Last Updated on Sunday, 29 January 2012 12:59
Written by Barry Battista
Sunday, January 29th, 2012
Before taking a look at the upcoming stuff I wanted to mention a couple things.
We had a couple terrible trades last week. It should go without saying that we are not out of the woods yet with regards to the European situation which I believe is creating huge headwinds for the Forex and Futures markets. I am going to continue to trade cautiously (a concept I deviated from last week a couple times with unpleasant consequences) until things have turned around.
In fact, I am quite irritated at the trade behavior we saw, so I am doing something about it. The Futures market is vastly more volatile than the Forex if you can believe that, so code written for it must account for that volatility and try to protect the trader from it. I have taken 3 of those concepts and incorporated them into the Straddle. Had they been in place last week, my 4 digit losses would have been cut by 80 – 90%. Would have still lost, but relatively very little. It is easy to write code that makes money in markets that always behave a certain way. It is much harder to write code that minimizes your losses in all cases.
Anyway, the changes are:
1) If one of your orders goes live before the data comes out, you can have your trade closed immediately. You risk losing the spread in this case but are not subject to the market moving against you if the data comes out the other way, which it often does.
2) If your live trade is in against the data (you are in on a sell when the data comes out as a safe buy, or vice versa), your live trade will be closed immediately.
3) You can request that as soon as your trade goes live, a hard stop is put in as tight as the broker will allow (if your broker allows stops to be placed at that time) and the opposing trade is cancelled if the stop is successfully placed.
These 3 things would have saved me a ton of headaches last week, and from what I saw in the Skype room, I am not the only one. I did some testing late last week and will do more this week. This will be done soon. Keep in mind that in fast moving markets, there is slippage and some brokers will try to block these things from happening, but some will not. There are a number of trades I will be doing this week to test the new code out. I will get this on the street as fast as I possibly can. It will be release v 2.36.
Speaking of the Skype room, I am noticing an increase in venting and complaining in there. We all know the markets are doing poorly right now, particularly those of us that make a living off trading the news. Being reminded of that serves no useful purpose. Posting wins and losses, and discussing the trades and strategies is a good thing. Discussing bad trades is a good thing. Coming up with constructive ideas on how to counteract some of the trade behaviors is also a good thing. There are a lot of savvy traders among you whose cumulative creative juices should be put to use for the practical advancement of the product. That benefits everyone. I am willing to entertain ideas from any and all of you, and have gotten some great ones, most recently from a trader named Andrius. If you are uncomfortable discussing ideas in a public forum, simply Skype me directly, post in the blog, or Email me.
Now, for the upcoming week we have a few opportunities. All of these are potential Straddle trades and OT trades, so plan your week accordingly.
Tue 1/31 8:30 AM – CAD GDP m/m
Wed 2/1 4:28 AM – UK Manufacturing PMI
Wed 2/1 4:45 PM – NZD Employment Change q/q
Fri 2/3 4:28 AM – UK Services PMI
Fri 2/3 7:00 AM – CAD Employment Change
Fri 2/3 8:30 AM – US Non-Farm Employment Change
