Measuring Order Flow and Trading it.

Whether "THEY" are buying or selling is critical to market direction, for the next bar or for the next sequence. Data feeds now contain the information required to harness this information.

I use two main tools for this. The first one looks at each bar by bar and calculates whether trades take place at the bid price or the ask, and how much. Sellers hitting the bid in size has a greater impact on price than a passive seller offering at the ask, even in size. If there is such a passive seller, then the market usually front runs the order by hitting the bids.

The second tool looks at the cumulative effect of the first tool and also smooths it with an average.

These are the last two indicators on my charts. Looking what is happening as the order flow is revealed provides a great edge over the other electronic traders. Of course understanding what you are seeing is critical, if you are to make use of this information.

There is a very simple technique of using the shorter of my moving averages, which I perceive as the center of value at that moment, and trading crosses or bounces from it when confirmed by order flow. You can make a good living off this one setup alone.

The chart below shows some of these trades. Note, the time on this chart is GMT = NY Time + 4 now.

Click to Enlarge

Ran Out of Bullets

The pre-marker preparation is hugely important.  I need to know where the levels are that I may need to do something about – put on a trade, take a profit or scale in or out.  I use Market Profile for my levels as MP is a diagram of the volume for the day.

I first split the Profile into its distributions. My software displays the volume Points of Control (POC) as well as the Value Area Highs (VAH) and Value Area Lows (VAL). I also use the extremes where relevant. You can see that the POC of 27 Oct stopped the market on 29 Oct so knowing that it was there was important.

Next, I try and visualize the type of day that may unfold. For example, for today, 30 Oct, I envisioned a normal day with possible high of around 2845 and a low around 2790. I also Noted that there are single prints beginning at 2791 and that if selling order flow is revealed, it is likely that the market runs down to 2760.

I am writing this part of the blog before trading begins on 30 Oct. I will continue after the market has revealed itself.

WOW!! This really went according to plan. Again, as an early bird trading from Europe - about 9.30 GMT, 4.30 am on the U.S. east coast, I went short near the VAH of 29 Oct. as the selling showed itself. Looking at the charts below:

There was basically a failure at the VAH, then a lot of what looks like chop in the MP chart until the market got down to around 2800 at the VAL. Looking at the range bar chart on the left, you can see the benefit of using range bars as the chop is not there, just the steady down move. I have divided the MP chart into the two distributions we have had so far today. My vision from before the market opened was ful filled and exceeded

. As soon as price hit the single prints of the 29th, it went right down the zipper in a relentless but orderly trade. I took profits as usual but ran out of bullets at 2760. I was not too happy as I watch the market continue downwards. Order flow on both my indicators were clear so I tried to correct my mistake and went short again as 2742 was broken with double prints. The market finally started going sideways and I covered the whole piece at 2724. Fantastic day. In retrospect, I should have held onto the last 1/3 until the 2730 ish area where some buying came in. K. was in the trade but got out wayyyy too early at 2790 but I was very proud to see she used another technique to re-enter on confirmed pull backs which she did at 2780, and 2738 taking 10 ticks out on each trade. I'll talk about this style of trading more in another post.

Without that envisioning it was a much harder day as K. discovered. Seeing this vision takes a bit of time and experience. But there are ways to correct yourself as K. did.

 

Time Zones and What and When to Trade

I moved to London from Australia about 30 years ago to trade in a better time zone. I tried living in the United States too. The European time zone for me, is the best time zone as it straddles the most active markets.

Lots of moves now begin in the European morning before the U.S. wakes up. Many U.S. traders now have alarms so that if key support and resistance areas are breached, they wake up to trade. Why? Well the markets are continually changing. Now a days, for the stock indices, if you miss THE move of the day then you have missed the only good move of the day.

In the European morning, I trade the Eurex's Dow Euro 50 future because of its liquidity - more than 1 million contracts a day. The eMini S&P is getting more liquid at that time of day but nowhere near the Eurex contract until closer to the RTH open.

Liquidity is important for me as it gives a better read of Order Flow.

Another reason to get up early is there are days when you know the odds are that we will get a two way rotational day and if you start early you can be earning with relatively little risk for 14 hours instead of just 6 and a half.

Again, the harder I work, the luckier I get.

Last Post before contest...

I'm waiting for the last batch of Cat screens to heat up in the toaster oven before dipping in the secret sauce. So I have a few minutes. The rest of the day is going to be crazy so I won't post again until after the contest.

Nominally this is a two person team, Myself and My son, but in reality there is a large array of people that help out.

First and foremost is my wife Mariellen, without her support and assistance in a million ways both big and small this would not be possible.

My son. Without his help and countless hours this would not be possible. It has been a real joy to spend three years working with my son on a big project.

Bob our Welder. In the past week he has put in as many hours as we have. Without his assistance we could not possibly have been ready.

Charles Pooley of Microlaunchers. Charles has spent countless days and nights out at FAR helping us test.

Carl Tedesco of Flometrics. Carl has been a help both here iin San Diego and out at the FAR site.
He has offered help with both technical, fabrication and just being there to lend a hand.

Steve Harrington of Flometrics if you need to solve a fulids, flow, valving, heat transfer, or aerodynamics problem Steve is the goto guy. His assitance with figuring out the flow and flluid " science part of the rockets has been invaluable. So if you need anyhting done in this area give Steve a call.

Kevin Baxter. President of the FAR organization. Keven has been the driving force in creating a world class rocket test facility from scratch at FAR.

Mark and Ted of FAR. The other two principals in FAR have been invaluable in their help and assistance.

Michael Carden of XL Space systems. He has been my propellant supplier and peroxide guru for all things related.

Tom and all the guys at NetBurner that have been understanding of the CTO vanishing for every increasing amounts of time.

John Carmack and all the guys at Armadillo for being open, kind and helpful to a competitor.

All the guys at Masten, they have all been supportive and helpful.

Wynn Aung and all the people at the FAA that have been helpful and professional throughout the whole process.

Will ,Nicole Bill, and all the Xprize people that have organized the event for 4 years.

All the neighbors who think I'm crazy, but are still supportive anyway.

