Friday, 1 June 2012

Reality Is Setting In

I think the markets are finally facing the reality I have been talking about for a while now. The stock indices are down hard in London this morning ahead of, but not because of, the jobs report.

But as discretionary day traders, we just trade the trend of the single chart we use.

Looking more longer term, in answer to emails and comments, I'm showing one of the longer term trades in one of the accounts I trade.

The risk graph shows the risk and P&L possibilities. The position is what is left of a more complex butterfly. It is in profit of 6% and I am looking to make 15% on my max margin. I try to do this about 3 or 4 times a month for this particular type of trade. I only need to look at the trade once a day or when an alert email goes off. I don't always wait for the 15%, as I use the usual EL analysis on daily data to manage the trade. I plan on showing some of these trades in a separate blog starting next week. I'll post a link when it's up. Seems to be a lot of interest from traders wanting to swing trade with a big edge in their favour. I can be profitable if the market goes in my chosen direction, stays in a range, or even goes against me. I ran an options market making team who worked for me on the LIFFE floor, so have lots of experience in options.

No post next Monday and Tuesday as the whole tribe is in Ireland for a wedding of a relative.

Today, the ES was for sale from the get go. It was not too hard to sell the pullbacks in the direction of the trend.


  1. Hi,

    Thank you so much Tom for sharing your valuable knowledge.

    I am using Tradestation but I'm having difficulties producing the Volume Breakdown and the Cumulative VB. The links to the right on this page as well as this page ( are both broken.

    Is there anyone willing to share the code for the indicators, or can the link be fixed?

    Any help would be highly appreciated!
    (Should you ever visit Stockholm - Dinner's on me)


  2. Tom, Thanks for showing the options trades. I like butterfly trades also low risk with potential high reward. Look forward to to your new blog. Hope you have a fun time in Ireland. I am from Cork.

  3. John, the wedding was fantastic. To be expected the Irish are great and I always have a good time when I'm there. I'll post the result of the trade today. I took it off last week.

    Andy, I'll fix the link on the week-end and put them in my Dropbox.