TraderWill

I agree with the previous two posters. Renko charts give you a very clean indication of trend, support/resistance and congestion. Volume is also extremely useful if you're simply looking at a naked chart. There's a thread here that focuses on volume price analysis that you may find helpful. I'd add one more element, and ties in with the comment on doing your homework before the session starts, and that is to also take a look at your markets on a higher time frame. Going to a daily or even weekly chart will help you gauge the markets trendiness or degree of consolidation, and that will make it easier for you to decide whether you'll take breakouts of S/R or fade them. I'll be looking forward to hearing how you progress with your strategy. Good luck.

The performance report shows that your average losing trade is ten times larger than your average winning trade, so a 90% win rate is basically keeping you even. Of course once you figure in the commissions and slippage on all of those trades you're just digging a hole for yourself. You may want to revisit the strategy or look for a new one. As others have said I'd suggest a strategy that has fewer trades each day and also one that has winning and losing trades more similar in size. That way if you can come up with a 60% - 70% win rate you'll do a whole lot better than with the strategy you showed us. I'd steer away from a system that gives the performance you showed us. Good luck

Those are great results, and you've been doing well for the past several weeks with the same approach. Sounds like you're ready to trade live. Start small, one contract, and let your account grow before increasing size. Try to keep your risk to about 1% to 2% of your total account size for each trade, that'll help you survive the inevitable strings of losses. And keep us posted on your progress. Good luck.

I think we do trade to make money, but TheNegotiator makes an excellent point about the right mental attitude going into any individual trade. Assuming that you have a system that's been back tested and yields positive results over a longer timeframe, then you should approach each trade with a neutral expectation as to whether it will be a winning trade or a losing trade. You will have winners and losers in any system. But your focus has to be on excecuting your trade according to your trade plan, which is based on your back test results. Know where the entry should be, where the target and stop will go, and trade accordingly. Don't deviate or improvise. Good luck.

Great post, you're off to a good start in your trading. I'd also add that when you start trading with real money you want to limit the risk you take on each trade. Know what your maximum loss will be, where you put your initial loss. And make sure that you're not risking more than 1% to 2% of your account on any individual trade. That way even if you get 5 or 10 losing trades in a row your account will survive. And although it sounds like a lot, if you have a system that wins 2/3 of the time then statistically you should expect a 10 trade losing streak once or twice a year. Keeping your risk small will allow you to recover from these drawdowns. Good luck.

Hi quad, if you're using technical analysis on your charts then one approach you can use for targeting is to measure the most recent price move, wait for a retracement, and when the trend resumes (if it does), set your target for the same size move. Good luck.

Hi Jim, I don't know what the GBPJPY prediction is based on, but there are some smart people out there and it could well be correct. I looked at the weekly chart for the pair and on that chart you can see that it's been moving sideways for about two years now, after a big drop in 2008. Matter of fact since September '09 and now it's been stuck between 125 and 150. Eventually price will break out of this range, but I wouldn't predict in which direction. I'd wait for the break to happen and then look for an opportunity to get on board the new trend. Good luck.

I second (or third) Technical Analysis by John Murphy and Trading in the Zone by Mark Douglas. And for a more in depth look at technical analysis, Trading Systems and Methods by Perry J. Kaufman (this one is for us geeks).

Tams is correct, in Tradestation you can manually draw the trendlines and have your code take certain actions whenever it interacts with the trendlines. You can also specify different actions to take depending on the color or style (solid, dashed, etc) of the trendline. So definitely doable. Good luck

Hello Feng, You do have to spend a lot more than two hours to learn EasyLanguage programming. Let me try to help you understand this code a little better. First, open the Tradestation Help and in the search tab put in swingHighBar. That'll give you a page that explains what this function does exactly, and what the different input parameters mean. Essentially it'll give you the bar number for the swing high. H[2] means the high of two bars ago, it does not mean that the high is 2. Numbers or variables inside square brackets tell you how many bars ago to reference. Your question about the if - the code is checking if the most recent swing high is lower than the prior highest swing level, which I believe is then used by the program to determine that the uptrend is over. You really need to commit to spending more time learning EasyLanguage, there are simply no shortcuts to that. And I fear you may be setting yourself up for a hard time in the markets if you think all you need is some free trading strategy and a couple of hours time to get started. Buckle down and invest the time to learn, start with the simple code examples in the Tradestation tutorials, write your own simple strategy and test it out, do some demo trading, and if after all of that you think that you have a winning strategy, then go ahead and trade real money. And be prepared to deal with losing trades because they will come and are an unavoidable element of trading. Good luck in your studies.