All the readers of this blog that have offer encouragement and kind words.

Its Still Rock and Roll to Me

"Welcome back to the age of jive". Those were Billy Joel's words in the song. And jive it was today. The Market Profile tells the story best.  As the order flow took price  into the previous day's value the market retraced with double prints, I bought the Dow Euro 50 @ 2816. It didn't take long for me to exit with a 5 tick loss. The cyan lines are drawn in before trading against the MP S&R. The line @ 2803 was taken out with my Order Flow indicator showing good selling so I went short there.  Without being able to read the order flow, there is a high risk of being chopped up at areas of support and resistence.  Then the music began. I took the first 1/3 off @ 2780, the next @ 2760. I held the last 1/3 until the close @ 2750. The pre-market preparation pays off, over and over. I'm a believer in the say that "the harder I work, the luckier I get". Its days with the large ranges that you need to take advantage of. These larger than average profits a few times a month make a difference to your yearly results. K. is still learning. I was pleased she got on the trade OK. Where she had problems was holding on. It's hard for newer traders not to grab that profit after being used to seeing so many losers. Having MP and those lines on the chart make it easier because you can take the first profit, move your stop to break even and then hope for the trade to develop. After the second profit is taken you can move your stop again to the next line.

And as Billy goes on to say:"Oh, it doesn't matter what they say in the papers

'Cause it's always been the same old scene."

Good news...

I went to bed certain that our 180 second vehicle was dead. We split the tank over 20 inches of the main seam. My son and our welder Bob would not give up they got up at 6 am and spent the day grinding bending and otherwise beating the tank back into shape. They then re-welded the bad seam. At 2:30pm this afternoon it passed Hydro. Its clear that we are real close with little margin, but we do not pressurize in the presence of humans so even if it failed we would not hurt anyone. This was a 12 hr detour that we did not need. Its still a Hail Mary to be ready for the 180, but we are not yet dead.

As a result we are probably not going to be ready Friday Morning, its more likely we will try a Friday Afternoon flight and one or more Saturday Flights. I'm a bit hesitant to post the FAR map as we have had some theft problems, but I am going to post it for the next 24 hours.

If you want to come watch the earliest possible start is a Friday Noon safety briefing.
The Saturday Safety briefing will be at 7 am Saturday Morning. If you want to Camp at FAR you can. If yotu are not Xprize or Judges you will need to sign a FAR liabiliy waiver. You must be at the briefing to attend the event. It is very possible that Friday will be canceled entirely.

Far is a good 45 minutes from Mojave, and the road is rough. You may find the map here.

The ball is dropped in the end zone.

The tank failure we had last night is not recoverable in three days. We are not going to fly the 180 second L2 silver ball this year. If Masten continues their recent rapid progress and finishes the L2 180 second flights we will probably never fly the silver ball again. Its basically scrap metal.

At a personal level I've worked on this project for 3 years and spent enough $ to buy a nice house anywhere but CA. . We came oh so very close to fielding two vehicles, a tiny bit less corrosion in a weld and we would have two vehicles ready to fly.(Proof the Silver flew) As a team of two we built and flew two complete vehicles, but the odds are now that we will walk away with nothing to show for our efforts. Its a really really bitter pill.

I'm now going to get a long stream of comments saying you were two guys in a garage up against teams with multimillion dollar budgets. This is true, but there is no junior varsity contest, just the one contest. I started this to compete and hopefully win, its not to be.

My current task is to scrape myself off the floor and try to get the Blue Ball ready to fly. We have a legitimate shot of tying Masten for the L1 2nd prize.

Day After the Trend

 

Click to Enlarge

After  the move of yesterday I expected the market to trade in a range in a fairly normal distribution. Not a prediction but based on observation, after a day like yesterday we get a day like today.

It was the Dow Euro 50: I went Long @ 2818 against the VAL as buying came in. I traded it all the way to the other side of value to VAH and exited the whole position @ 2833. Next was the top of the Keltner channel where selling came at a very overbought area. A failed auction. I went short @ 2835. After some sideways action which saw a lot of selling, the market rotated back down and extended the range. I covered 2/3 @ 2815 and the balance @ 2804, both @ my predetermined S&R points.

As the market had range extended down, I was looking for a short which finally happened @ 2830 back at the VAH. I coverd the whole position on the rotation back down @ 2810 at the oversold Keltner.

The day unfolded as expected. I don't get married to expectations but it helps to visualise the possibilities ahead of time so you can react, K. had a couple of issues. After the first short, she got faked out of the trade because of the sideways chop. Position boredom without quick gratification. She should have looked more carefully at the order flow which was mostly selling during the chop. Second issue for her was that she bought after the range extension where we covered the second part of the short. Problem was she went long without the order flow being clear enough and got shaken out on the pullback. Buying against range extension is difficult because the market is wanting to go in that direction and you get waves of late entries making it hard to hold on, even if you are right. Better usually to wait for a trade in the direction of the range extension.

Progress ,...

We ground off all the mounting tabs we were not using.
We welded the Safety Vent to the vehicle instead of using a heavy Stainless sanitary clamp.
We shortened the legs etc.... So we need to re-hydro the main tank. We got a pin hole leak where we ground off unused tabs. Argh!!! Weld a plate over and try again.. We needed to get to 425 PSI. The Tank Failed at 350 on the main seam. . We had hydro-ed it to 400 in the spring, so over the last 6 months it lost 50 PSI. Probably means we are done for the 180.

We patched the tank on the blue ball after a hydro failure, we will look at patching this tank in the AM, but 95% sure it means no 180 for us.

A trek down memory lane

McDONALD, Pa. - My heart raced and legs burned the faster I peddled down the Montour Trail in Washington County. I wanted to see more of the countryside the farther I biked down the trail, although I had no clue where it would take me. By the time my trip had reached nine miles, I began to see familiar sites, beginning with a trestle bridge near this quaint borough that straddles Washington and Allegheny counties. Just down the road, I could see the Robinson Township Municipal Building where I covered numerous meetings and broke a few stories.

