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Trading Oil - "Velocity" system


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Trading Oil - "Velocity" system

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  #31 (permalink)
 
michaelleemoore's Avatar
 michaelleemoore 
Missoula, MT Nɫʔay(ccstm)
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Okina View Post
@HoopyTrading

I don't resit the temptation to answer to your post, I hope you will indulge my weakness.
@Big Mike and @sam028 has succeeded in creating a forum that is at the same time respectful, not polluted by vendors of miracles, and also professional. It means that if we see someone that is on verge of doing something stupid (in terms of trading) no one will hesitate to say it. But in a constructive manner. But on the other hand no one is here to say: "I've got the biggest one...". For that I have several other forum names that I have discovered with my 17 years son.

In terms of "big one" I have a big one. I'm not in the category of being a potential interview for the next Market Wizards but I'm just below that one. But on the other hands I've learned with humility a lot of things from the people of this forum. Even if when I was a pro 15 years ago I used to neglect and undermine them. And I know for sure that there are "bigger one" than me here and even if they don't have the same professional records than me they have made by themselves much more difficult things that I've made because I was just lucky to be at right time at the right place with the right people. And I greatly respect them for that.

There are only 2 things that I refuse to provide. I won't go into escalation to provide proof of trading because I'm not selling anything. So I don't owe proofs since I have no clients. And I won't give all the detail of my system because it is mine and because I'm not selling anything. And I'm always happy to share and to explain, to receive questions especially if they are challenging because they help me to improve my trades.

But on the other hand the spirit in which I post here is because I take so I want to give. I take a lot of ideas from other successes and failures and constructive/challenging comments, and I give for the same reason. Maybe some could take some ideas from my trades.

I'm not the moderator of this forum and I hope I have understand its spirit.

Good Trading.

Okina Tora.

Exactly that, Okina. Nicely put.

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  #32 (permalink)
 
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 Okina 
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Here are 2 examples about how I trade my system (I did not take any of those trade but they illustrate well the idea).

First I have a permission indicator that paint bars in red or green (short or long). In my case it is based on price patterns but it could be anything your comfortable with (MA crossing, RSI, DMi etc...). The idea here is quite simple no short when green and no long when red. But it does not mean buy or sell.

After I measure the velocity of the market (here it is a RB chart so it is an velocity in price, but I have the same one on CVB who measure velocity in order flow - the graphic in the lower panel representation could be misleading since when the bar is small it means fast and when it is long it means slow).

Between 10 to 15% of the time I notice an acceleration (sudden increase of the velocity) at the beginning of a trend (when the permission change from red to green or vice versa). This is the pattern I'm looking for in order to take a trade.




80% of the time I notice an acceleration long after the trend (permission indicator) has started. In that case I avoid the trade because this acceleration often means the end of the move.



In the second example you can also notice that for the red move just after the green you have no acceleration at all. In that case I also stay away.


When you use as a filter those conditions on both price and order flow you will have what I call "high probability" of ending with a profit. I try to take those trade.

R.I.P. Olivier Terrier (aka "Okina"), 1969-2016.
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  #33 (permalink)
 
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 Okina 
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As you can see in the example above the difficulty of the system is that in the first example (the good one) if I missed the first acceleration to enter, I do not enter on the subsequent one (even if in that case they would have been profitable - but of course I can't know that in advance and they could have meant the end of the move).

I have presented that in "mechanical" terms. But in more usual terms I could describe it like that : " you see an increase of price, price are rising more and more rapidly, volume is building, the DOM is very active." (of course opposite of that for a short trade).

So my system is just an attempt to quantify a very very common method of trading used by hundreds of day traders.

I've traded on the pit the CAC40 future for a small period of my career and after that I moved to pricing and marketing OTC derivatives on commodities (mostly agricultural ones) so this system if for me a synthesis of those 2 experiences. I want to "see" and "feel" the market but I do it in a more "quantitative" way than most people.

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  #34 (permalink)
 
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 bobwest 
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HoopyTrading View Post
So you are excited about your system, yes? Sucks when you try to implement it live, yes? Welcome to trading. Make it work live before giving folks ideas and hopes.

