The Google Flash Crash 10/18/2012

Google was the poster boy for the extreme activity of the day and thankfully it helped make my day rock solid in the profit category. Google had earning released early by maybe a disgruntled employee or somebody that just did not set their watch correctly? Whatever the reason it sure threw the market into a tailspin. When I get such activity the ticks will go off the board and the institutional computers will start to pop orders off like mad, which will make trading almost effortless for me and sure enough it did exactly that. I had 11 trades 9 wins 2 losses. The overall tone to yesterday was down the 4H shows a drop coming in the euro for the next day so I was keen on any sell signal I could find on the shorter time frames to start.

At 9am I was getting a clear reversal signal as I had about the same time yesterday 9:04 I believe this one was only a minute different. The big computers “Institutional” hit again today exactly around 9am for this move. When I see such opportunities of the flow of price moving exactly on time with my ALGO signals I go full leverage 5% on each call or put. Today was exactly repeating yesterdays price behavior so I did that without hesitation.

* Google Flash Crash * This was my favorite trade of the day I missed catching the 1:38 bounce exactly but that is ok because I was not comfortable with the buy due to the earnings miss by Google but the sell @ 1:50 exact I was going to take with out hesitation as it was available to trading on 24options. My entry was precise for 1pm expiry and extremely confident from all my data that the continuation drop would push hard at 1:50 and it did then a min or so in it was Halted. Now I have only recently started trading binary options and though they are perfect for my ALGOs I have no idea how a broker such as 24option would handle a stock being halted. I was pleasantly surprised to find out they give you the last settlement price for expiry so from 694 to 687.20 it expired ITM. I would have really liked to see it not have been halted thinking the next drop was likely to be very steep according to my data.

My next few trades were all cleanups on the technical damage to the market done with Google earnings. As you can see the I was sitting around just waiting to find entries on the Dow S&P & Nasdaq. This trade here on the Dow was the cleanest. The movement on the S&P 500 did not have a good match for me.

In summation my day was super easy the only gripe I could have, is in knowing I missed 2 good signals that were perfect matches for entries both of which ended in the money. It does happen even to an almost mechanical entry system. As time goes on I plan to develop a scanner for my ALGOs in order to increase my profit potential on a daily basis. Due to the complexity of my system I will have to likely turn my trading room into a computerized war room. I will for sure have pictures posted of this which will resemble something akin to the movie “The Matrix” and be of great entertainment value to others haha. In my next article I will go over “The Kelly Ratio” and “Healthy Habits of a Successful Trader” Until next time, have a great day!