As I rolled farther down the trail, I came upon the putrid smell emanating from the Reaxis chemical plant off Route 980. Local residents were concerned that the plant could expel dangerous chemicals into the community -- it did during one leak several years ago that caused a few problems -- and they wanted warning sirens to alert them in case of another emergency.

A couple miles more and I could see the towering coal refuse dump owned by the Bologna family. Robinson Power Company, which is operated by the Bologna's, plans to build a mid-sized power plant using the thousands of tons of waste-coal dumped on the site over the years. It has been met by major resistance from local residents, although the township supervisors approved the power plant in 2006. The project has been bogged down in permit challenges with the state Department of Environmental Protection since and the future of the power plant is in question as financial backers hedge due to the economy.

This area is still beautiful, however, and the crisp autumn afternoon made it better. I went a little farther to U.S. Route 22 to mark the end my journey. The path re-entered Allegheny County in North Fayette and it felt like it was time to return home. The excursion was fun and challenging, but I should have been thinking ahead a little bit before enduring the 14 miles back to my car. That one hurt, just a little bit. From now on, I'll leave the 28-mile bike rides to Lance Armstrong and Greg Tarr.

Monday, Monday

Click to Enlarge

As the song says, "Monday was so good to me". 4 trades with 3 winners and 1 loser.   Based on a 3 lot, profit of 1350 Euro (about $2,000) before commissions which were about 50 Euro. I was trading the Dow Euro 50 traded on the Eurex exchange in Germany.

Market opened and looked for balance. After an hour or so the orderflow started selling and I entered short against resistance from the MP. I covered 1/3 at yesterday's Point of Control (POC) and the balance @ 2882 as the sequence bottomed. Second trade came out of that sequence with a Long @ 2883 exiting @2889 as MP resistance held. Went Long again @ 2883 with the order flow but was stopped out for a loss of 4 ticks as there was no follow through. The next Long @ 2883 again as buy orderflow came in was a profitable trade. The trade of the day was the last one, Short @ 2888 which I rode down all the way to 2820 taking profits in my usual scales out. Most days have one good trade like this and its important to stay focused so you don't miss it.

My daughter had a tougher day. Late entries resulted in no profits for her until the last sequence, but she finished green on the day as the last sequence had a lot of juice in it, over 60 ticks.

Info for K. (my daughter): Being late on an entry is much worse than being early. Being late gives you a worse trade location which means that your stop loss will be bigger, you take more heat. Being early usually gives you a better trade location but you run the risk of being wrong. Trading order flow correctly should mean that you get instant gratification as you are front running the market.

Progress....

I have a theory as to why the cat pack suddenly died. (80% confidence) and I know how to avoid the issue. It was not my cost saving short cut. The old cat pack is being nitric acid stripped and re-plated. I've got all the material for a new no shortcuts CAT pack arriving at 8am Tuesday, with the Waterjet and Plateing house lined up to get a new one made. This should be ready Wednesday Afternoon.

We spent the day removing 40 lbs form the silver ball (Stainless fuel tanks and plumbing and misc unused fittings and bits. We then added back back 20lbs including a New higher capacity composite fuel tank and pressure bottles for external pressurization. The whole vehicle should be back together late Tuesday or Early Wednesday. It could hold double the propellant and it weighs 20 lbs less. The takeoff limitation will now be engine thrust, not propellant capacity.

If I can duplicate my in flight measured ratio of theoretical to actual performance I'll have 200 seconds of hover.

The LLC judges inspected our lunar pad and it passed.

Someone asked me today when I last had 8 hrs of sleep I asked if they meant in a single week?

Going to sleep UPS promises to arrive before 8 am.

6 Days

Our 90 Second Vehicle is Ready.
Our RTK GPS tests with the helicopter say we have a chance to tie Masten in the 90 sec contest, but beating them outright would require some significant luck.

Our 180 Second vehicle is going to go down to the last minute. I disassembled the Motor and it looks good inside, the screens just look like they all got too hot. I think I need to change my warmup purge sequence. The sad part is that I really don't need to do a Cat pack warmup for normal ops, only for Tether ops as I need finer control of the in initial altitude on tether.

The vehicle flies at least as well as the blue ball, but we need to add a pressurization tank and
make weight reduction modifications to have any margin at all on the 180 second flight. Motor pressure drops are high so we need to hydro to a higher pressure and if the tank fails there we are done. I have parts of a spare Catalyst, but I took a cost reduction short cut on the last batch and they did not last as long as the previous batch. So I need to next day air some screen material and beg the waterjet and plating house to perform a miracle. It is all going to come down to the wire.

As one of the recent Masten posts commented about recent progress "we have had multiple consecutive miracles. " We will need similar to do 180. If we can fly for 180 seconds we can beat Armadillos accuracy, so it becomes a risk reward game.... IE On Saturday morning if we have a vehicle that would cost 50K to reproduce that has a 10% chance of success and a 90 % chance of destruction do we make the attempt? (0.9 * -$50K) vs (0.1 *$1M ) The calculus changes a little bit depending on Masten's result.

Are recently discussed on Twitter, Bon Nova is not going to fly this year.
I know exactly where they are in the process and its a really hard place to be in .
so close, but no realistic chance of completion, we were there last year.

Returning to the scene

We sometimes hear stories about laid off workers being paid a few extra bucks to dismantle their factory equipment and ship it to China. Or about the people whose homes are being foreclosed and they're paid a small stipend to clean out their own furniture and take it to the dump. Well, this wasn't the same, but it was bizarre nonetheless.

I returned to the scene of the crime - so to speak - by offering to freelance for the Observer-Reporter sports department and writing a high school football story Friday night. Covering sports is something I always wanted to do, although I got a little sidetracked in college while just trying to get column inches and experience at The Daily Athenaeum. After a couple years at the college newspaper, I realized I liked writing news and was good at doing it.

But my heart is in sports. So I spent my Friday night at Fort Cherry High School in Mt. Pleasant Township. The Rangers took on the Burgettstown Blue Devils (a school board I covered in my past profession) and won 21-19 in a great back-and-forth game. It was fun, and I felt the rush trying to beat the 11 p.m. deadline (made it by two minutes, by the way). And I received a lot of enjoyment reading my new byline, M. Alan Jones, on the sports section. It's a new phase in my life, right? Maybe it's time for a different pen name, too.

