Better To Buy Strength or Weakness?

October 3, 2016 5:00 am4 comments

Emotionally it’s a lot easier to buy on strength than to buy on weakness. Buying into a falling market feels unnatural. Your instincts warn that price may continue to fall resulting in lost capital. On the other hand buying when the market makes new highs feels more natural. Price is moving in your direction and the sky is the limit! However, with so many other aspects of trading what feels natural or easy is often the opposite of what you should be doing. Trading psychology can make or break not only your mental state-of-mind but your trading account. In this post I’m going to compare these two different trading strategies on the S&P E-mini futures market and see which one produces better […]

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Step One In Building An Intraday Trading System

September 26, 2016 5:00 am7 comments

If you have been reading System Trader Success for a while you’re probably familiar with how I develop trading systems. The very first step is to come up with a simple idea to act as the seed or core of your trading system. I call this your key concept. This key concept is a simple observation of market behavior. This observation does not need to be complex at all. In fact, they are often very simple. For example, here is a key concept: most opening gaps on the S&P market close if the gaps are less than 4 points. This key concept is very simple, and testable. It is from such observation that I’ll often start to build a trading […]

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Using EasyLanguage To Limit Trades

September 19, 2016 5:00 am6 comments

In this article I’m going to demonstrate an EasyLanguage technique to limit the number of trades your trading system will take within a given period. Most often this is done to limit the number of trades a strategy will open in a single day. For example, you may want your day trading strategy to only take a maximum of 20 trades per day. Once it reaches that number, you wish the strategy to not open any more trades until the next trading day. The code I’m going to write will be a more flexible method than the built-in TradeStation reserved word, EnteriesToday. This works fine in many cases, but what if you wish to limit the number of trades in the […]

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Beginner’s Guide to Quantitative Trading

September 12, 2016 5:00 am3 comments

In this article I’m going to introduce you to some of the basic concepts which accompany an end-to-end quantitative trading system. This post will hopefully serve two audiences. The first will be individuals trying to obtain a job at a fund as a quantitative trader. The second will be individuals who wish to try and set up their own “retail” algorithmic trading business. Quantitative trading is an extremely sophisticated area of quant finance. It can take a significant amount of time to gain the necessary knowledge to pass an interview or construct your own trading strategies. Not only that but it requires extensive programming expertise, at the very least in a language such as MATLAB, R or Python. However as the trading […]

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Optimizing Your Algo: Tips for Beginners

August 29, 2016 5:00 am0 comments

You have created a trading algo. The Algo is profitable in the backtester. Before unleashing it with real money, you’ve got to first tighten the screws. That is, ensure your algo is fine-tuned so it can deliver optimal returns. There’s one major challenge ahead of you. Firstly, your strategy is rather simple. You may go through the detailed process of building and optimizing a strategy, including curve fitting, correlation, and so on. But you want a simpler process – something leaner, that will fit your modest needs. Secondly, you may not yet have mastered the full technique of optimizing. You are still learning and want to try off with a simple process. One technique I find especially simple in optimizing […]

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Finding Out What Works, And What Doesn’t Work

August 22, 2016 5:00 am12 comments

Many traders who try system trading have previously had difficulty at discretionary or manual trading. Most of these folks eventually recognize the benefit of trading a system with well defined rules – a system that has performed well in the past. It is nice to know a trading approach has historically worked, but as with all things related to trading, past performance is no guarantee of future results. Unfortunately, many people who try systematic/algorithmic/mechanical/rule-based trading for the first time bring along a lot of the baggage that they have acquired from their previous method. Depending on the pre-conceived notions they bring into mechanical trading, these new systematic traders may run into a lot of frustration and trouble. Many times, for […]

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