Category Archives for System Development

The Bullish Outside Month

I came across an article over at the blog, Jay On The Markets, that talked about applying a bullish outside indicator on a monthly chart. The article I was reading is entitled, “One Sign That the Bull May Still Have Legs​”. In this article Jay talks about the incredible run the U.S. broad market has experienced […]

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Best Times To Day Trade

TimingMoney

If you are developing a trading system to trade intraday charts you might want to know when are the best times to day trade. This article is aimed at those who enjoy opening and closing a trade within a day. That is, those of you who are day traders that end the day with your […]

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Risk-Based Position Sizing

Let’s start with a thought experiment. Let’s say we have two traders who are each given identical trading systems to execute on the SPDR S&P 500 ETF (SPY).  Because both systems are identical copies of an automated trading system, both trading systems generate the same buy/sell signals, use identical stop loss and trailing stop parameters.  These two […]

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Improving The Moving Average Crossover System

Let’s take a look at a simple moving average crossover system and see if we can improve it. Specifically, can we improve the moving average system’s performance by reducing the number of whipsaws during those dreaded range bound markets? Whipsaws occur when a market moves from a trending mode to a consolidation mode. During this […]

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Hedging a $500k Portfolio With Optimal Puts

Hedging a $500k Portfolio With Optimal Puts

A reader recently emailed me, asking how he could hedge a “typical $500k mutual fund portfolio”. I’m going to walk through a step-by-step example of doing that in this post.Step One: Choose A Proxy Exchange-Traded FundIf you own a portfolio of stocks or stock funds, you can hedge that portfolio against market risk by buying […]

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Step One In Building An Intraday Trading System

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 […]

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Improving The Moving Average Crossover System

Let’s take a look at a simple moving average crossover system and see if we can improve it. Specifically, can we improve the moving average system’s performance by reducing the number of whipsaws during those dreaded range bound markets? Whipsaws occur when a market moves from a trending mode to a consolidation mode. During this consolidation […]

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Two Dimensional Market Environment Filter

In this article I’m going to demonstrate a technique to help adapt your trading systems to the changing market conditions. In a previous article entitled, “Trend Testing Indicators“, I tested several indicators that could be used to divide the market into two modes: bullish and bearish. These two modes were then used to dictate how […]

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