Finishing the Story

My daughter read the blog last night after she got home from a date. She asked why I didn't finish the story about "!'m 38 bid and ask for 100, What do you want to do?" I didn't finish the story because I was only interested in my own punchline about managing the trade. However, looks like I was wrong. The rest of the story was quite relevant. I sold 10 lots. Most locals like to go short rather than go long as you make your profit quicker. I covered my 10 at 35. The Big Local bought at 35 along with me (or was it really me buying along with him) as a BUY order came in from a broker who we knew filled for one of the funds. He sold his back at 39. We BOTH made money taking opposite positions. TRADE MANAGEMENT.

I'll start posting real trades from tomorrow night.

Managing the Trade

This is the last of the informational setup posts. We'll cover the rest as we go along.

This post is about Money Management.

One day when I was down on the floor in the Bund pit there was a big local (big = he traded large size) who was bored and stood in my face and said: " I'm 38 bid and ask for 100. What do you want to do?" He was saying he would buy or sell 100 contracts at 38 and he didn't care which. He knew that all he needed to do was to get the trade on and then manage it. This reminded me of what I had learned from Pete Steidlemayer (inventor of the Market Profile). Pete told me: "Just get the trade on and then manage it". All experienced traders know that trade management is the most important part of trading.

But what is Managing the Trade or Money Management? Basically, it's how you exit the trade. Not just a stop loss but the plan of how you exit at a profit and at a loss. See the word "plan" in bold? I know my exit plan before I put the trade on. Its programmed into my trade platform. But I amend my plan as I go along to fit the Order Flow but always staying within the mathematical parameters I have calculated to make sure that my edge makes me a profit over time.

As I said earlier, I scale out of trades. This way, I am fairly sure of a profit on at least part of my trade. I can also adjust the targets on the second and third parts so that if the trade runs, I can maximize the profits.

Another way to trade is to trade larger size and exit the whole position at the same time. This way, you are getting a profit on the whole position.

Which method my daughter finally chooses will depend on the maths of her trade as well as her comfort zone.

Getting ready to trade. A Day in the Life of the Electronic Local

I start the day marking up my charts with support and resistance. I take these from the Market Profile of the previous day as well as areas that I identified from high and low volume. Again, these are broad principals, not rules. Art, not science. You will get the feel of how to do this after a while.

Next, using colour coding, I take the value area highs and lows and draw horizontal lines on my chart. I also mark any virgin points of control with horizontal lines. The same with the single prints. I look at the whole 24 hours that the market trades.

This way, when the price trades to one of my horizontal lines, I can lean against support and resistance if and when my order flow information is compatible. Further, these are the areas that I will look to scale out.

I am now ready to trade.

I’ve been trading electronically for 15 years and now have the same edge, or more, that I had when I was on the floor.

Putting it All Together

My trading method is fairly straight forward:
- I usually only trade against one of the support or resistance lines I have drawn on my  chart.
- When price is near one of these lines I look at my chart to see if there is a setup.
- If “Yes”, I look for it to trigger and I fine tune the entry.
- That’s it. From here, it’s managing the trade.

One if by mail, two if by e-mail...

"Don't waste yourself in rejection." --Ralph Waldo Emerson

By Amanda Gillooly
BLB Guest Blogger

The rejection came three-fold. The first came by e-mail, the second via the U.S. Postal Service and the last through no communication at all. I had tried not to get my hopes up (or allow them to stay there long if they drifted skyward) but that’s just not my style. I don’t do chill, calm or collected. I get carried away with big, lofty dreams and I crash hard when I get shot down.

Those of you who know me can imagine the spectrum of emotions. They’ve seen that movie. I get devastated, I bemoan myself, I consider plans for revenge (My name is Amanda Blu Gillooly… you killed my dream. Prepare to die!), then I sulk and then I get over myself.

It was harder to get to the “over it” part this time, though. I attribute it to the blow in self-confidence that comes free with walking papers. While the rational part of me (that little, tiny section) knows that it was dollars and cents, when has rational ever won? When it does, it always seems to be a fourth-quarter victory – and a close one, too.

But I did. After I bitched to my sister, complained to my BFFF Scott and broadcasted my angst over several social networking sites, I started to come around. And for the first time since rejection struck, I was able to see things from a more balanced state of mind.

Job #1, the managing editor position, was out of my experience range. A professor at the college I applied to e-mailed to let me know how much competition there had been for the position – with applicants who had ample magazine production experience on their resumes.

Job #2 was a freelance marketing gig I was recruited for, only to be unceremoniously cast off. Not only did I have absolutely no experience in marketing, but as it turns out, no interest in it, either. So why was I so upset? I guess once I get in a tizzy I roll with it.

Job #3? Well, that was a communications manager position I still think I’d be well-suited for. Requiring strong writing, editing and interpersonal skills, it was one I was pumped for, too. But I haven’t heard back. And it has been three weeks. So, while there may be hope for a second interview, I’m not holding my breath.

The rejection felt different this time, but it was essentially the same song and dance. What matters, as always, is what you do after getting the shaft. I asked myself: Are you going to sit and complain and binge drink or are you going to get back to the keyboard, send out some more query letters all the while working to re-inflate your own ego?

I know I should have answered: “Get back to the keyboard!” but I had already bought a case of Blue Moon and it seemed silly not to drink a few. So I cracked one open and began my story – and rejection was the last thing on my mind.

Amanda Gillooly previously worked for the Observer-Reporter and now freelances for The Innocence Institute of Point Park University and PittsburghMom.com. She can be reached by e-mail at amandabgillooly@gmail.com.

Yinz going Dahntahn n'at?

Early followers of this blog will remember my entry shredding our neighbors to the northwest in Cleveland with a couple hilarious videos. Well, I think it's only fair to reciprocate with a yinzer video of our own that made me laugh just as hard as the YouTubes in which Cleveland proudly proclaims that "At least we're not Detroit!" The video below is a take on Petula Clark's classic "Downtown." Anyway, here's a quick tutorial on Pittsburguese. I mean, we should laugh at ourselves and not be jagoffs, n'at.

