Sep 152013
 

The summer flew by so quickly.  Since my last update, well June was my last month on my consulting assignment.  In July we spent a week and a half at La Motte at the largest equestrian competition in the world.  That was exhausting but a lot of fun.  Then we were off to the USA for vacation.  We had a particular eye out for places to live.  New York was great and the highlight of our trip, but may not be best for the kids.  Cape Cod was wonderful for vacation.  Boston seemed like an excellent place to live and has a lot of hi-tech jobs.  And Portland Maine was great for outdoors activities like Kayaking.  And then back to France for the new school year and all the kids’ activities.

I haven’t traded much since we got back and the time off has done me some good.  But we’re starting to get settled down and most of the meetings with the teachers is over.  And it’s back to my time window (last 2-3 hours).  I’m actually looking for a consulting assignment now but I don’t  want to trade Globex due to lack of volatility and so I’m just sticking to my normal time period despite being home during the day.  I’ve been using my days to work on another project.

In the past I’ve made available my order flow signals.  The challenge in doing that is that my order flow algorithms make observations in the market and then I take this information and line it up with my trading plan and decide when to enter trades.  There is a bit of discretion involved and no simple automated algorithm is going to make money long term.  As a result, for someone who didn’t have access to the behind the scenes information from my indicators, the signals were not as useful as I hoped.  One question many asked was that they wanted to run them on their own PC and not be dependent on getting them realtime from me.  And that made a lot of sense.  So I decided to provide a Ninjatrader indicator that will provide the “behind the scenes” information rather than just giving a long/short signal.  This will require some interpretation, which means it’ll require lots of explaining and practice.  But I think it’ll be far more useful.  The trick for me is to do this without giving away the logic behind the proprietary algorithms.  I think I’ve reached a good compromise.

I’ve identified two indicators that I will make available.  Initially I’ll do a private test with people who have purchased previous tools from me (the zones indicator, the signals, etc.).  And if feedback is positive then they’ll be available publicly soon after.

The cool thing about making these public is that when I post trades, I can show my screens and explain how I interpreted the data and used it to enter a trade.  I think that will make the blog much more useful.

I’ve been using these algorithms for several years.  They’re integral to my trading and I hope you will find them useful too.

 

Jul 312012
 

I’ve been reading a couple books on trading stocks since this is something I can do outside of market hours.  The first book is How to Make Money in Stocks by William O’Neil.  I’ve read this book before and used to trade stocks with the O’Neil approach until I switched to ES, but reading it again now was like someone turned on some major lights.  I guess I’ve really matured as a trader and now I’m ready for O’Neil’s teachings.  I thought I understood it years ago but I was wrong.  Just like maybe in another 4 years from now I’ll understand it even more than I do now.  I’ve heard of people reading it 20+ times.  It’s that good.  I’m sim trading some stocks while waiting for my account to be re-opened at Interactive Brokers.  So far the results are ok but it’s just for practice.  Soon I’ll be trading ridiculously small sizes with real money.  I like the fact that we can do that.  If anyone is interested in collaborating on trading stocks using the “O’Neil approach” get in touch with me.  I stopped it in 2008 when the top wiped out my gains and then some and focused on day trading.  So I still consider myself a beginner at this approach.  I’m not necessarily going to trade exactly as O’Neil (buying breakouts), but there are a lot of good ideas in that book.

The next book is Trade Like an O’Neil Disciple which is written by two of his former employees.  They made incredible gains, which the authors claim were audited and verified.  They tell how they did it.  If there was a book written by a futures trader who had his trading records audited by a big accounting firm, then I’d be very interested.  I am not aware of any such book.  Why is it that we have stock traders with verified track records but no futures traders?

This second book is really for people who have read and appreciate the first book.  It goes into detail about various stock trades.  That was the boring part.  The great part was all the little bits of wisdom from William O’Neil.  I have to be honest, I skimmed over some of the details on previous trades but I took a lot of notes on the teachings of O’Neil.

Here is an example quote:

In the end, traders must insist that they trade alone, free from distractions and interference from the outside world, whether such distractions come from business partners, the media, or any other source of external input that can throw you off your path. Remember this rule: Trade your plan, and plan your trade, and do it all with a minimum of outside influence or input, preferably remaining in the Livermorian ideal of “trader’s isolation.”

When I read that, what immediately came to mind was Twitter.  I know what I’m looking for and I have rules telling me when I can enter, where to put the stop, where to scale, etc.  So why do I need twitter?  Since I read that quote last week, I completely exited my Twitter client.  It’s hard to break a bad habit so occasionally when the market is slow and I know I don’t have a trade coming, I’ll run Tweetdeck and read the recent tweets and then quickly exit having realized I’m better off without that distraction while trading.  There are some excellent tweets from FT71 and GoldTrader, but they don’t trade like me so it’s better if I read their tweets when I’m not trading.

Two days in a row that I’ve come up empty handed in my 90 min window.  Yesterday I didn’t take any trades.  Tonight I took a shot at a long at 79 but scratched it for a tick.  That’s one reason I started writing this blog post, to keep me busy so that I won’t force a trade.

We haven’t given back any gains over the last two days so my big picture bias is still bullish.

I didn’t meet the Velocity minimum and they have not replied to two customer support enquiries about it.  So I think they’ll sock me with a 30 euro fee.  In a few minutes I’ll deactivate my platform and trade with Mirus next month.  Mirus has slightly higher commissions but no minimum and since I’ll be on vacation for most of August, Mirus makes more sense.

Good luck.

 

Jul 212012
 

I was discussing with a few other traders about EMP zones and one asked how my zones have worked for me.  My answer is my zones have worked very well for me, however I’m not sitting and waiting for price to come to one of my zones.  I’m just using them kind of as a milestone for how the market is doing and where it might go next, and I’m looking to get in on that move on pullbacks to S/R at a micro level.

I feel like making the zones is pretty easy and repeatable.  I do it myself every day and it usually takes me 10-15 minutes tops.  Sometimes 5.  No magic involved, just looking support & resistance and areas of low volume.  Confluence is best.

What I like about my zones is often they’re an exact price.  So no guessing.  And if I have a 1 pt wide zone, or rarely, 2 pts, I know why.  This gives me more confidence than if I had used someone else’s zones.   I’ve noticed that just about any set of levels or zones will look good in hindsight, so it’s how you use them real time that really counts.

I would make these zones available on my blog however since I’m only trading the last 90min I often make them right before I start trading.  However, when I do, I make them as of the close of the previous day.. I don’t take the current day into account.  I do this because the current day is easy enough to see on my chart and also I want to keep my zones consistent and have them always as if I had done them immediately after the RTH close (which I would do if I weren’t often in bed by then).

Comments welcome.  Do you make your own levels?  Do you use someone else’s?  Do you pay for them?  Do you draw them by hand?

Shameless plug:  My zones indicator will plot them on Ninjatrader.  I use this to make my zones once in a text file and have them displayed on all my Ninja charts.  But that’s half of it.  The other advantage is if I go back over the week, I can see how my zones did historically.  And since I created each one myself, I know exactly why.  I’m considering adding a feature to have each zone labeled with a comment about the zone.