System M82
- Thread starter godfather
- Start date
GF, Saw the board and remarking in that context - tough times never last, but tough people do. Hang on there, inspite of the challenges.. you can make it.
Good luck.
Next Few Days are important for me.....Last step before turning into a Full time trader...will not be visiting TJ for few days because of this last commitment
Take-care all of You and a Happy weekend to all...
Enjoy buddies ....Hope To See U All Soon....
Good luck.
Next Few Days are important for me.....Last step before turning into a Full time trader...will not be visiting TJ for few days because of this last commitment Take-care all of You and a Happy weekend to all...
Enjoy buddies ....Hope To See U All Soon....
A great trader asked me once what I wanted my system to do, and I responded vaguely about outperforming the market. He pushed me for the performance statistics I was after, and I told him what they were, but I said that I needed to see what the system would do first. He basically told me that I had it backwards. He said very specifically to start with the performance I was expecting and design a system to that specification.—Frank Gallucci
What is a Trading System? by Van K. Tharp
What most people think of as a trading system, Van would call a trading strategy that consists of seven parts:
Set-up conditions.
An entry signal.
A worst-case stop loss.
Re-entry when appropriate.
Profit-taking exits.
A position sizing algorithm.
Multiple systems for different market conditions (if needed).
The set-up conditions amount to your screening criteria. For example, if you trade stocks, there are 7,000-plus stocks that you might decide to invest in at any time. Most people employ a series of screening criteria to reduce that number down to 50 stocks or less. Perhaps they might look for stocks that are great “value,” or stocks that are making new all-time highs, or stocks that pay high dividends.
The entry signal would be a unique signal that meets your initial screen and that you’d use to determine when you might enter a position—either long or short. There are all sorts of signals that can be used for entry, but they typically involve some sort of move in direction that occurs after a particular set-up occurs.
The protective stop is the worst-case loss you would want to experience. Your stop might be some value that will keep you in the trade for a long time (i.e., a 25% drop in the price of the stock), or something that will get you out quickly if the market turns against you. Protective stops are absolutely essential. Markets don’t go up forever, and they don’t go down forever. You need stops to protect yourself.
A re-entry strategy. Quite often, when you get stopped out of a position, the stock will turn around in the direction that favors your old position. When this happens, you might have a perfect chance for profits that was not covered by your original set-up and entry conditions. Consequently, you need to think about re-entry criteria.
The exit strategy could be very simple. It is one factor in your trading over which you have total control. Your exits control whether or not you make money in the market or have small losses. You should spend a great deal of time and thought on your exit strategies, for one very good reason: you don't make money when you enter the market, you make money when you exit the market. Far too many people focus only on market entry, or what to buy, rather than on when to sell. If you approach trading with an exit strategy, it will benefit you right away.
Position sizing is that part of your system that controls how much you trade. It determines how many shares of stock you should buy or “how much” you should invest in any given trade. It is through position sizing that you will meet your objectives.
Finally, depending upon how robust your trading system is, you might need multiple trading systems for each type of market. At minimum, you might need one system for trending markets and another system for flat markets. Many professional traders have multiple systems that operate in multiple time frames over many markets to help offset the enormous portfolio dependence of a single trend-following system.
Your system should reflect your beliefs (i.e., who you are as a trader and as a person). Many people are just looking for “any system that works,” but if your trading system doesn’t match your beliefs about the markets, you will eventually find a way to sabotage your trading.
What's more, most people have never really taken the time to think through what they truly want from their trading in the first place. They don’t have specific objectives in mind. They think they do, but they really don’t. They just have a vague concept in their heads that they "want to make a lot of money," but objectives are 50% of designing a system that fits you.
Examples of possible objectives:
I want to become a full-time trader making 30% per year for my clients with potential losses no bigger than half of that.
I want to spend less than three hours a week on trading and get the maximum yield out of my system. While I’d like to minimize my downside, I’m willing to risk whatever it takes to get maximum returns, including losing it all.
I want to limit my drawdowns to no more than 20%. I’d like to make whatever I can, but minimizing the drawdowns is my primary objective.