Plans Update

We are going to go out to the site On Wedensday Morning set up and work on non-rocket flight things. RTK GPS base, Helicopter testing etc....(Can't fly the rocket on Wedensday, I forgot to Fax my FAA notification)
We will be flight testing Thursday and Friday and I think I have help for those days.
Its really hard to plan more than a day or two in advance but its really likely that I'll need some help during the week next week. So if you were so inclined check in on the blog or unrocket on twitter.

The current flight plans are to attempt the 90 second flight Friday Morning the 30th and the 180 second flight Saturday the 31st. If you want to come out and watch you will need to attend the safety briefing TBD some time late next week in Mojave. You will also need to sign the FAR liability waiver, I'll bring copies to the safety briefing.

The FAR site is about 45 minutes from Mojave out route 14. I'll provide a detailed map at the safety briefing.

The trip includes 10 miles of somewhat rough dirt road. (My wife drives her Honda civic out the road so its not too terrible.) Its actually really fun in my STI.

If you want to attend both days and can be 100% self sufficent you can probably camp on site Thursday Night and Friday. We will be camping on site and we will need our sleep so I'd really appreciate no 3am arrivals.

You can find my E-mail address phonetically in the comments of the previous blog thread.

The whim of a traitor

Although I have reserved "whim of a madman" for everyone's favorite shock jock, Glenn Beck, I think a new phrase - "The whim of a traitor" - should now be placed on another right-wing nutjob. State Rep. Daryl Metcalfe has gone off his rocker (again) by issuing a terse e-mail to a group of military veterans touring 21 states and warning of climate change. Now, before anyone goes off about the "Cap and Trade" legislation or its ramifications, I first would like to say that I, too, am unsure whether the proposal makes sense. But that's not the issue here. In Metcalfe's statement, he calls these veterans "traitors" and likens them to Benedict Arnold. Here's what he said, according to the Pittsburgh Post-Gazette...

"As a veteran, I believe that any veteran lending their name, to promote the leftist propaganda of global warming and climate change, in an effort to control more of the wealth created in our economy, through cap and tax type policies, all in the name of national security, is a traitor to the oath he or she took to defend the Constitution of our great nation! Remember Benedict Arnold before giving credibility to a veteran who uses their service as a means to promote a leftist agenda. Drill Baby Drill!!!"

Now, technically Rep. Metcalfe, R-Cranberry, is an Army veteran. I spoke to a polite receptionist at his district office this afternoon and she said he served during the early 1980s in the dangerous battle zone of Germany. She couldn't tell me his rank when he retired in 1984. However, when I pushed the woman on the "traitor" issue, she agreed that these veterans are indeed traitors to the United States because they are endorsing legislation that could restrict coal mining. WOW. She offered a caveat that this is a free country and people can say anything they wish. You're right. That's why I'm writing on my blog that your boss is a flaming idiot.

Well, what if these veterans were touting pro-choice rights, I asked her. Anyone pushing a leftist agenda is a traitor, she responded. WOW.

Metcalfe, of course, is the same bonehead who opposed legislation to promote a Domestic Violence Month in the state because he was concerned that the resolution also recognized abused men. He assumed that meant it covered homosexual men, and that just wouldn't fly with him. WOW. This guy can't honestly believe half of what he says... right?

Although I doubt many who read this blog are in Metcalfe's district, I'll offer a couple of phone numbers for anyone else offended by this idiot's tired act. The Cranberry office is (724) 772-3110 and Harrisburg office is (717) 783-1707, or you can e-mail him directly at dmetcalf@pahousegop.com. The stupidity in this country is increasing each day, and it shouldn't be surprising when we elect ignorant morons like Metcalfe to represent us.

WOW.

Greeted by a hissing stove

I returned back to my house Saturday evening to catch a pungent whiff of natural gas settling in the front hallway. The stench was unmistakable, so I walked to the road and made a quick phone call to 911. As a police reporter, I called emergency dispatchers hundreds of times to ask them questions. Now I was asking them for help.

Luckily, the local fire department is just a half-mile away, so emergency responders were there in less than 10 minutes. They entered my townhouse and quickly determined the stove was spewing natural gas for unknown reasons. I'm sure they get some minor cases, but the first firefighter who entered made it clear this was the real deal. "Oh yeah!" the assistant chief shouted before retreating to his truck for more equipment. They clamped the connection and opened the windows. Within 15 minutes, the natural gas had dissipated and we were back in the house.

So today I went out in search of a new gas stove from The Home Depot. That's the funny thing about not having a job. Your income might be reduced, but the bills keep on rolling. As I swiped my credit card to drop $575 for the GE oven, I thought it might be wise to ask for a job application, as well. Now that I've reverted back to a volunteer for the Sestak campaign, it probably couldn't hurt to have a little part-time income to bump up my bank account. With the economy slogging along through Bush's Recession, I wonder if that potential part-time job might come in handy in the very near future. Especially after I receive this month's gas bill.

Tools of the Trade

Click on Chart to enlarge

 

Now let's get down to details. Charts! 
I put the minimum amount of information I need on my charts. Anything that is on a chart will distract you.  So, the distraction MUST give you valuable information or it just takes away your attention from trading or puts doubts in your head. Remember, we are trading the order flow so that is the information we need to capture on a live real time basis. The charts above are what I trade from. Range Bar chart on the left, Market Profile on the right.

The cyan lines on the Market Profile chart are the support and resistance lines I draw in every day before trading begins. Th ese are the areas where I expect to put  on or take off trades. 

On the Range Bar chart, the dotted yellow lines of the Keltner Channel around the price provide a "normal" channel, so I notice abnormal vertical movement. There are two exponential moving averages through price so I can see the centre of value. Below that is an indicator that shows me where we are in the trading sequence. It is based on the now famous CCI. I started using it in about 1981 when Don Lambert made it available to CompuTrac, a technical analysis group I was a member of.  Below that are the two indicators I use to show me order flow. The first one is a volume breakdown. The lowest one is the cumulative average of that volume breakdown. Are the balance of traders buying or selling. That's all you need.

