Friday, 2 September 2011

Waiting for Jobs - Not Steve

London was quiet in the morning except for some nice Euro action. "They" were waiting for the Monthly Jobs report due at 8.30am NY time.

Today's morning trades went according to Flo. The Euro chart on MarketDelta show how well the even unfiltered Flo signals are working on the 5 tick range bar chart.

Using an algo, even just to identify the trades, is a great edge as it provides one half of what is required for CP: Instant Trade Recognition. Then, you need to act quickly on it to meet the second requirement: Instant Trade Execution. Using an algo to enter the trades ensures compliance with this aspect.

The most difficult part of a trade is the trade management, I think. This is true whether you are managing manually or whether you are programming the algo to manage it's entries. There are pros and cons for each method but the challenges of management are different for each of them.

For a manual management, you are reacting in real time to the context. For algo managed trades you are trying to look into the future and take into account different eventualities. You have the benefit of being able to backtest but the end product can be only an "average" management result. A good manual management should out perform the algo. However, the algo can manage 100 trades at the same time when I am struggling to manage 3, manually.

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