the chart.

Here's the daily chart version.

I manage my longer term trades this way. Of course by adding indicator alerts, I have a lot less manual work to do.

Today's trades started in the DAX. I dropped down to a 5 tick (2.5 point) range bar. The market gapped up on the open in line with the overnight ES. The POC of 10 Aug and the single print selling tail of Friday on the Market Profile held the low. Flo, my algo, found the low and put on my first trade I manually stretched the targets that you see on the chart - hybrid trade management. Orderflow slowed and Flo's filters kept her out, but I manually found some more trades using a new indicator to read lower level order flow. I took profits all out on these. I could have been finished trading after the first hour. But as a greedy b*st*rd  (Aussie friendly slang), I kept on working.

Greed was Good, as Gordon Geko said. Great moves down and easy to see with the alerts I've created. Just look at the yellow Dots from the Pressure Change Alert that foreshadowed the down move - the Order Flow indicator had also shown that things had changed after the up move. Go Flo! She traded the whole move down...

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