No system is a money-making machine that can be turned on and print cash forever. Systems must be evaluated and revised to adapt to changing market conditions. And while there are ways to measure the quality of the system, you will never trade a system properly if you don’t feel comfortable trading it, just as you might have trouble following the advice of newsletters because you don’t feel comfortable taking certain trades that they recommend.
Improving your trading performance will not come from some indicator that better predicts the market. It comes from learning the art of trading and understanding how to create a trading system that fits your wants, needs, desires and lifestyle.
So ask yourself, how much time and money am I willing to lose trying to trade other people’s systems?
What most people think of as a trading system, Van would call a trading strategy that consists of seven parts:
Set-up conditions.
An entry signal.
A worst-case stop loss.
Re-entry when appropriate.
Profit-taking exits.
A position sizing algorithm.
Multiple systems for different market conditions (if needed).
The set-up conditions amount to your screening criteria. For example, if you trade stocks, there are 7,000-plus stocks that you might decide to invest in at any time. Most people employ a series of screening criteria to reduce that number down to 50 stocks or less. Perhaps they might look for stocks that are great “value,” or stocks that are making new all-time highs, or stocks that pay high dividends.
The entry signal would be a unique signal that meets your initial screen and that you’d use to determine when you might enter a position—either long or short. There are all sorts of signals that can be used for entry, but they typically involve some sort of move in direction that occurs after a particular set-up occurs.
The protective stop is the worst-case loss you would want to experience. Your stop might be some value that will keep you in the trade for a long time (i.e., a 25% drop in the price of the stock), or something that will get you out quickly if the market turns against you. Protective stops are absolutely essential. Markets don’t go up forever, and they don’t go down forever. You need stops to protect yourself.
A re-entry strategy. Quite often, when you get stopped out of a position, the stock will turn around in the direction that favors your old position. When this happens, you might have a perfect chance for profits that was not covered by your original set-up and entry conditions. Consequently, you need to think about re-entry criteria.
The exit strategy could be very simple. It is one factor in your trading over which you have total control. Your exits control whether or not you make money in the market or have small losses. You should spend a great deal of time and thought on your exit strategies, for one very good reason: you don't make money when you enter the market, you make money when you exit the market. Far too many people focus only on market entry, or what to buy, rather than on when to sell. If you approach trading with an exit strategy, it will benefit you right away.
Position sizing is that part of your system that controls how much you trade. It determines how many shares of stock you should buy or “how much” you should invest in any given trade. It is through position sizing that you will meet your objectives.
Finally, depending upon how robust your trading system is, you might need multiple trading systems for each type of market. At minimum, you might need one system for trending markets and another system for flat markets. Many professional traders have multiple systems that operate in multiple time frames over many markets to help offset the enormous portfolio dependence of a single trend-following system.
Your system should reflect your beliefs (i.e., who you are as a trader and as a person). Many people are just looking for “any system that works,” but if your trading system doesn’t match your beliefs about the markets, you will eventually find a way to sabotage your trading.
What's more, most people have never really taken the time to think through what they truly want from their trading in the first place. They don’t have specific objectives in mind. They think they do, but they really don’t. They just have a vague concept in their heads that they "want to make a lot of money," but objectives are 50% of designing a system that fits you.
Examples of possible objectives:
I want to become a full-time trader making 30% per year for my clients with potential losses no bigger than half of that.
I want to spend less than three hours a week on trading and get the maximum yield out of my system. While I’d like to minimize my downside, I’m willing to risk whatever it takes to get maximum returns, including losing it all.
I want to limit my drawdowns to no more than 20%. I’d like to make whatever I can, but minimizing the drawdowns is my primary objective.
No system is a money-making machine that can be turned on and print cash forever. Systems must be evaluated and revised to adapt to changing market conditions. And while there are ways to measure the quality of the system, you will never trade a system properly if you don’t feel comfortable trading it, just as you might have trouble following the advice of newsletters because you don’t feel comfortable taking certain trades that they recommend.
Improving your trading performance will not come from some indicator that better predicts the market. It comes from learning the art of trading and understanding how to create a trading system that fits your wants, needs, desires and lifestyle.
So ask yourself, how much time and money am I willing to lose trying to trade other people’s systems?
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