If you want to see more on Bloodhound, use the link on this page.
Jumat, 23 Agustus 2013
I Love the Smell of DAX in the Morning
I'm getting quite a few questions bout how I'm going with Bloodhound. This is a Flobot that I use in the European mornings on the DAX. As you can see, its all outside in trades which work well on the DAX as it overshoots a lot. You can see the ENTRY and EXIT signals generated by Flo in the Hound as well as how those signals are executed using my autotrader in Ninjatrader. Same Flobot works on a number of markets and periodicities. I've got a few new guys doing the Flo Algo Training and I'll be sharing this and other logic with them. I'm also using my MultiCharts for longer term trades and for strategies I haven't ported over to Bloodhound yet.
If you want to see more on Bloodhound, use the link on this page.
If you want to see more on Bloodhound, use the link on this page.
Kamis, 15 Agustus 2013
Pick Your Jib
I love sailing. I've had two boats of about 37 feet long. One crossed the Atlantic from Spain to the U.S. My happiest days were the days I bought them and the days I sold them and all the days in between.
One of the things you learn as a sailor is to pick the right jib ffor the wind. Just like that, I pick which "sail" Flo should use to trade a particular market on a particular day. There are three types of algos that I can choose from:
Today was clearly one that would start as a Trend day down. I picked my "jib" for trend and off she went.
This is what Flo did during the time I let her run. There is no law saying I have to leave Flo to trade 24x7. Picking a time of day to auto or hybrid trade is just as important as picking a time to trade as a discretionary trader.
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One of the things you learn as a sailor is to pick the right jib ffor the wind. Just like that, I pick which "sail" Flo should use to trade a particular market on a particular day. There are three types of algos that I can choose from:
- Trend day
- Normal day
- Sideways tighter range day
Today was clearly one that would start as a Trend day down. I picked my "jib" for trend and off she went.
This is what Flo did during the time I let her run. There is no law saying I have to leave Flo to trade 24x7. Picking a time of day to auto or hybrid trade is just as important as picking a time to trade as a discretionary trader.
Sabtu, 10 Agustus 2013
Algos or What
I became a trader very early in life as I was very entrepreneurial from an early age. My Dad always had his own business and that was my example.
In my quest for even more freedom, I have thought for a very long time that it would be neat if I didn't even have to turn up and the cheques kept on coming. However, life isn't like that unless you inherit your money so a degree of perspiration is always required. However, thos of you have been longtime readers of the blog know that one of my favourite quotes is: "Genius is 10% inspiration and 90% perspiration" (Thomas Edison).
Nevertheless, I believe that I should be the one to choose when to expend my 90% and when to expend my 10%. I've more than put in my 90% so now I'm enjoying using that 10%.
I've been working like a fiend with Bloodhound. Bloodhound has allowed Flo to progress well beyond my meager programming abilities and to be released from reliance on anyone. Here's one I did earlier.
The algo uses the LogikUniversalRenko bars that get rid of noise. There is a downside to these as there is a 3 bar slippage at the turning points but I take this into account when I show Flo what to do - all with no programming, just picking logic blocks. All my algos have the same premise of following the orderflow. No prediction. As the Chinese philosopher Lao Tzu said: " Those who have knowledge don't predict. Those who predict don't have knowledge".
As you can see from the pic, Bloodhound allows hybrid trading from the same chart.
In my quest for even more freedom, I have thought for a very long time that it would be neat if I didn't even have to turn up and the cheques kept on coming. However, life isn't like that unless you inherit your money so a degree of perspiration is always required. However, thos of you have been longtime readers of the blog know that one of my favourite quotes is: "Genius is 10% inspiration and 90% perspiration" (Thomas Edison).
Nevertheless, I believe that I should be the one to choose when to expend my 90% and when to expend my 10%. I've more than put in my 90% so now I'm enjoying using that 10%.
I've been working like a fiend with Bloodhound. Bloodhound has allowed Flo to progress well beyond my meager programming abilities and to be released from reliance on anyone. Here's one I did earlier.
