Tuesday, December 29, 2009

After Christmas thoughts

Hi Brett,

Brett Steenbarger, whom I really respect and whose blog I follow on a regular basis, pointed me to Mike Bellafiore's new article at SFO magazine. It really was one of the first to make sense to me describing patterns as result of HFT, seen in the market over and over again, while I was struggling to accept these as real.
I have struggled the last few months with my trading setups, as they did no longer work as expected. Nothing to really put my finger to, just a feeling in my stomach, that the futures I follow do not move as expected. Taking longer to break out, testing levels again and again only to spike, after I covered my position for scraps. I adapted by scaling back on my trading to nearly zero. Just placing one or two trades a day to not lose the feeling for having money on the line at all and if these did not work (or if they worked - but after I covered) I left the market to itself. I reworked my charts, to find something better fitting, but nothing feeling right so far. 
I know the market will be here tomorrow or the day after, when I will have found the confidence again to trust my signals and therefore trade more aggressively.
I know exactly why I wasn't able to rework my charts the way they should be. I'm an engineer -not by profession, but by heart- and I need a logical explanation, before I trust something.

…and I had none. I couldn’t explain multiple V moves, breaks which happen only to get reversed 100% only to break again and reverse again. The moves no longer spoke to me. I was still able to formulate longer term plays, but those I don’t trade with futures. Like a Euro/USD trade which I made with my account itself moving from Euro to USD when Euro broke down below 1.48 sometime before Christmas. This trade made sense at the time I took it and still makes sense. Nonetheless it went against me 80 or so ticks at first and in futures I would never ever held such a position.

I have my further work cut out it seems. Sure, it all comes back to trust what you see all along on your charts. But, the mind can put so many doubts in your decision making process, that the opportunity is gone, once you have put them all aside.


bigapple said...

Dear Globetrader, I follow your blog since some time and it is really interesting how flexible you change your trading style.
After long years a traiding I came for myself to the conclusion that trading can be easy.But easy trading is booring and I think you also like the adrenalin shock.After long time trying to trade daytrader style I started to make money with swingtrades.But like I told I am also missing the adrenalin and I am bored.

Have a good next year.

michaelB said...


I've read your most recent post and have been struggling with the same issues. How to trade in a market dominated by teh HFT's. After looking at a thousand stocks I came to a couple of conclusions.

The market has changed and the change will be permanent.

The HF traders operate on very short term time frames. You need to educate yourself on how they do what they do and then you can use that information to your advantage.
The other thing I came up with was to change your timeframe on your trades. The market has different time cycles. The short term traders are always operating on very shor term time cycles. If you can trade on long term cycles and patterns then you can trade with lower risk and better profits.


michael B

Markus said...

Hi Chris,

don't give up. You mentioned Bella from SMB. They offer a very good training. I took their SMB Edge and it helped me a lot to gain insights in tape reading and how to trade stocks. And the funny thing: I do not trade stocks, only futures, but it aided my trading anyway. Sometimes it's good to stop, breath for some time (weeks ;-) and gain new perspectives. HFT, so what! They are nothing new in the future market (started there). Perhaps it could also help you to concentrate on one instrument. E.g.: I have traded the ESTX50 and Bund future and now focus only on the ESTX, cause it favors my plays (retracement, support/resistance). The Bund on the other hand is more a kind of momentum and fade trading.

So, take care!

愛鋒頭 said...