When to stop the pendulum

‘strategy no.1 – lay low, back high’ 

It’s one of the first bits of trading advice I got 7 years ago. Good advice but a bit of an empty statement. Do I back all markets low? When do I trade out?

The latter of these two questions is something I’ve been considering recently with some old bots I’m looking to revamp. You always see traders talking about laying low, none talk about the back part to exit the trade. Conscious they are exiting early and not profiting as much as their peers, perhaps not trading out and watching the market slide back to 1.01.

Back in July I set target profits for these bots but in truth didn’t know if it was right or not. It felt right, based on the number of trades possible in the time the market existed.

Last month, I screwed the target and set it to run infinite, the more it hit, the more my potential loss was reduced. What I have now is a month worth of results and I can calculate the average p/l per trade on which I can estimate p/l targets if I introduce that in the future.

Rather than having to concentrate on an exit price per trade (that is set), I am confident I can collect more data to make this more accurate over the coming months.

I am a big fan of graph analysis, it shows resistance, support and price around which the market pivots. I think of it link a pendulum, sometimes it swings big, sometimes small.

I mentioned the pendulum as it’s going to play a part in the next series of blogs where I’ll detail building, testing and implementing a new bot from scratch. Let’s see how it goes, any requests?…

US open

been a good tournament so far. I eluded to trying to get professional with my approach before, put my faith and trust in the eyes and opinion of a trusted few.

Well it is Sunday, so a good time to review that faith. Doing everything myself isn’t possible, which is why I use these guys. I don’t waste time fixing my car, it goes to the garage and I can invest the time I would have spent doing so, earning to pay for it or spending time with the family.

Onto the tennis. I firmly believe major tournaments offer the best trading conditions. An old colleague trader was a big advocate of flow of money, the amounts coming into the market every minute to provide fluidity. While necessary for larger volumes, it isn’t a particular concern of mine.

Major tournaments do provide the greatest incentive for most players. That means injuries, poor preparation, tanking, low motivation from women AND men, should be a minor factor. That gives peace of mind and freedom to analyse match ups and form in a purer sense. 

The 5 set format for men is another factor worthy of more time in an future post.

Judging from the old stalwart traders I suspect some have enjoyed the juicy prices on offer on favourites in play. The swings have been great and as we enter the business stage of the event, the factors I mentioned above play even less of a factor.

I have added a manual element this year for most matches, taking an opinion during the match and using the bot to reduce liabilities on the outcome. 

Surprisingly, most decisions have been good, meaning the bot ends up as unused insurance. It got me thinking, why use it I such a negative way? On the flip side I could be using it to leverage profits from my initial position which I took, but the bot would be working against my opinion. 

I could, and have, had outcomes where the bot eradicated my profit using this method, it is financially safer as a trade but as most programmers are aware, the conflict between computer and human mind remains ever present!!

Trade profitably and enjoy the rest of the tournement.
Leboss