Strategy Session: As the Market Changes so do the Odds

Strategy Session: As the Market Changes so do the Odds

Dec 7, 2006

We are taking a position on the market and backing it up with The Odds Maker.

A couple of customers using The Odds Maker with positive results emailed us separately with interesting observations to share:

#1 The market is efficient
When they find a strategy with a great Odds Maker summary, the market eventually reduces the efficiency of the strategy as more market participants work the pattern or underlying themes within market evolve. For example fading afternoon breakouts may become less profitable if the market exhibits momentum tendencies.

#2 Trading the markets requires the mentality of a pitching coach
Like strategies certain pitchers are called in for specific situations. Strategies that might not have worked before can work now and strategies that have worked in the past may stop working.

We agree with our customers’ observations. As a result we are also calling a change we are seeing the markets.

When we initially launched The Odds Maker beta, the market was different than it is today. It was easier to find strategies to fade and to short. Today the better strategies are found on the long side. As an example I would like to point out a strategy that would have never worked even a month ago but is now showing very nice returns.

Strategy Session:

Long 200 Day Highs – Hold till 30 minutes before the Close

How It’s Modeled:

The set-up includes these filtering conditions:

Min Daily Volume=100,000 (Shares / Day) Min Daily volume set to 100,000 shares/day

Min Current Volume=5 (Ratio) Min Current volume set to 5 (must be trading 5x its normal volume at time of alert)

Min Count=20 (Alerts) Min Count set to 20 (only report the alert after the 20th instance – to establish a pattern)

and just one alert:

New high; Filter=200 (Days, i.e. 52 week high = 365) New High set to 200 days

Take evolution as another example. You can be successful at what you do and do great for a long time but what happens when things change? Many animals, like the Sabertooth, died out simply because they had done so well, had become so specialized at doing what they did that when the environment changed they simply were not able to adapt, and hence died out.

So went many a SOES traders who knew how to work the system with SOES and SelectNet, but were not able to adapt to a changing market. Today the traders who scalp the NYSE are facing the same situation: Adapt or die.

The Odds Maker is a tool that helps the trader adapt to whatever is happening. A gut check that should tell you to stop what you are doing if it is not working. Don’t bang your head against the wall time and time again only to expect a different outcome the final time. That is the mark of insanity.

We will continue to give example of things that are working right now and how we found them using The Odds Maker. We really appreciate all the emails from users to help us see how people are getting results.


  • Link to other articles about The Odds Maker.
  • Link to other Strategy Sessions.
  • Remember that these set-ups are sketches meant to give you an idea how to model your own trading plan. Use this ‘as is’ or modify it to your own liking as many others do. Know, however, that and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, alerts and all other features are for research purposes only and should not be construed as investment advice.