Traders Log » Trading Systems

Real World Trading Costs Include Errors

TradersLog — Fri, 09 Sep 2011 14:49:31 +0000

A trading magazine recently published an article about a university that runs a FOREX fund as part of its undergrad business program. The students manage $2,500 in real money and learn how to trade. School officials noted that more than 80% of the participants have landed real world internships and

Three Indicator System: 27% a Year Returns

TradersLog — Thu, 01 Sep 2011 16:33:17 +0000

Trading for a living requires steady returns. Equally important, and often overlooked, is that you must avoid big losses to stay in the game. Gains and losses are asymmetric and the math is well known – a 10% loss requires an 11% gain to break even; a 20% loss will need gains of 25% to fully recov

Trading Activity Can Hurt Performance

TradersLog — Sat, 27 Aug 2011 13:11:04 +0000

Value investors in the stock market spend a great deal of time studying the words and actions of Warren Buffett. He has delivered amazing returns in the stock market for decades and created great wealth for himself and others. Buffett applies the principles outlined in Graham and Dodd’s “Securit

Testing Some Simple Mechanical Trading Systems

TradersLog — Fri, 12 Aug 2011 16:57:51 +0000

Many books and articles have been written about how to use moving averages and a variety of technical indicators to trade the markets. Amazingly, very few of these books or articles show actual test results. Back testing is a relatively straightforward process, simple to accomplish with trading soft

Trading Noncorrelated Systems in Small Accounts

TradersLog — Thu, 21 Jul 2011 21:08:05 +0000

Many individuals are drawn to trading thinking they won’t have to do math. This belief is rarely held by successful traders, and few actually succeed in modern trading without some math skills. It is possible to win at trading without understanding any math, but that is the exception rather the ru

Optimizing and Monitoring a Trading System

TradersLog — Wed, 13 Jul 2011 15:21:09 +0000

After finding rules that work, many traders are tempted to optimize the parameters. This is easy to do, and is the beginning of the end of many solid trading plans. If trading a simple MACD system, traders usually buy when the MACD difference crosses above zero and sell when it turns negative. With

Trading System Design: Test Your Edge

TradersLog — Wed, 06 Jul 2011 13:45:11 +0000

Finding a logical reason that your trades should work is the first step in coming up with a market beating strategy. After that, testing is required to be certain your idea actually works in the market because, in the end, markets are driven by emotions and logic will sometimes fail in the face of t

Rules for Trading

TradersLog — Tue, 28 Jun 2011 17:52:27 +0000

Michael J. Carr, CMT After deciding which markets and what timeframe are right for you, the next step is to come up with the rules for trading. There are actually four different types of rules that are needed to have a complete trading system: 1. When to buy/sell 2. How much to trade on e

Designing a Trading System: What Should You Trade

TradersLog — Fri, 10 Jun 2011 15:23:54 +0000

By Michael J. Carr, CMT Designing a trading system is simply a series of decisions. First is deciding what edge you have over all the other players in the market. This isn’t as difficult as it sounds. Using a logical approach to the markets, any individual can develop a unique insight that lets th

Designing a Trading System: The First Step, Worry about Making Money Instead of Being Right

TradersLog — Fri, 03 Jun 2011 18:59:08 +0000

By Michael J. Carr, CMT To be successful in trading means that you make money and the most important rule new traders must understand is that it’s more important to make money than it is to be right. The goal is simply to make more money on the winning trades than you lose on the inevitable losing