All posts by System Trader Success Contributor

Why You Should Really Optimize and Even If You Don’t

optimization

Why You Really Should Optimize And Even If You Don’t… Today’s topic is on optimization. Some system developers don’t believe in optimization. However, I’m going to show you why you should really learn how to optimize, and second I’m going to demonstrate that even if you don’t believe in optimization then “not optimizing” is not […]

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The Art of Crafting an Automated Trading Strategy

For nearly every trader, there is one all-consuming question: How do you build a profitable strategy? Naturally, one would expect to dive straight into the statistics and begin crunching the numbers. Yet, before we delve further into the mechanics – and believe me there are plenty – I want to talk a bit about the […]

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Strategy Testing – Violating These Steps Will Damage Your Account

One of the most rewarding experiences for a TradeStation trader is to pick up a performance report that proves their great strategy idea is indeed a profitable strategy. Strategy testing done properly, as is outlined in this article, can verify the efficacy of your trading strategy and give you confidence to start trading it. But be forewarned, […]

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World’s Simplest Trading System

a-tree-on-the-horizon

Here’s the system: At the end of every month, if the index is above its 10-month simple moving average: the portfolio is 100% in the market if the index is below its 10-month simple moving average: the portfolio is 100% in cash  And that’s it. So, if we take the FTSE 100 Index as an […]

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Avoiding Stock Market Crashes with the Hi-Lo Index of the S&P500

This daily indicator is calculated as the ratio of the number of S&P500 stocks that have reached new 3-month-highs minus those that have reached new 3-month-lows, divided 500. Exiting and entering the stock market according the indicator’s signals would have avoided major drawdowns of the market during the backtest period from Jan-2000 to Aug-2015. Switching according to the signals […]

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Maximum Loss Stops: Do you really need them?

Cartoon Man Stop Sign

We hear it all the time. “You must use stops.” And most of us use them. But do you know how they change your strategy results? Are they improving your results by giving you higher CAR or lower maximum drawdown? Recently I was speaking with a reader about this topic and he insisted that you […]

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What is the difference between Relative Strength and Trend Following ?

The Different

After publishing our Two Centuries of Momentum article last week, we received a number of requests for our thoughts on the recent underperformance of multi-asset, relative strength portfolios Now, we tend to fall more on the trend following side of momentum.  So we wanted to spend some time talking about the difference between relative strength and […]

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A Flexible Trailing Stop Function

The Anatomy of a Stop A stop can be defined by specifying four basic parameters, illustrated in Figure 1 below: Price Reference: The price from which the stop is offset (white line) to create a stop value. Stop Offset: The distance from the Price Reference to the stop value. Price Trigger: The value of price […]

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Stops – When Not to Use Them

Cartoon Man Stop Sign

Using a stop on a position is a very popular risk management technique used by traders. My research and experience has led me to believe they are appropriate for some – but not all – types of trades. Today I will discuss when I believe they aren’t appropriate. In Larry Connors’ new book, “Short-term Trading […]

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Part 2: Using a Self-Similarity Metric with Intraday Data to Define Market Regimes

buy and sell signals

The Self-Similarity metric has been a popular series. Recently the original post was shared on Jeff Swanson’s popular site, System Trader Success which covers a wide variety of thought-provoking articles on trading system development and is worth reading. Jeff has also posted some TradeStation codes for the indicator which some readers may find valuable. In […]

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