Hi Feng, If you have specific questions about the code it'd be easier to answer, as the previous posts state. This appears to be Tradestation code and if you have that charting platform you could just run it and see what it does. I think it looks for lower highs to indicate that an uptrend is over and a downtrend beginning and then gives a setup to go short the market. And conversely looks for higher lows to indicate the end of a downtrend and beginning of a reversal. The variables are used to store values calculated by and used in the code. The numbers next to the variables are default values to initialize the code but will be changed as the code is executed on each price bar. Not sure if this helps, if you can narrow down your question it may be easier to answer. Tradestation by the way has extensive documentation about coding in their help file and in the help file reference section there's a link to downloaded their coding tutorial pdf document. You should download it and go through it as it does a great job of teaching how to program in their platform. It explains the use of inputs, variables, logic structures, etc. Some of the commands in the code are actually programmed functions and if you look their name up in the Tradestation help you'll find an explanation of what they do and how to use them. Good luck in your studies.

Hi Sandra, If you've traded before you can probably do a web search to come up with a few suggestions. Fading the opening gap is a popular technique that is based on the belief that most opening gaps will be filled, but I don't personally know the specific rules on how to do it. If you haven't traded before then you'll want to get some general background on technical analysis, which you can probably get by reading a few books from your local library or bookstore. Any market open strategies will make more sense to you if you have the technical analysis background. Good luck

I just ran into this thread today. Are you trading live now or still paper/demo trading JohnnyCakes? Looks like you've settled on a set of indicators that work for you, that's great. You made an earlier post about cutting back on the number of trades you take. That's something I do in my own trading, if I have a strong start with a couple of easy winners then I call it a day. And I limit the total time I spend trading, so even on choppy sessions the damage will be limited. Good luck in your trading, you're doing the right thing by starting slow and paper trading before using real money.

I find the best trading for index futures is typically in the first 30 - 45 minutes after the open. If the early session is choppy however then 11am EST often sees some nice breakout moves. I wonder if anyone else has noticed this. Regards.

feng, if you want to look at historical data use the continuous contract, which for the S&P is @ES. This is not a real contract that you can trade but an artificial contract that combines all the front month contracts. If you want to test the Russell use @TF, for Dow @YM and for Nasdaq @NQ. Good luck in your testing.

Hi Jeremy, One of the first things you should do is learn how to read a chart. You can get a free demo account with many brokers and once you do install the free Metatrader charting package. Maybe spend some time in your local library and go through a basic book or two on technical analysis, and at some point I'd also suggest a book on trader psychology (Trading in the Zone is a good one). After you get the basics down and spend some time experimenting with the technical indicators included in Metatrader, then you can start looking for or coming up with your own daytrading strategies. But continue to learn and don't be too eager to trade with real money, use a demo account instead. The markets will still be there when you've finished your trading education. Good luck in your studies.

Daniel, if you've never programmed before then you have a challenge ahead of you. Look in your charting platform's help file and see if they teach some programming basics there, or maybe there's a link on their website with programming tutorials. Then just go through the tutorial lessons and sample code patiently. Try to program a simple indicator like a moving average, ramp up the difficulty by programming a moving average cross system, etc, just gradually build up the difficulty. A good tutorial will walk you through the process. After you're done with that you can look at the code for the indicators built into your charting platform. I know that you can look at source code for indicators on Tradestation, Metatrader and Ninjatrader, I don't know about any other platforms, no experience with them. It won't be a quick process because you'll be learning a new language. Only after you've learned it can you start coding your own system. Unfortunately there's no shortcut. Now if you have a friend who knows how to program you could get together with him, share your strategy with him so that he does the coding and as long as you know that you can trust him then you two will be the only people trading it. Good luck in your trading.

Hi Dsalas, Have you programmed on your charting platform before? If not then the first step is to learn how to code some simple indicators and get familiar with the programming language. Most charting applications have tutorials to help you. Then if you want to look at support/resistance levels you can code a simple indicator to plot the highest high and lowest low over different time frames, eg the last hour, since session start, last 15 minutes, etc. This can show you clusters of support/resistance levels and you then move to the next step, deciding what you want your system to do when price is near those levels. Good luck in your trading.

I agree that the best time to trade TF and pretty much any of the other index futures is at 9:30. The best volatility usually comes in the first half hour to an hour. If you see that the first ten minutes don't give you any good moves then think about sitting it out. Else if you get some good moves and maybe a couple of winners early on, take your money and stop for the day. Good luck in your trading.

