Saturday, 3 December 2016

Everything Old is New Again

As we come to the end of 2016 I thought I'd summarize where I am now with day trading.

When you look at the chart below, you will see the same ols same old plus a whole lot of new stuff to help with both the decision making and the execution.

Nothing has changed about the basis of trades: its either outside in: fade the moves, or, inside out: trade the pullback in the trend.

What has changed since I started this blog in 2009? Well, all the futures pits are gone. No more locals. We're now all electronic locals.There's no middle man or buffer for our trades. Except for the algos. And that's a big "except". The "except" is now somewhere between 70% and 90% of the volume (depending on who you ask).

And why does that matter? It matters because the rhythm of the markets have changed and the way in which orders appear has changed. We have words such as "HFT", "submarine" and "iceberg" that have taken on a whole new meaning.

However, happily, the technology has advanced in leaps and bounds. Seeing order flow has never been easier. And order flow is what we need to see in order to trade successfully.

The workspace below is what I trade off. I've upgraded to 27 inch 4k monitors to give me more room and granularity.  NinjaTrader 8 is out. The charts are my same range bars but with a ton of order flow information. I'll tell you more about how I use the information in subsequent posts.

Tuesday, 1 November 2016

From Sea to Shining Sea

This was a very typical trade to look for every day. The fact that it happened on the RTH open only made it easier as the market was going to look for balance and was even more likely to hit the VAL.

There are now many tools for looking at the orderflow. Some are better than others. While I use a proprietary add-in to NinjaTrader 8 and to that I have shown earlier in this blog, there are others such as the commercial Gomi which you can see here. While non of the commercially available tools have all that I want (hence using something tailor made) many of them do provide the basics to show what is happening in the orderflow.

Thursday, 28 July 2016

You Can See the Orderflow

The key to market direction as I have said many times is ORDERFLOW. "Orderflow" has become a much over used word in the many years since I started this blog in 2009.

The issue is that most wanna be traders have no idea of what orderflow is. I guess I have a big advantage of being a an ex local pit trader as that was at the sharpest edge of orderflow.

Any picture, setup or trading idea can be completely invalidated if the orderflow changes: if enough orders come into the other direction to your trade. Before the latest technology of which NinjaTrader 8 is a great example, we nhad to look at the footsteps of orderflow: indicators. This was not perfect. Indicators have now become part of the context.

Today's chart shows how easy it is to see orderflow. However, the orderflow needs to be seen in context to understand the probabilities of what will happen next. Pete Steidlmayer's teachings have even more relevance now that we can see orderflow clearly.

Saturday, 25 June 2016

Winning-v-Losing Trade with Same Setup

The difference between a winning trade and a losing trade with the same setup is the order flow.

This is key. I don't think I can emphasize this more. If you are not tracking order flow then you are trading with a blindfold.

Order flow should be in the direction of your trade at key levels where you trigger the trade. Whatever you use to trigger a trade, requiring the order flow to be strongly in the direction of the trade greatly increases the probability of the price moving in the direction of your trade.

The first pic shows the same indicators I have used since this blog began in 2009. What the arrows show is the order flow meeting requirements I have had programmed. The order flow helps not only identify the trades at key support and resistance areas but also show continuity of order flow. In this pic, price hit my FavFib and order flow confirmed that the sellers hit the market hard.

Pic 2 shows even more information about the volume imbalance within each bar. This more detailed information does not always need to be seen unless I am scalping. I do look at the detailed bar at the key levels. In this case, you can see the sellers inside the bar hitting the bid.

NinjaTrader 8 is still in beta and still has a number of issues. Hopefully all these will be resolved soon. However, the ability of NinjaTrader 8 to load ad use bid and ask data and micro second time stamping is a quantum step forward for order flow traders.

Wednesday, 16 March 2016

Finding the Top of a Major Swing

The hardest thing for me to do as you will know if you are a regular reader of this blog is to hold onto a trade. I've been working on this issue for the whole of my trading life.

The charts below show how such a major top or bottom can be found. Its a matter of using order flow at the right context spots. The bar charts shows the latest tools I use. The buttons at the top of the chart allow me to have Flo trigger trades that meet most combinations of context and order flow combinations. The human eye is still needed as yet to verify the context. The second chart - Market Profile - shows the split's POC that held the market twice. The bar chart shows the reversal of the order flow at the right context for that chart. All that is needed is to have enough contracts so you can scale out at relevant chart areas.

Monday, 7 March 2016

Why Algos Work!

One of the reasons that algos for hybrid trading work so well is that it makes me focus on what's important and to ignore what's not.

Recent studies, talked about here, show that if you know what to ignore you can focus on what's important. The article is well worth a read.

Applying that to trading means that I create a trading plan and then strengthen my ability to stick to that plan by having an algo do the triggering based on the rules in my trading plan but only after I arm it for each specific trade after I have determined that the extra context components of the TP are present.

This means I have plenty of time before the trade triggers to arm my algo and then let it shoot the order with just 1 ms of latency when all the rules are met.

As the Great One said, "how sweet it is".

Friday, 4 March 2016

Numbers and Orderflow and Algos

Writing this waiting for the monthly unemployment numbers.

The pic tells the story. Selling revealed itself after the market went overbought. It sold all the way down to the POC of the day's Volume Profile. I've been doing a lot of work on using Volume Profiles intra day and I'll be showing more about that. We've got a lot of information about order flow in our data stream and we have the technology to reveal the information we need to trade CP. Its now just a matter of learning how to use it. We're in very competative markets. We are competing against a lot of smart people and HFTs. Using algos is a must for most of us if we are to succeed.

The markets liked the number, at first but over cooked it. Then the opportunities showed themselves. The buttons at the top of the chart allow me to place trades based on a combination or orderflow and context. Go Flo.