A quick update...

Currently in the passenger seat of the car on the way home.
Just spent 4 days at FAR camping. Worked on three things...

1)Navigating Pad to Pad flying the exact desired LLC profile with the helicopter, and new GPS system. This work went very well, many exactly repeatable flights, only one scare the GPS needs more voltage for proper operation than all the other electronics, so one flight the system battery was low and even tired, sun burnt and sleep deprived at dusk I mangaged to save the helicopter by taking over.

2)We had a very poorly timed large project for a customer. It was the largest rocket ever fired at FAR and the test went really well. Can't really say more.

3)We tyried to hover the silver ball. We got the altitude stuff under controll, but never managed a stable hover. Nothing we did in the way of loop tuning seemd to help. Got up before sunrise this morning to carefully look at everything in the system. I did some sweeps of the gimbal actuators trying to precisely measure dead band and hystersis. Came up with a sequience where the actuator moved OPPOSITE of the commanded direction. This jives with observations and as we would hover then just all of a sudden flip over to the abort limit. Seems to come and go depending on how I press on the PCB, I had no replacement with me so it means going home.

My son is in the middle of starting a new business and has other commitments for most of this week. I've got business commitments Monday and Tuesday, but I hope to go out to the site
Tuesday night for more testing. We will be short handed so if you are in the So cal area and don't mind hard work in the sun at a site with no good shelter and no running water we could really use some help.

You've KISSed now what do you do?

IF YOU ACHIEVE ONLY ONE THING LET IT BE THIS: Treat your trading as a business and not a hobby. (100% focus, during every second that you are sitting in front of your trading platform. The goal is to preserve capital AND make money.

NEXT:
• Decide your working hours, then be there EVERY working day during that time.
• Focus. When you are working, focus on trading. No telephone chats, no TV, no distractions. There is nothing else during those working hours but trading. If you have to do something else, stop working. In the pit, there was nothing else, just the market.
• Have your trading plan in front of you and stick to it. Keep a log of your trades with the reasons for your actions. At the end of your work session, review your log. If you see regular non compliance then you know you have a problem and you need to take immediate corrective action. Is your plan wrong or incomplete or are you lacking focus and discipline?
• Set up your tools – computers and software, internet connections, broker accounts. Make sure that everything is redundant – if anything fails, you need to have a standby so you can at the very least, close all positions instantly in the event of catastrophic infrastructure failure. Smart phones are a good cheap standby.

"Seeing" the Markets

Now let’s look at what you need to “see” the market – Charts.

I use two charts to trade from for each market that I trade.

I also use a Market Profile chart – standard chart with letters representing each TPO but VOLUME determining the POC for support and resistance.

Range Bars: I use range bars as a tool to remove a lot of the noise from the market. These range bars are sized to suit the fingerprint of each market so I can concentrate on Order Flow.

The bars on my chart are candlesticks, so I can easily see what happened during the bar. Dojis and hammers are easily seen, quite important for me.

A Trading Plan needs to be KISSable (keep it simple st**id)

Trading Plans should be simple and provide principles for:
• Setups
• Entry Trigger
• Trade Management (sizing, risk, exits)

Note that I have said “principles”. Without methodology, there is no trading plan. You need to identify your “edge” (edge is the reason you are confident to buy when the seller sells and be able to repeat your trades and measure their results.

An example of a trading plan set out in clear and easy to understand terms:
1. I will trade the emini S&P
2. I will note every trade and why I entered and exited
3. I will only enter trades at Support and Resistance areas
4. To enter a trade, the following conditions must be met
a. Price is in a support/resistance area
b. If it is a Trend trade then I am entering with the trend
c. If it is a counter trend trade then I am far enough from Value to make a multiple of my risk when the price goes back to Value
d. Momentum is with my trade
e. Order flow to be in my direction
5. Absolute Stop Loss per contract will be 9 ticks but I will not wait to be stopped out if I determine that the trade is a loser.
6. Trade size is in multiple of 3 contracts, all entered at the same time
7. When setup conditions have been met, my entry trigger is alignment of all requirements
8. I will scale out of trades by thirds
a. 1/3 @ 1st support/resistance
b. 1/3 @ 2nd support/resistance
c. 1/3 @ 3rd support/resistance
My scales will be at logical support and resistance areas.

Money Management is the basis of profitability. We will talk a lot about that later.

It's The Pits

How to get the information you need without being in a trading pit.

This was a huge trading challenge and it took me years to figure out how to get this information on a live basis.  (This is the information that allows me to profit each and every year)

To replicate the information I had in the pit, I needed to know the following (in no particular order)
• Amount of volume and whether it was buying or selling – Order flow
• Whether there was any momentum in a particular direction and the short term trend
• Whether we were trading rhythmically and where in the cycle we were
• Where were the areas that buyers and sellers would appear
• What the market structure looked like on previous days and how today’s market structure develops

One of the most ignored aspects of trading is CONTEXT. Without context you cannot correctly understand what information you are getting. One of the first components making up this information is Market Profile (“MP”). I don’t quite use it as Pete Steidlmayer taught me. Instead, I have worked out what required information I can get from MP and now MPs’ only purpose is being just one of a number of combined components I use.

I use MP to visualise the structure I am trading in. I use the previous days’ MPs as well as the current day as it is developing. I look at “value” in the MP sense = acceptance of price.

Another way of looking at value is with moving averages. Correctly used, moving averages give you a lot of information about both trend and value.

I use more traditional indicators such as stochastic, RSI, etc. to give me the cyclical and momentum information, but again, I use them in a different way and construct them differently. A very important point that needs making here is that locals trade in the present. By this, I mean that as a local you are trading what you see now. There is no prediction – you may develop a short term bias from what you see but NO PREDICTIONS. Whatever you think is going to happen, one large order can come in and make the opposite happen, and the trigger a whole lot of other opposite orders.

Components of a trading plan

Next, what components of a trading plan do you need to be profitable?

Let’s start by looking at a local, ME a number of years ago. This was my daily routine. I came onto the floor early, at least 1 hour before the markets opened to prepare for the day.

