My Simple Trading System

Unf I only fairly recently came across this site..
I have spent a good while sniffing around the edges of trading, reading a multitude of books, learning technical analysis (even working with one or two good technical analysts) and placing trades for all sorts of reasons good and bad.. But, as I have learnt, TA is TA and trading is trading.

So,now I have hit upon a simple system that seems to be working well so far - I've backtested and put it to real life action (for around 2 weeks), and its working!

Its the first time I've had consistent, repeatable, profits. I've previously had plenty of periods of small losses, break evens and small gains with occasional good gains.

As I am a very much part time trader I do not have fancy tools of the trade so my charts are limited to my spreadbetters charting system and tools.

I use a money managment system that tries for 3:1 minimum profits and results so far have been that 6 out of 10 trades are positive.

Anyway here is the system, you are welcome to use it, comment on it, change it, - it no doubt needs working on, and can be improved, or ignore it.
Maybe even I've just been on a lucky run- its still early days.
If its any good I acknowledge its down to soaking up the strategies, skills and experience of traders from many sources including this site, many trading books (and even TU - although their teachings play little part in this system).

One aspect ofthe system is that it uses bollinger bands for outer parameters of price action, I'd like to have also tested the system using fixed standard deviations but don't have that tool at my disposal at the mo.

good effort, and i'm not knocking you when i say that most of us have been through this phase, but i'd wager that this time next year, you've dropped most if not all of those "indicators"

if it's working for you great, but if you want to call it "simple" I can see, for example, NewtronBomb's Range Breakout strategy, amongst others, screaming all over these charts .....

best of luck, r_e

http://www.trade2win.com/boards/free-systems/48496-simple-trading-system.html

or this

It is Christmas...

Simple Trading System ... !!

No indicators ..... !!


Theres NO mathematical correlation between how many indicators you use and how much " MONEY YOU MAKE " - NONE.... !!
The " PRICE ACTION is telling you " ALL " you need to know.... !! :idea:

rathcoole_exile said:

good effort, and i'm not knocking you when i say that most of us have been through this phase, but i'd wager that this time next year, you've dropped most if not all of those "indicators"

if it's working for you great, but if you want to call it "simple" I can see, for example, NewtronBomb's Range Breakout strategy, amongst others, screaming all over these charts .....

best of luck, r_e

Click to expand...

rathcoole exile, many thanks for the feedback ...can I take it that with this system I am at least heading towards the right way of thinking for daytrading? ..when you suggest dropping the indicators, does this refer to both upper and lower indicators? I guess the least I could get away with using are the 2 moving averages.. (the MACD & RSI certainly don't seem to add much.)

Meanwhile I'll also take a look at Newtronbomb's system,

rikrok

rikrok said:

rathcoole exile, many thanks for the feedback ...can I take it that with this system I am at least heading towards the right way of thinking for daytrading? ..when you suggest dropping the indicators, does this refer to both upper and lower indicators? I guess the least I could get away with using are the 2 moving averages.. (the MACD & RSI certainly don't seem to add much.)

Meanwhile I'll also take a look at Newtronbomb's system,

rikrok

Click to expand...

mate there's nothing intrinsically wrong with your system, if it works for you, and it's probably better than some or even most that others are using.
I don't want to say you will find it unprofitable, the crux of what I was saying is that over time you will start to see the uselessness** of some or all of your indicators and start to shed them from your system
Whether that improves your profitability I daren't venture to say, but I'm pretty damned sure that dropping them won't negatively affect your profitability.

if you want to see the power of using MAs and still feel the need for such indicators, then maybe also check out Captain Currency"s 3 Ducks system
I am sure there are others that other people will recommend - there are many more approaches (let's not fool ourselves into thinking we have a "system") that can be considered more "simple"

best of luck
r_e

** uselessness is probably an incorrect description but I don't know how else to phrase it - inutility, ineffectiveness, lack of "value add", lack of trading enhancement, inefficacy if such a word even exists ?

or this one

http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html

If your systems work for you, that all it matters.

I use all kinds of indicators to help me trade. My system has been called "a confusing mess". It doesn't matter. It works for me. I use multiple moving averages, Bollinger Bands, K-channels, Stochastics, MACD, CCI, volume, plus a few more. I know what I am looking at at any given moment. The information is clear to me.