It is funny...If you look at all the people trying to trade, ALL over the world, trading a single instrument with one contract everyday...Like CL for example...you wonder why at the end of a typical day CL has only ~300K volume. It is because nobody does it LIVE, with real money.

No system in the world will work live unless you can trade it mechanically with your own money live. No ifs ands or buts. Sim is great for set-ups, but not for follow-through.

@HoopyTrading, what is the point of the negative posts you are sprinkling around the forum?

No one needs to be talked down to in these terms. If someone is willing to expose his/her trading to public view, they deserve more consideration than that. They do not need someone to come on like he is the greatest expert in the world and lecture them. It is much better to try to help someone with some kind of useful feedback than dish out all this superior-sounding nonsense.

If I have misjudged you, I do and will apologize. But we try to be more constructive here.

Bob.

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  #35 (permalink)
 
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 Okina 
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While I was writing the above post I have missed a really f... good trade a real text book one by my system... It cost me a potential 31 ticks...


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  #36 (permalink)
 
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 Okina 
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this trade is a fail (real this one)

I scrap it just in time for a poor +2 ticks. I certainly could have managed it better but it was definitely a false signal. What I like with my system is that most of the time my fails produce a small gain a just a small lose.


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  #37 (permalink)
 
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 xplorer 
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Okina View Post
While I was writing the above post I have missed a really f... good trade a real text book one by my system... It cost me a potential 31 ticks...

Wouldn't you agree that 'loss of opportunity is better than loss of capital'?

In other words, if you haven't had a net losing day in the last 5 months (I presume on about 400+ live trades), shouldn't that give you a certain level of confidence in the method you are using, regardless of the trades you miss?

Also, you have stated you are trading this system using only 1 contract. After how many extra trades (or you could say after how many extra days without a loss) are you going to increase that, e.g. to 2 contracts?

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  #38 (permalink)
 
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 Okina 
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xplorer View Post
Wouldn't you agree that 'loss of opportunity is better than loss of capital'?

In other words, if you haven't had a net losing day in the last 5 months (I presume on about 400+ live trades), shouldn't that give you a certain level of confidence in the method you are using, regardless of the trades you miss?

Also, you have stated you are trading this system using only 1 contract. After how many extra trades (or you could say after how many extra days without a loss) are you going to increase that, e.g. to 2 contracts?

I was not that good over the last 5 months unfortunately. At the beginning my intraday equity curve was a super roller coaster. I had to fight till the end of the day sometime in order to finish with a small gain. I was taking all possible trades, my exit system was not ready, and I did not use order flow. At some point during the day I could be at +100 and 2 hours latter at -20... Now that I have set proper filters and a good exit system, my equity curve is very smooth. But it happens recently.

I learn a lot by reading lancelottrader journal. It changed my trading.

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  #39 (permalink)
 
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 xplorer 
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Okina View Post
I was not that good over the last 5 months unfortunately. At the beginning my intraday equity curve was a super roller coaster. I had to fight till the end of the day sometime in order to finish with a small gain. I was taking all possible trades, my exit system was not ready, and I did not use order flow. At some point during the day I could be at +100 and 2 hours latter at -20... Now that I have set proper filters and a good exit system, my equity curve is very smooth. But it happens recently.

I learn a lot by reading lancelottrader journal. It changed my trading.

Well... I still envy you, in a way, for being able to still finish every day in positive, no matter how small, and for having days with that kind of return.... personally if I had a +100 ticks on one contract on any given day I'd consider myself blessed and call it quits for the day, but I appreciate everyone's different.

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  #40 (permalink)
 
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 Okina 
montreal quebec/canada
 
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@xplorer

depending of what is your style of trading I recommend you to read lancelot trading journal. He is much better than me. He did not explain market in the same way that I do but I think that we have very close system. He has done several videos and he is trading his system for years.

The biggest challenge for me has been to learn patience. That is the reason why I don't trade 5 contract not even 2. I read scary thing here. Retail trading is a new word for me and it is scary. I see people with no experience trading 2 or more contract on the bund or 5 on CL with no stop loss etc... I don't need to make 5 time more money (even if I appreciate that) so I will trade 1 for maybe another 5 months and we will see.

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