• First I'd think about what happened the previous day- where we had traded, what the action was and where it was.
• Next, I looked at the overnight trading - what had happened in other similar markets in other parts of the world
• I then looked at whether any significant news was out that day,
• I began trading with this info and then watched carefully everything that happened in the pit – the brokers filling paper, the hand signals of clerks flashing orders into the pit

Now, let me translate that into modern electronic trading jargon.

• What sort of day was the previous day – trend, normal, range bound, what was the trend AND where was the support and resistance
• What happened in the news overnight that might affect the trend or the support and resistance. I now read all my news on line and look at the calendars to see what announcements are due during the day.
• What numbers – numbers are what locals call the government statistics that are announced - these may change the trend or day type during the day and when could they appear
• What was the order flow?

Order flow is exactly what it says on the box: the flow of orders from external parties into the pit. Relevant information is the balance – more buying or more selling, size and volume, commercial or retail (we knew which brokers represented which type of customer).

Do you like juice?

 I’ll still be trading each day.  I will post her questions and my answers and some other info I think might be helpful at then end of the trading day.

 We’ll trade many time zones and many different markets. Money can be made all over the world.  I’ll show and talk about each of these markets and her successes and failures in each of them and why she succeeded and failed.  She'll even tell how much money she is making or losing.

The blog will show the trades I make every day and some of the “why” I took the trade and also some of the “why” I didn’t take the trade.

We'll be trading from Europe.  It's the best time zone if you want to trade during the daylight hours. Europe straddles the US/European/Asian hours. What I tend to do is to take the juiciest parts out of each time zone which tends to be the opening of each time zone market plus the close of the U.S. market.

A Maz-ificent game

It's getting harder and harder to imagine the Pittsburgh Pirates as a championship caliber (or even a major league) team, but the 1960 roster shocked the world 49 years ago today. It still is amazing that team, which won Game 7 against the feared New York Yankees, doesn't get the historical credit it deserves. Although the Yankees had outscored the Pirates by a score of 46-17 during the first six games, the series was tied heading back to Pittsburgh for Game 7. The Pirates blew a 9-7 lead in the ninth, but they had final ups in the bottom half of the inning. And there was scrawny Bill Mazeroski standing at the plate - a player known more for his glove than his bat - cracking the winning run over the center field wall.

While most of the country doesn't even remember this game, a group of Buccos fans and former players still gather at the outfield wall in Oakland to listen to the radio call and commemorate this amazing feat. In a city that has seen 17 years of abysmal baseball, Oct. 13 is recognized as a local holiday for a city starving for meaningful baseball.

Definition of Insanity....

Definition of insanity: Doing the same thing over and over and expecting different results.

Clearly we don't think we are doping the same thing, but the results are really similar....

Drive 4 hours, camp, setup test, fly abort, break the vehicle, driver home 4 hours, fix vehicle, lather rinse repeat.

We should have the vehicle back together tonight. We have fabricated a new version of the the part in the gimbal mount we broke, but we still need to fabricate a brace so it won't break again.

We failed to record data on the last flight, so almost no useful information from the test.
(The error was a tired operator error, not a fundamental problem)
I've spent the morning changing software so data will be recorded automagically without any operator intervention, in 3 places, on the ground station PC, on the telemetry box, on an SD card in the vehicle, just to be redundant.

Looking at what data I do have, several things are clear.... proportionally it looks like the gimbal system needs a lot more differential correction than the vanes did.

The system seems to be a lot more sensitive to every thing being level to start with, the vane system just plain ignores tilts of up to 15 degrees, does not even cause a noticeable start up transient. This gimbal vehicle seems to want to start out with a large transient.

On a spherical vehicle its actually really hard to be sure that everything is lined up level.
The IMU is level, the motor is dead level vertically, but I'm sure I have a center of mass offset for the partially full fuel tank. Again the vanes vehicle just ignored the center of mass offset when flying with the permanganate tank.

I'm not a big believer in software only simulations, I like to build real world analogs and test those, this may change my mind. For a long time my todo list has had a hardware in the loop simulator on the list, ie simulate IMU and GPS inputs to the computer, measure the actual valve and motor positions and use these to run the simulation. This will probably be my winter project.

War is over!!!!

Congrats to our state Legislature for passing the budget! Pay raises and Pink Pigs for EVERYONE!! Thank you, state legislators, for performing your state-mandated duty 101 days late. If I did my job as poorly as all of you did yours, I'd lose my job... Oh wait!

Off by a factor of 57.295779513.....

I've been playing with the high accuracy RTK GPS on the helicopter.
The software reports stunningly consistent positions etc....
But visually the helicopter wanders all over the world.

I've jsut solved it.
The Old GPS reports position in degrees, new GPS reports position in Radians!
Arghhhhh! Since I never actually looked at the lat lon positions I just told the vehicle to remember where "here" is and report distances from that reference point I never noticed.

I like using the binary records from the GPS's as parsing NEMA style text is a conversion that is not needed. If the binary record reports IEEE double format just use them. Alas The two GPS have different byte orders as well one is big endian one little endian, one reports velocity as heading and speed, one reports as vnorth and veast. I got all of these conversions working, but missed the radians/degrees difference. I'm tired and in a hurry, not the best situation for quality software. If NASA can make these kind of errors I guess I'm in good company. (Remember Mars Climate Orbiter?)

Observations....

I've been working on the Vertical issue, so I have not really gotten to work on the position hold and overall horizontal stability. In viewing the Masten Video Several things are clear,

1)Their motor movement is a lot smaller than mine, I think I probably have the gross actuator gain turned up too far.

2)Its real clear that they switch modes on the descent, IE the vehicle it goes into tight position hold mode, the engine then starts moving a lot more.

In any case its cool to watch the videos.

A personal rejection

This time, the rejection letter was personal. Not only did it dash any hopes of working for a major newspaper, but it also was delivered in the mail and actually signed by hand. In an era of rapid-fire e-mails, the signature made the rejection by Pittsburgh Post-Gazette Executive Editor David Shribman somewhat personal.