My chart

For "indicators" versus "no indicators", I would say this:

The longer the time-frame you trade (e.g. solely on daily chart, or weekly chart), then indicators are probably useless. You can be very wrong timing your entries based on a particular indicator reading being "oversold" or "overbought". You can probably trade with a "naked chart" because those support/resistance levels would seem more obvious. But the shorter the time-frame you trade (e.g. 1-min intraday), the more helpful the indicators would be. I am an intraday momentum scalper. I use TICK charts to trade. I rely heavily on my indicators. If you trade intraday, the indicators can be very useful.

rathcoole_exile said:

or this one

http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html

Click to expand...

r_e -many thanks for the advice & support, I'll check out the systems you recommend here.

I've backtested using fewer indicators this afternoon, -at first it felt a bit like Luke Skywalker when he used the visor to get the hang of THE FORCE in Star Wars (if you recall!?), then it made some sense but for the time being I'll cling to what I;m comfy with until I can rely more on price action.

rikrok

Bolimomo said:

If your systems work for you, that all it matters.

I use all kinds of indicators to help me trade. My system has been called "a confusing mess". It doesn't matter. It works for me. I use multiple moving averages, Bollinger Bands, K-channels, Stochastics, MACD, CCI, volume, plus a few more. I know what I am looking at at any given moment. The information is clear to me.

My chart

For "indicators" versus "no indicators", I would say this:

The longer the time-frame you trade (e.g. solely on daily chart, or weekly chart), then indicators are probably useless. You can be very wrong timing your entries based on a particular indicator reading being "oversold" or "overbought". You can probably trade with a "naked chart" because those support/resistance levels would seem more obvious. But the shorter the time-frame you trade (e.g. 1-min intraday), the more helpful the indicators would be. I am an intraday momentum scalper. I use TICK charts to trade. I rely heavily on my indicators. If you trade intraday, the indicators can be very useful.

Click to expand...

Cheers Bolimomo,
I tend to use the stochastics to help confirm the reversals, thats the main lower indicator I use. Its still early days for my trading (despite the very long 'apprenticeship' I've taken so far) I'm sure my method will adapt.
My biggest problem at the moment is limited time for real time trading - so I'll be taking things slowly.

Another trade I take as & when I get the chance is the 'fade' after the dow opens - seems to work well 3/5 times.

For what its worth a couple more thoughts on indicators .....
I was re reading a part of Mkt Wizards - the interview with Charles Faulkner (NLP) who was saying that all good traders have a methodology, it doesn't seem to matter which one it is as long as they stick to it. The salient point was made by the interviewer, Jack Schwager, which I paraphrase as best I can from memory, <all traders require a perceptive mechanism to view the markets, whether this is gann technique, elliot waves, classical chart analysis, it doesn't matter as ultimately these are all different methods of viewing the same thing - price, through different perceptual mechanisms. What traders are ultimately doing in using their methodology is developing trust in a system with an edge and a building experience that kind of gives them an intuition, or 'subconscious pool of experience' on price.>
I thought that kind of chimed with what r_e was saying above about using less indicators as time goes on.

Classic Trading Mistakes / MERRY CHRISTMAS

Still testing the system, however not getting the same positive results as before.
On review I think this is more down to me than the system. I fell into a classic trap -overconfidence led to me getting lax on position sizing, this was just the first wrong step, the real downfall came next - jumping into trades which didn't fit the system because I 'thought' they were part way through a valid move, then even worse not cutting my losses but trying to make back the money. I know these are classic mistakes. I know well enough not to make them. I have been disciplined on every other occasion but one slip and it all went wrong ((twice)).
Nevermind. Live & Learn.

Thats it for this trading year, looking forward to the next.

Merry Christmas Everybody.