The algo uses the LogikUniversalRenko bars that get rid of noise. There is a downside to these as there is a 3 bar slippage at the turning points but I take this into account when I show Flo what to do - all with no programming, just picking logic blocks. All my algos have the same premise of following the orderflow. No prediction. As the Chinese philosopher Lao Tzu said: " Those who have knowledge don't predict. Those who predict don't have knowledge".
As you can see from the pic, Bloodhound allows hybrid trading from the same chart.
Kamis, 11 Juli 2013
Shortening the Time to Consistent Profitability
In my post here, I wrote about the strengths of Automated Trading. I want to take this further in today's post.
Traders seem to be able to learn the mechanics of trading quite quickly. They can find a good trading picture or copy someone else's and get to CP in SIM in a very reasonable time. The big leap seems to be getting from CP in SIM to CP with real money.
Automated Trading is a way to make that transition much more quickly. If someone has worked out a trading picture to trade and made it into an algo, backtested and forward walked it and then successfully SIM tested it, then the only way they can sabotage their success is to either turn the algo off or to override its signals. Two failings that are easier to cure than having to make discretionary trading decisions ten times a day.
What is interesting is that you don't need to be a programmer to create your algo. On May 22 I started using BLOODHOUND and am live trading. Flo loves the'hound. I can setup more interesting rules that I didn't have the competence to do in easylanguage.
Additionally, I'm using Logik Ultimate Renko bars. These take even more of the noise out than the range bars. Renko bars are complicated and have many pluses and minuses. I'll post separately on this topic but for the time being I can say that all renko bars are not created equal. Far from it. I tried about a dozen of them before I found Logik.
I haven't recommended much in the blog in the past but these two add-ins to Ninjatrader are together a quantum leap for me.
Full Disclosure: I'm now an affiliate of both Bloodhound and PureLogik. My aim is to help both these good products get into the hands of more traders on their road to CP. All financial recognition from these vendors will go to Macmillan Cancer.
The chart and stats below tells the story. It's a very simple reversal algo. I am running a number of different algos on a portfolio of markets.
Traders seem to be able to learn the mechanics of trading quite quickly. They can find a good trading picture or copy someone else's and get to CP in SIM in a very reasonable time. The big leap seems to be getting from CP in SIM to CP with real money.
Automated Trading is a way to make that transition much more quickly. If someone has worked out a trading picture to trade and made it into an algo, backtested and forward walked it and then successfully SIM tested it, then the only way they can sabotage their success is to either turn the algo off or to override its signals. Two failings that are easier to cure than having to make discretionary trading decisions ten times a day.
What is interesting is that you don't need to be a programmer to create your algo. On May 22 I started using BLOODHOUND and am live trading. Flo loves the'hound. I can setup more interesting rules that I didn't have the competence to do in easylanguage.
Additionally, I'm using Logik Ultimate Renko bars. These take even more of the noise out than the range bars. Renko bars are complicated and have many pluses and minuses. I'll post separately on this topic but for the time being I can say that all renko bars are not created equal. Far from it. I tried about a dozen of them before I found Logik.
I haven't recommended much in the blog in the past but these two add-ins to Ninjatrader are together a quantum leap for me.
Full Disclosure: I'm now an affiliate of both Bloodhound and PureLogik. My aim is to help both these good products get into the hands of more traders on their road to CP. All financial recognition from these vendors will go to Macmillan Cancer.
The chart and stats below tells the story. It's a very simple reversal algo. I am running a number of different algos on a portfolio of markets.
Minggu, 30 Juni 2013
A Business Plan, Different to a Trading Plan, Part 1
Trading is a business. A business needs a business plan once you get to CP.
The business plan is different to the trading plan. The trading plan is the detailed way you go about trading a particular market(s) and periodicity including the trade and risk management. A business plan is a plan how to conduct and grow your business.
While most traders have now finally "got it" that they need a trading plan, most still don't have a business plan. The business plan is not talked about so much as most traders are still trying to reach their first goal of CP.
