Guide Of Trading / Building a Profitable Trading System

[xenonhd]

Hello Guys I thought this thread could be very usefull for you Traders

 

I have been testing over 100+ trading methodology + Building Algorythms for 5 years now

I learned that on all thoses sellers/providers there is only 1% that are actually really making money.

Think about this , why would someone that make money would share his secret sauce ?? they would of course keep it for themselves.

it means 98.5% on internet are bullshit and scammers trying to sell high priced Automated system.

 

The things you must ask before buying a Trading system/automated system

 

1)Ask for Account Statement wich has money and real trades , no better proof than a trader that trade his own money right ?

2)Get systems Educated before buying them , God thanks that I found this forum 8-) Thanks Indo-investasi you saved me lot of money.

3)Don't hope making money with a small 10k usd starting capital , you need at least 50kusd for risk managment and adequate position sizing.

4)VERY IMPORTANT most sellers will show show you backtesting results WITHOUT Slippages+Commissions this impact dramticly the performances results changing from Smooth positive eq curve to negative and poor eq curve , Don't get mistaken or scammed guys.

 

The more Trades you have and the more it will impact the profitability

 

example: let's say you have a system that from 2010 to 2018 has 500 trades

slippages is : when you enter a position you never get filled the same price as what backtesting results says

it means you need to add 1 ticks to 2 in futures & about 0.10 cents if you trade Stocks to reflect the reality

 

Slippages

Futures:1 ticks in Crude oil futures = 10$ , 10$ entry + 10$ exit means 20$/trade you multiply by 500 trades that's 10 000$ just in slippage

Stocks:to be determined

 

Commissions

 

Futures:Commissions is the brokerage firm fees to allow you to enter into the position (depends on each brokerage firm)

in this example we are going to use 2,50$ fees per trades 2.50*500 =1250$

 

Stocks: Lets say you trade a 100$/share stock x (stocks has per trade or per shares price bundle depends on the package you took with your broker)

 

Example: 50k/100 = 500 shares you can take a maxmium of 500 shares for a 50k capital

500shares*2.50 +0.05*500shares*500 trades =13250$

 

0.05 is 5 cents per shares as most brokers charge

500 shares / trade * 500 trades (2010 to 2018) =

 

Total slippages + commissions paid in crude oil futures : -10250$ to the overall strategy performance

Total Slippages + commisisons paid in 100$/share (stock X):-13250$ to the overall strategy performance

 

Key points

 

1)Strategy robustness + profitability profit factor at least 1.6 ,drawdown must be under 10k for a 50k capital that's 20% drawdown (don't forget this)

Backtesing must at lwast have 300 Trades minimum so you can start considering the strategy

2) ALLWAYS Perform a Montecarlo Robustness Testing into a strategy(it randomise entries + pricing for calculating the robustness)

3) Preferably Have a Long & Short strategy that has at least 50/50 Long & shorts.

You can have long only strategy but make sure it has passed worst period like 2008 crisis

 

4)Risk Managment** position sizing vs equity allocation Very important , it's actually more important than the strategy itself

 

5)Hedging strategies in as the market goes up or down cause you never know allwyas remember that (Past results doesn't indicate futures results)

 

 

Thanks for Reading & Happy Trading Guys :):)

Edited November 6, 2018 by xenonhd

[Traderbeauty]

Well spoken.

We all appreciate your feedback.

Please let us know if there is a system or methodology you prefer and like.

Jane

[iDov]

“Backtesing must at lwast have 300 Trades minimum”

Isn't there some kind of association between the number of trades & other factors. eg if the win rate is high, and/or profit per trade is very even, are 300 simulated trades really necessary?