E-Mini Swing Trading
Discretionary Trading
System Trading
E-Mini Swing Trading
Discretionary Trading
System Trading
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March 17, 2017

Lessons in Price Action – One shot, one kill

I had planned to make todays post a continuation of the system building, but we have an excellent risk/reward opportunity in Crude today, and there are some subtle clues it is worth investigating.

What story is the tape telling us?

Once upon a time, there was an epic battle, my institutional trader friend Jehan calls it the “Battle of the shales and sheiks”.

Like we were talking about yesterday, trading ranges end when participants are so exhausted or bored they give up. A useful proxy for “we are in a trading range” for system building is 20 bars or more of inconclusive bullshit.

This is very handy shorthand. 20 bars from [...]

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March 16, 2017

Market Update Post Fed – Lessons in Price action

I see an uptrend like the recent one in the indexes and expect to see the reverse happen. This is because recency bias conditions our primitive DNA to expect everything in context with what came just before.

But that doesn’t work with markets. Like with so many things, our hunter gatherer DNA is ill equipped to deal with the modern world.

Burn this into your brains.

The highest probability following any period of smooth, easy to trade, single direction price movement is a period of choppy, two sided, difficult to trade price action. We call this easytime-hardtime, and it is a very good paradigm for viewing the markets.

So we look and see a reversal [...]

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March 15, 2017

Systematic Trading Continued. Unwrapping the onion

One continual theme in my own trading is that every time I think I have it figured out – I get punched in the face with a unexpected problem. The tendency is to go more complicated, but often the solution is a degree of acceptance around the nature of the game. Sometimes my edges work, sometimes they don’t. Sometimes they stop working for long periods, 6 months or more. That’s actually ok for me, but it’s not ok for other people. The ultimate systems you choose have to suit your personality. If you cannot handle extended periods of working hard without making money (I can) then you have to retool your systems to avoid this.

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March 12, 2017

Trend Bending Continued

Traders are always trying to work out what happens next. But in the process of becoming convinced of something we actively block out information which doesn’t fit with our narrative. We become openly hostile to those who have an opposing view. We become biased.

It’s extremely tough to avoid this. Myself, even after 7 years in permabear recovery, I still don’t like being long stock indexes and have to force myself to take the setups as they appear. Deep inside there is a part of me that wants to see it all burned down. Taken to an extreme is the kind of idiocy you see at the slopeofhope, where the internet’s 3 remaining bears huddle together for [...]

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End of the line!
Cognitive Bias Carousel
  • Cognitive DissonanceCognitive Dissonance
    I had to think long and hard about what exactly to post today without insulting at least half of my readership. As you know I have … more
Live Tape Reading W1217
System Building Lessons continued
Systematic Trading Continued. Unwrapping the onion
Trend Bending Continued
Learning To Read Part 2 – The end of the trend, that was your friend, until it bends
old dog
Exercises in System Building – Part 2