Friday, 7 October 2011

The EL Methodology

I want to recap a little here as we hit the end of the second year of this blog.

Thank you for all the feedback from you guys that have achieved CP through reading the blog. I just provided the methodology. It was you who did all the hard work. Congratulations. Some of these emails are in the Testimonial section of the blog. It should be inspiration to all who are still on the road to CP. Keep going, you can do it as many others have.

What I do is really simple and easy to learn.

I identify the trend using the tools you see on my chart. I then wait for a pullback in that trend and enter on the thrust back in the direction of the trend. It is that simple.

What happens next is that either the order flow is strong enough to take the market further and give me a profit, or the order flow fails or hesitates enough to shake me out of the trade.

I qualify the entry and the order flow using the same tools that you have seen here in the blog. I can filter trades out using those tools. Sometimes the filtering filters out good trades, but mostly not.

I have a number of exiting techniques, but mostly exit all or part at what I call the first logical scale out point - the first resistance.

This is the inside out trade. I also trade outside in which is fading the trend. This is a less usual trade for me and I only execute it when there is something to lean against in the context. It is typically fading an overbought or oversold market. The Gap trade is an example of this type of trade.

I have mechanised most of these entries using my algos that I call Flo or FloBot. I have also fully automated some of these strategies in a fully automatic FloBot. I activate the right algo to match the price action.

Everything I do is in this blog, but if you want to save time and effort, there are just a couple of places left for the November 5 Workshop where I will teach all of the above including how to create and use an algo to both enter and exit trades in both hybrid (algo entry with manual trade management) or fully automated, including how to optimise with the greatest probability of obtaining a robust model. 

The chart below is the ES and 1.30pm is when the jobs report came out. The first trade is an outside in trade, OverBot and against the Fib and also against some high volume in a previous overlapping Profile. The market sold down to the other Fib you see marked. This greater volatility is skidding price a little more through the Fib area than usual, but I had made the adjustment and left it to breath a little more. This series was also a Gap trade. The 3rd trade was right into the jaws of the Fib, but orderflow was strongly down and I didn't believe that it would hold a second time - it was used up. I was rewarded for my analysis.


  1. Wow, has it been 2 years already?... I've been with you since pretty much the beginning, seems time went by so fast.
    Want to thank you for all your efforts in the blog, feel it helps me a lot, and one day I will be profitable as well.
    Thanks a lot,

  2. I echo the above.. your blog has been a great help. I'm still working on building some capital, but I know where I'll be heading for tuition as soon as I'm ready.