daytrading oct 27 morning, page-241

good article in Tharp newsletter this week - worth a read

talks about VIX, structural changes and traders improving span of control

link and a few snippets below

http://www.vantharp.com/Tharps-Thoughts/Weekly_549_Oct_26_2011.htm

Here are some examples:

•Regulatory Changes:

?January 1997—Order handling rules changed and opened up data access execution channels to retail traders and spurred the Day Trading revolution.

?2001—Stock prices were stated in tens of cents rather than fractions of a dollar. The change was referred to as decimalization, and scalping of the bid/ask spreads ground to a halt for small volume traders.

•Monetary Policy Changes:

?2002 – 2004—Greenspan expanded credit even with recovery underway, which then led to a real estate bubble and a four-year bull stock market without a single 10% correction.

?March 2009 – May 2011—The real estate bubble/debt crisis bailout fueled the rally.

•Technology Changes:

?1920s—The telephone reduced trading cycle response time in Jessie Livermore’s era.

?1995 – present—The Internet has reduced news cycles and, therefore, trading cycles.
These are just the first few environmental changes that came to mind. Clearly there are many other examples and probably even more significant ones out there!

What we are experiencing now in the markets is a combination of all of these outside influences: regulatory, monetary, and technology changes have combined to reduce cycle times and expand volatility. Today we’ll concentrate on the volatility issues and leave the cycle time reduction for future discussion.


10 Ways to Improve Your Span of Control

You have to know where you are before you can consider how to improve with your active trade management processes.
Here are some things you can do to improve your span of control:

1.Simplify your rule sets.
2.Rehearse contingency situations.
3.Use automatic trailing stops to manage open positions.
4.Trade symbols you are familiar with.
5.Identify the main themes of the day, week or month and stay with them.
6.Improve speed of execution.
7.Automate information gathering.
8.Increase the speed of your decision-making.
9.Reduce the amount of information required to act.
10.Stop believing that you are right and truly look at what’s happening now.

Improving your span of control can afford you more open positions with smaller relative risk per position. If you stay within your maximum portfolio heat, you will reduce the probability of ever experiencing maximum single moment drawdown