On the floor our job was to provide liquidity. That meant that we faded most moves. I've spoken about the inside out trades and the outside in. Those were with the trend and against the trend. My focus used to be outside in until a trend day appeared.
So what's happened now? Well, the swings have gotten longer most of the time. That means its more profitable to trade inside out - trade with the trend. The HFTs have taken on providing the liquidity so all I need to do is identify the order flow and trade with "them".
The chart I posted in the previous blog and which I repost today is a good example of what I'm talking about. The move starts on the left hand side of the chart and tops very clearly. Most of the move was the trend up. Now when the order flow changed direction I can go short, not for just a quick scalp, but to trade the retracement swing. The idea is to stay in trades longer - more bars - no matter what periodicity I'm trading.
You are using Multicharts. Are the indicators and vol profiles etc. inbuilt or custom built? These look pretty awesome.
ReplyDeleteWhen you say "order flow changed direction I can go short", are you talking about the (what appear to be) Delta candles at the bottom turning from green to red?
ReplyDelete