The Post-Gazette was the first job I applied to after getting my walking papers June 24. Expecting the demise of the Observer-Reporter earlier this year, I compiled my favorite clips - newspaper jargon for stories - and placed them in a manila folder. They sat there untouched for about four months until I pulled them out again and mailed them to the P-G on June 25. This was my opportunity, I thought, to work for a major newspaper and remain in my hometown. But with newspapers across the country slashing payroll, it shouldn't have been a surprise that there are no positions available at the paper. Shribman told me exactly that in his letter.

But the thing that caught me is he actually signed the letter. It wasn't written with the typical printed fake signature most companies use. I could see the divots in the blue ink he used to scrawl his name. That made me wonder: Did he actually review my clips? Did he personally reject me? Does he know my name? I don't need answers to any of those questions. Rather, they were just thoughts that rattled around my head for a few minutes.

The question now, though, is where am I going to apply to next?

Congradulations to Masten.

Congratulations to Masten. They did as good a job as is likely possible.

Their preliminary average landing accuracy was 15cm so based on my understanding of the rules we would have to have an average accuracy of 4.9 cm to beat them The vehicle reference point can move 5 cm just depending on how it settles on the gear. That is impressive.

To Tie and split the purse
we would need an accuracy of 25.9 cm or better.

On Monday I stopped by their shop and got a look at their L2 vehicle (I think I can now say this publicly as they have now published a picture of it) it's very light and looks largely complete. They probably just have to bolt the engine and electronics from xombie on it and they have a real good shot at Level 2.

All in all a very discouraging week.

Forklift Smack view #2

Another on-board view of the forklift smack flight.
I like this view.....http://www.youtube.com/watch?v=uAgY2gK4OL8

Testing 1..2.. smack

We flew twice today. We smacked the forklift again, we are climbing too high , its now jumping off the ground going to the proper altitude sitting there for awhile then slowly ever so slowly climbing up up and away. I need to spend some time reviewing data and trying to understand whats going on.

On the last abort we smacked the forklift and tore off a landing gear.
We were really hoping to get some in flight performance measurements.
No such luck. About all we know is that its performance is better than the blue ball.
Is it enough better to do 180 seconds? That's the $1M question.

We will probably go out again Wednesday night or Thursday morning.

We were testing some new wide angle video and while the picture is not perfect (Its facing the sun) we got some really spectacular smack the forklift video. (The HD stuff takes to long to process on the computer I just don't have time.) This post was written in the car so the MiFi is working while enroute, and the laptop just does not have the cajones to edit video.

I'm really looking forward to Nov 1st.

Testing again...

All tested and ready to go. Were on the way to FAR once more.

In reviewing the video of the last flight I was not really happy with it,
it was stable, but did wallow around more than I'd like. So I did a through review of the code and the adjustable variable settings. I found an error in my integral position gain. In my loop code I'd transitioned from having the displayed integral constant be the proper value or a percent value.
I'd set the value like a percent and used it as a normal so the itnegral gain was 100x too high.
This makes me much happier as the flight visually looked like an earlier blue ball flight that had the same problem. The code set started on the helicopter and transitioned to the blue ball and from there to the silver. I've tried to put all the vehicle specific stuff in a separate compilation modules, but the code has now drifted so I have three similar but not identical code sets.

I Started out with everything under CVS on my main computer with updates from the laptop. Then the laptop died and code was moved to the backup laptop in the field and the CVS stuff has not caught up. The project always has the dilemma, stop and fix a systematic problem where it effects your productivity, but not the actual flight vehicle. 6 months ago these decisions were easier, now it's will the time taken to fix "This" have a payback in the next 27 days.

I'ts pretty clear that the "2nd" gneration is better than the first. The Blue ball is our 2nd gen vehicle, the silver is gen 2.5. We have lots of things we know we would do different on gen 3, yet the current plans for gen 3 add the whole aerodynamics aspect that is missing from the LLC vehicles.

Driving home again...

We tried one hover test this morning about 11:45 am. The vehicle was stable, but we continue to have vertical throttle control issues, as it climbed above the fork lift then aborted when the ropes jerked on it hard enough to exceed the tether tilt abort limits. This happened simultaneously with my hitting abort. Luckily we missed the forklift and did no physical damage. The pressure readings were being erratic all morning and after the flight we did some debugging and one of the transducers shorted, taking out the A/D converter and letting out the electronic magic smoke. Putting short protection on the 4-20 ma transducers has been on my "I really should do that some time list". I guess it will be friday. So if all goes well we will be doing the 4 hour drive again on Friday night.

After determining that the vehicle was not fixable in the desert, we also received a delivery of propellant and decanted that from drums to smaller poly totes. Right before sunset we flew the helicoipter with the full RTK gps stuff running. Much more accurate, Seems to be more stable, but we ran out of light so we will test that more this weekend.


Its 9:30 PM we are 2:45 min from home (my son is driving), I'm on the web with the new MiFi wireless access point. It does not work at the FAR site, but works on the road to and from. In the past its always been that both my son and I wanted to drive as being passenger was really boring,with live internet access now the other eway around as the passenger can surf,,,, I think I'm going to go read the Firday XKCD.

YOU'RE FIRED

This may be casting the net too wide, but Gov. Ed Rendell and every state legislator should be fired. Sure, I realize that some of our elected representatives and senators are on board with the current budget proposal, but that isn't enough. There still is no budget and many of us are starting to pick out Halloween jack-o-lanterns. We have waited three months for approval of the budget - the state constitution dictates it be passed by June 30 - and yet we still have nothing to show for it. Real people are hurting, and your partisan bickering is crushing us.

I challenge each elected official working in Harrisburg to forgo his/her per diem until the budget is actually passed, and pay back your previous expense checks. If this is unacceptable, then I ask you to resign. There are plenty of Pennsylvanians who would gladly do your job and earn your paychecks (including many of us breadliners). It's becoming more and more obviously you are unable to perform the most basic duty expected of America's Largest and Most Expensive Full-Time State Legislature.

The time for games is over. Republicans and Democrats, do your job or get out. Otherwise, everyone's favorite Pink Pig will return during your 2010 re-election campaigns to sling (or roll in) some mud.