Reuters Hot off the Press

Blogspot was down for quite a few hours today and I couldn't upload. Was it self inflicted error or was it outside interference? I don't know but it shows that even Google is not immune to IT glitches. Our technology is evolving but is still far from seamless.


Someone sent me an interesting article:


http://www.reuters.com/article/2011/05/06/us-nymex-traders-crash-idUSTRE7456NH20110506


It talks about the success of algo trading versus the discretionary trading of floor and other traders. I have written in the past that we, electronic traders, have now got the advantage but we must understand what those advantages are and how to exploit them.


I am now firmly of the view that using an algo to enter my trades gives me an extra edge on top of my existing edge. I can enter more consistently, faster, and accurately than by just a pick and click.


One of the advantages of algo trading is the ability to trade very short term and many, many times a day. Why is this an advantage? Well, I think it's easier to see the very short term effects of order flow and trade that. This means that if I go for small target many times a day, my high win rate and tight stops will make me money more consistently.


I'm posting two charts today - Crude and the Euro. You can see the way that Flo eats the trend, trading in the direction of the trend, taking a small profit and then putting the trade back on when there is a pullback.


The effect of this is a high win rate and profits. The concept is very simple which I think is a requirement for any trading methodology.