Rik,
m8 bear in mind you shouldn't really be trading this week, volume is too thin, direction too sporadic to make any meaningful assessment of your system
I'm sure you'll get better data and evaluation from 5 Jan.
Just chill for now and enjoy the hols.

merry xmas and all the best for 2009

rikrok said:

Still testing the system, however not getting the same positive results as before.
On review I think this is more down to me than the system. I fell into a classic trap -overconfidence led to me getting lax on position sizing, this was just the first wrong step, the real downfall came next - jumping into trades which didn't fit the system because I 'thought' they were part way through a valid move, then even worse not cutting my losses but trying to make back the money. I know these are classic mistakes. I know well enough not to make them. I have been disciplined on every other occasion but one slip and it all went wrong ((twice)).
Nevermind. Live & Learn.

Thats it for this trading year, looking forward to the next.

Merry Christmas Everybody.

Click to expand...

with the indicators you using check how they are calculed as many have similar inputs and measure the same thing so they might be a tad different but fundamentally the same so no point having 3 of the same thing. imho best would be 1 for trend, 1 for cycle. all the best.

rikrok said:

Unf I only fairly recently came across this site..
I have spent a good while sniffing around the edges of trading, reading a multitude of books, learning technical analysis (even working with one or two good technical analysts) and placing trades for all sorts of reasons good and bad.. But, as I have learnt, TA is TA and trading is trading.

So,now I have hit upon a simple system that seems to be working well so far - I've backtested and put it to real life action (for around 2 weeks), and its working!

Its the first time I've had consistent, repeatable, profits. I've previously had plenty of periods of small losses, break evens and small gains with occasional good gains.

As I am a very much part time trader I do not have fancy tools of the trade so my charts are limited to my spreadbetters charting system and tools.

I use a money managment system that tries for 3:1 minimum profits and results so far have been that 6 out of 10 trades are positive.

Anyway here is the system, you are welcome to use it, comment on it, change it, - it no doubt needs working on, and can be improved, or ignore it.
Maybe even I've just been on a lucky run- its still early days.
If its any good I acknowledge its down to soaking up the strategies, skills and experience of traders from many sources including this site, many trading books (and even TU - although their teachings play little part in this system).

One aspect ofthe system is that it uses bollinger bands for outer parameters of price action, I'd like to have also tested the system using fixed standard deviations but don't have that tool at my disposal at the mo.

Click to expand...

It is a pile of bollox. Why would some rubbish like Bollinger Bands or EMAs work?

lol...FXscalper! You're the most pessimistic person ive ever 'met' on this forum!

FXSCALPER2 said:

It is a pile of bollox. Why would some rubbish like Bollinger Bands or EMAs work?

Click to expand...

i bet the OP is feeling all warm and fuzzy with all the support and encouragement you provided for him.
Merry Christmas EbenezerScalper !
arty:

Back Up Again / MERRY CHRISTMAS

After my losses & lack of discipline I went back in, more focussed & made back 2/3 of it back on cable.... ...in future I will remember focus and be patient.


r_e - many thanks for the advice - after getting the account back up to a more tidy sum this afternoon I am out of the markets til at least 2nd week in Jan. I;ll be away from the net & computers for much of the time, so it shouldn't be too hard..


brutusdog - cheers - I have cut back on 2 of the the lower indicators, but for good or bad at the mo I still like the stochastics, although they only work 50% of the time, at least I know which 50% it is.

Mr FX Scalper2 - Ho Ho Ho Merry Christmas Mr Happy!! try & chill out have a good one!!! !!!
Seriously tho,Please tell me what does work.. I looked at your trading methods posted recently , and they ain't for me (scalpings too short term for me, I wouldn't know where to begin)) as much as mine ain;'t for you.... I see you say on a recent thread 50 pips a day is good going - if thats the case I'm off to a reasonable start, even though I only get the occasional 45 mins in front of a trading screen (partly the reason I sometimes jump in when I shouldn't)....you ask why bbands and emas might work - my post No 12 gives my thoughts (or actually someone elses that I've borrowed) and the answer is that they work as well as anything else that works...or as badly as anything else that doesn't work. Its all in the eye of the beholder, and the finger on the mouse.

I still I have a long way to go before being consistent and happy to increase position size significantly.
A very very merry christmas & happy new year to you all.

FXSCALPER2 said:

It is a pile of bollox. Why would some rubbish like Bollinger Bands or EMAs work?

Click to expand...

very fair comment, but sometimes you need to find out these things for yourself, especially when starting out?