Your starting capital will depend on how well your methodology performs. For example, if you have a system that gives you about 65% win rate then statistically you have a very high probability of getting three losing trades in a row. You also have about a 1% probability that you'll get ten losing trades in a row. A 1% probability is very low but if you trade 200+ days each year it will probably happen to you once or twice during the year. It's usually best to plan for the worst case. You know Murphy's Law will kick in at the worst possible moment, right? Now the question is how big of a hit to your account do you think you can handle financially and mentally. Can you live with a 10% hit? A 20% hit? If your system has 65% winners you know you'll recover either way. In the case of a 10% drawdown you'll need to make back 11%, with a 20% drawdown you'll need to make back 25% to get to your previous equity high. Let's assume that you can deal with a 20% drawdown. That means that the 10 losing trades in a row add up to 20% of your account, so on average the maximum risk you want to take on any single trade is 2% (10 X 2% = 20%). It's actually a bit more complicated than that but this simple calculation gets you close. Similarly if you think that you can only be comfortable with a 10% maximum drawdown then you should risk no more than 1% of your account on any single trade. That was a long way of saying that I agree with the earlier post that you should risk no more than 1% to 2% of your trading capital on each trade. From that you can back into the size of account that you need. If your system's method has average losing trades of 20 pips and you're trading a single mini lot, then your account size X 1% has to equal $20. So a $2000 acount would be your minimum size, $2,000 X 1% = $20. If you want to be even more conservative use the size of your largest losing trade instead of average losing trade. Good luck in your trading.

As Cutshot and AmCan say, manual back testing has the great benefit that it reinforces your understanding of the system rules and will point out areas where you may be unclear on the rules. Maybe even help you spot scenarios that are not even covered by the rules. If you ever buy an automated strategy, make sure that it's not a black box, that the developer actually describes the rules behind the setups and exits. Otherwise the only way you can prove to yourself that it works is by running it live and testing it with a demo account or heavens forbid, real money.

AmCan, it's just an indicator, not a system. As Cutshot says John Carter has been using a version of it for a while. He has a book out, I forget the name, that has a chapter devoted to trading with it. Carter's basic strategy if I recall was to take a breakeout when exiting the squeeze, using the histogram to indicate direction. Not sure what exit rules he was using.

Daveyjones, this is a great topic. If you've been trading for a while you know that there's a lot of hype about the fortunes you can make by trading for a living. The reality is that like every job or business it is a process of gradual growth. And if you know people who've started their own business, you'll know that they lived like paupers for years, building their business to the point where they could reap the rewards by paying themselves a decent salary. It's the same with trading for living. If you have a profitable system, you first need to build your trading account so that you can increase the number of shares, contracts or lots that you trade. You also need to have an idea of how much you need or want to withdraw from your account on a monthly or quarterly basis, that becomes essentially the salary you want to receive. Once you trade enough shares, contracts or lots so that your account grows on average more per month or quarter than what you want to pay yourself as a salary, then you can start pulling money out of it. But not before. You want to be in the position that even after your periodic withdrawals the trading account continues to grow, albeit more slowly. Depending on the initial size of your trading account, and on the profitability of your system, you may have to build your account for one or two years before you can start pulling money out of it. It can be done, but not as fast as some would have you believe. Of course the larger your starting account and the smaller your salary requirements, the faster the process.

Any system that can be traded and tested manually can be programmed and tested through automation. The problem is that many variables and criteria that we apply when trading manually, never make it into the automated system. Small price adjustments around key price levels, decisions about when to take the first trade, when to stop trading, when to adjust our target and stop expectations, etc. are all things that we do almost insitnctively but never make it into a program specification. Or, if we do try to factor all these variables and criteria into the program, the code can become incredibly complex and subject to coding bugs. Furthermore, the programming language itself may limit what can be accomplished through code. Having said that, automation can be invaluable in refining your system. A basic version of the system, without all the nuances mentioned above, can give you a clear idea whether or not the system even has a chance at becoming profitable. It can also help you identify ranges for each of your variables that provide fairly stable results, and can pinpoint values that are over optimized. If you want to see whether your system works better on a 5 minute or a 2 minute chart, you can get the answer a lot faster with automation than through manual testing. Actually letting the automation place trades for you is a much riskier proposition. Besides the risk of programming bugs that will only become evident when they can hurt the most, you're also subject to the risk of power or internet outages. So I feel comfortable using automation to help refine my strategy, but always place and monitor my trades manually.

AmCan, I think you got it. The squeeze itself is indicated by the center line dots, they change color when Keltner moves inside Bollinger. The histogram has nothing to do with the Keltner and BB, it's just a separate directional indicator. Could be a MACD, CCI, price oscillator, whatever.