So what's in a business plan? The starting point is the same thing that's in most business plans, an analysis of costs and the profits that are required to hit breakeven taking into account all expenses (even living expenses for a trader). The second part of the business plan is describing the actions required to meet those costs.
For example, a trader starting out in business may plan:
This busines plan provides a goal as well as an assurance, if met, that the trader has a business. Income surpasses expenses. As the business develops, goalls change and the business plan is updated.
OK. Now you are a successful trader with a number of dependents and a higher level of expenses and income and the business is growing substantially, what sort of business plan might be prudent to protect both income and assets. This was something I took a lot of time over and still do. I'll write the second part of this post soon.
The business plan is different to the trading plan. The trading plan is the detailed way you go about trading a particular market(s) and periodicity including the trade and risk management. A business plan is a plan how to conduct and grow your business.
While most traders have now finally "got it" that they need a trading plan, most still don't have a business plan. The business plan is not talked about so much as most traders are still trying to reach their first goal of CP.
So what's in a business plan? The starting point is the same thing that's in most business plans, an analysis of costs and the profits that are required to hit breakeven taking into account all expenses (even living expenses for a trader). The second part of the business plan is describing the actions required to meet those costs.
For example, a trader starting out in business may plan:
Costs per month
Data 120
Platform 50
Rent & Utilities 1,500
Car Expenses 500
Education 200
Various 930
TOTAL 3,300
Income
Breakeven @ 165/day for 20 days 3,300
Requirement
Trade 2 contracts ES per trade to earn average 1.5 points per trade as per my trading plan for ES day trading.
This busines plan provides a goal as well as an assurance, if met, that the trader has a business. Income surpasses expenses. As the business develops, goalls change and the business plan is updated.
OK. Now you are a successful trader with a number of dependents and a higher level of expenses and income and the business is growing substantially, what sort of business plan might be prudent to protect both income and assets. This was something I took a lot of time over and still do. I'll write the second part of this post soon.
Jumat, 21 Juni 2013
The Ever Evolving Trader
The road to consistent profitability is to find something that works and then do it over and over again.
This doesn't mean that you do EXACTLY the same thing for ever as markets are evolving, particularly as technology and the economic climate changes.
To meet these changes, we must subtly tweek our successful methodology.
How do we know that its necessary to tweek and how do we make the tweeks?
We know that it's necessary because we keep detailed records of our trades in either a spreadsheet or in a program like MSA. By knowing the profile of our trading, we can see statistical changes taking place. We then go back to our charts and look at the trades and see where the issue is.
Once we have an idea of the changes taking place, we go back to our trading app and rerun the algo that we use to test our methodology - assuming we have been clever enough to create a model of our trading.
Creating a trading module - an algorithmic represntation of how we trade our pictures/ setups is cnow necessay, even if we are discretionary traders. We need to test the effectiveness of our entries and exits. If the math doesn't work we can't be CP.
For me, alogorithmic testing is the starting point of a new idea. Without this, it can be just guessing. Looking at the number of traders who don't use algos for working out their methodology gives you an idea of why most traders lose.
This doesn't mean that you do EXACTLY the same thing for ever as markets are evolving, particularly as technology and the economic climate changes.
To meet these changes, we must subtly tweek our successful methodology.
How do we know that its necessary to tweek and how do we make the tweeks?
We know that it's necessary because we keep detailed records of our trades in either a spreadsheet or in a program like MSA. By knowing the profile of our trading, we can see statistical changes taking place. We then go back to our charts and look at the trades and see where the issue is.
Once we have an idea of the changes taking place, we go back to our trading app and rerun the algo that we use to test our methodology - assuming we have been clever enough to create a model of our trading.
Creating a trading module - an algorithmic represntation of how we trade our pictures/ setups is cnow necessay, even if we are discretionary traders. We need to test the effectiveness of our entries and exits. If the math doesn't work we can't be CP.
For me, alogorithmic testing is the starting point of a new idea. Without this, it can be just guessing. Looking at the number of traders who don't use algos for working out their methodology gives you an idea of why most traders lose.
