Pivots, Patterns, and Intraday Swing Trades: Derivatives Analysis with the E-mini and Russell Futures Contracts, + Website

CHAPTER 14

The Classics Revisited

The New School of derivatives trading is the world of algorithms and data mining. Inherent to this pursuit is the belief that select participants are of some secret cognoscenti, and that by virtue of their business activities alone, trends begin and end in price. Track those in-the-know, anticipate them, recognize their footprints, and then beat them to the door if only by milliseconds of their arrival, and it will be you that rescues the narrow opportunity available from a game that is clearly fixed by these so otherwise specially advantaged.

Utter nonsense. And furthermore, the time and money that is being expended in the pursuit for faster Internet access and higher frequency trade execution—sometimes to the extremes of installing remote servers within the same physical proximity to those of the Chicago Mercantile Exchange (CME) itself—betrays a lack of understanding that the living market animal proceeds on its own pace as it fleshes out trend and trend reversal pattern, independent of how quickly the participants actually arrive at the gates.

Lost in all this flutter over faster exchange server access is the acknowledgment that no amount of speed improvement or higher frequency trading volume will push a lazy consolidation pattern that's forming throughout the 1st Frame of the day any sooner toward its eventual fruition. High frequency trading and algorithmic data analysis has been hard at work for many years now, but just look at the many ...