Every trader has certain trading tactics they have acquired over the years that provide the basis of the method they use to trade the market. Although the applied approach may resonate and bring a high level of trust, the success ratio without a standardized TradePlan and normalized TradeStrategy will lack consistency and not be sustainable. Performance is enhanced when trading tactics are applied within the construct of a normalized TradeStrategy and optimized when executed within defined parameters incorporating dynamic order flow events. The result is a more effective MyTradeTactic that provides a comprehensive structured approach to trading that is applicable across all markets and state conditions.

TradeTactics Optimization Analysis

The Optimization process starts by incorporating risk/reward parameters into a normalized TradeStrategy. This performance enhancement process shifts the focus from the macro structure of the strategy to the micro structure of a trade tactic, whose effectiveness is enhanced by including risk and reward parameters.

Performance Enhancement

A standardized TradePlan and normalized TradeStrategy provide the macro foundation to create a sustainable trading program that improves consistency by having a structured approach to trading. Executing the program involves applying TradeTactics in the micro structure which can be optimized to improve their effectiveness with Risk and Reward Parameter thresholds.

• Entry Acceptance Zone
  • Risk Parameters – The AD and VAR metrics define the area of signal acceptance or “sweet-spot” that is associated with each Directional level on the PriceMap Framework. If entry is focused too close to the level, the TradeTactics will “miss” opportunities (winners), that “just didn’t make it” to the point of entry but will participate in all of the losers when the market goes through the level. Applying trading tactics only within the Entry Accepetance Zone improves their effectiveness

• Exit Limit
  • Reward Parameters – The APMD metric provides a guide to the Exit Limit placement which can be enhance by incorporating the Market Metrics to define the area of influence that is associated with each Target level on the PriceMap Framework. The effectiveness of TradingtTactics to reduce profit-giveback are improved by aligning Exit Limits within the MarketMetric thresholds.

• Trail Stop Adjustment
  • Risk Parameters – The VAR metric defines the area of influence that is associated with each Validation level on the PriceMap Framework. Position management TradeTactics are optimized by using this metric to make trail stop adjustments more effective.
• Exit Stop
  • Risk Parameters – The VAR, AD and MSD Market Metrics identify the risk parameters associated with each level on the PriceMap Framework which can be used to optimize STOP placement. The effectiveness of these metrics are further enhanced with the confluence of price structure and order-book liquidity.

• Profit Management
  • MyTradePlan– Each individuals profit-giveback threshold is unique in terms of the amount of unrealized gains they are willing to risk for additional profit. Profit Management TradeTactics are optimized when these thresholds are integrated making the approach more effective.

OrderFlow Dynamics

JSServices applications and analytics provides a comprehensive overview of the macro technical conditions. TradeTactics can be optimized by incorporating the micro dynamics of the orderbook to make them more effective.

• Liquidity Shifts
  • Shifts in liquidity improve timing by identifying that conditions in the order book are changing and TradeTactics should be adjusted to this fact.

• Imbalance
  • Order imbalance when aligned with the PriceMap framework identifies and confirms opportunities so TradeTactics can be applied to capture these dynamic occurrences.

• Intensity Of Trade
  • The intensity of trading activity is a good confirmation event for both FADE and REVERSAL momentum shifts as well as momentum BREAKOUT trades which can improve the timing and optimize TradeTactics.

• Large Lot Orders
  • Knowing the make-up of the order-book provides insight to the stability of the liquidity at a specific price point. TradeTactics adjusted for this fact are optimized and become more effective by differentiating between the stability of liquidity levels inside the order book.

• Resting Paper
  • The dynamics of the order-book make all resting paper “fleeting” however the length of time that it persists at a level can impact its reliability that it is “there”. In addition, identifying alignment of long term resting paper with price structure and risk parameter Market Metrics can improve the effectiveness of entry, exit, stop placement and position management TradeTactics.