Selasa, 18 Juni 2013
Automated Trading
We have been actively trading Flo for a long time now have a lot of experience and statistics available.
It is my strongest belief that as the markets have changed and continue to evolve with technology, the way for traders to now succeed (succeed = to make consistent profits) is to use rule based, back and forward tested, methodology.
Having interacted and/or mentored with hundreds of traders, I believe that traders fail because of a lack of a properly tested trading plan or a failure to follow a trading plan.
The medicine for this, I believe, is to trade using an algo. The very act of properly creating, testing and using an algo means that there is a properly created and tested trading plan which is adhered to.
Trading is a business of probabilities. When we see "A" there is a predominance of probability that "B" happens. We then wrap money management around this and we have consistent probability.
The least important part of all this is what "A" is. There are millions of "A"s that result in high probability "B"s. It is NOT difficult to create a consistently profitable algo.
What is more difficult is to create a consistently profitable algo with the average trade size and drawdowns that do not cause the trader to turn the algo off. That means the trader needs to find an "A" that fits his trading DNA.
The basis of finding an answer to this question is determining a couple of basics:
While HFT implementing HFT is beyond the pockets of most retail traders, MFT (Medium Frequency Trading) is definitely not. MFT involves scalping the market with automation. Why MFT?
My tool of choice has been MultiCharts but there is now something new for someone who cannot or does not want to get involved with programming. This something new is BLOODHOUND, an add-in to Ninjatrader. BLOODHOUND is a tool box of logic and solver modules that can be picked and clicked and put together like a Lego model to create both signals and strategies that can be fully or hybrid autotraded. I've been working on porting Flo over to BLOODHOUND since the end of May and the results are looking pretty good. I'll post more on this in the future. In the mean time, click the BLOODHOUND link and have a look at their videos.
It is my strongest belief that as the markets have changed and continue to evolve with technology, the way for traders to now succeed (succeed = to make consistent profits) is to use rule based, back and forward tested, methodology.
Having interacted and/or mentored with hundreds of traders, I believe that traders fail because of a lack of a properly tested trading plan or a failure to follow a trading plan.
The medicine for this, I believe, is to trade using an algo. The very act of properly creating, testing and using an algo means that there is a properly created and tested trading plan which is adhered to.
Trading is a business of probabilities. When we see "A" there is a predominance of probability that "B" happens. We then wrap money management around this and we have consistent probability.
The least important part of all this is what "A" is. There are millions of "A"s that result in high probability "B"s. It is NOT difficult to create a consistently profitable algo.
What is more difficult is to create a consistently profitable algo with the average trade size and drawdowns that do not cause the trader to turn the algo off. That means the trader needs to find an "A" that fits his trading DNA.
The basis of finding an answer to this question is determining a couple of basics:
- Are you an inside out or outside in trader or both
- What size of swings/oscillations do you want to trade taking into account that the markets moves in thrusts and pullbacks during the trade
While HFT implementing HFT is beyond the pockets of most retail traders, MFT (Medium Frequency Trading) is definitely not. MFT involves scalping the market with automation. Why MFT?
- Very high win rate due to small profit targets
- Reduced risk as the trader is in a trade for a short time albeit many times a day
- Triggers on easily identified bursts of order flow and momentum
- Using an algo means the trader needs to be smart once - creating the algo -not smart for every entry and exit.
- Your trading plan can be both back tested and forward walked so that you can be as certain as possible that Consistent Profitability (CP) is there, all before any money is risked
My tool of choice has been MultiCharts but there is now something new for someone who cannot or does not want to get involved with programming. This something new is BLOODHOUND, an add-in to Ninjatrader. BLOODHOUND is a tool box of logic and solver modules that can be picked and clicked and put together like a Lego model to create both signals and strategies that can be fully or hybrid autotraded. I've been working on porting Flo over to BLOODHOUND since the end of May and the results are looking pretty good. I'll post more on this in the future. In the mean time, click the BLOODHOUND link and have a look at their videos.
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