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How to Find a Day Trading System that Works
03-09-2018, 12:29 AM
Post: #1
Big Grin How to Find a Day Trading System that Works
Trading with something can considerably boost your odds of making money in the areas.

The next problem is to find a system that works. Today you have the chance to select from more than 300 trading programs available. Unfortunately only a huge number of them are trading profitably.

Within the next 3 minutes I'll present you the 1-0 Power Maxims for Successful Day Trading Systems, which will assist and support you in your study.

Principle #1: Few rules - clear to see

It could surprise you that the most useful daytrading systems have less-than 10 principles. The more rules you have, the more likely you 'curve-fitted' your trading system to the past, and such an over-optimized system is quite unlikely to create profits in real markets.

It's important that the rules are easy to understand and perform. The markets may behave very wild and go fast, and you'll not have enough time in order to produce a trading decision to calculate complex formulas. Think about successful floor traders: The only instrument they use is really a calculator, and they make a large number of dollars every single day.

Rule #2: Trade electronic and liquid markets

We strongly suggest that you trade electronic markets because the profits are lower and you get instant fills. You have to know as quickly as possible if your order was filled and at what price, because according to this information you plan your exit.

Before you know that your access order is filled you should never place a leave order. When you deal open outcry markets (non-electronic) you may need to wait a-while before you receive your load. By that time, the marketplace may have already turned and your profitable trade has turned in to a loss!

When dealing e-lectronic areas you get your floods in under one 2nd and can immediately place your exit instructions. Dealing liquid markets you can prevent slippage, that will save your self you hundreds or even tens of thousands of dollars.

Principle #3: Make steady earnings

You should always locate a trading system that provides a nice and clean equity curve, even if in the long run the online revenue is somewhat smaller. Most-professional professionals would rather consider small profits every day instead of big profits every now and then. If you trade for-a living, you have to pay your bills out of your trading profits, and thus you must often deposit profits into your trading account.

Making constant gains is the secret of successful traders!

Rule #4: Maintain a healthier balance between risk and reward

I would like to give you an example: If you go to a casino and bet everything you've on 'red', then you've a 49% chance of doubling your cash and a 51-24 chance of losing everything. The exact same pertains to trading: You can make a lot of money if you are risking a lot, but then risk of damage is quite high. You have to look for a healthy balance between risk and reward.

Let us say you define 'ruin' as dropping 20% of the account, and you define 'accomplishment' as making 20% profits. Having a trading program with past performance results enable you to estimate the 'threat of damage' and 'potential for success.'

Your threat of damage should be always less than 5%, and your chance of success should be 5-10 times larger, e.g. if your danger of ruin is 4%, in that case your chance of success ought to be 40% or maybe more.

Concept #5: Look for a program that produces at-least five trades per week

The bigger the trading frequency the smaller the chances of having a losing month. Then 1 loser is enough to have a month, If you have a trading system that's a winning percentage of 700-800, but only provides 1 deal per month. In this example, you may have many losing months in-a row before you finally start making money. Meanwhile, how would you purchase your charges?

Then you definitely have on average 2-0 trades per month, if your trading system creates five trades per week. Having a winning percentage of 70% - your chances of a winning month are incredibly large.

That's the purpose of all traders: Having as many winning months as possible!

Principle #6: Start little - increase major

Your trading system must permit you to begin small and grow large. A great trading system allows you to begin with 1 or 2 contracts, and then boost your place as your trading account grows. This is in contrast to several 'martingale' trading systems that need increasing place styles when you're in a losing streak.

You probably found out about this strategy: Double your contracts everytime you drop, and one winner will get back all of the money you previously lost. It's maybe not unusual to get 4-5 losing trades in a row, and this would already need to trade 16 agreements after only 4 failures! Trading the e-mini S&P you'd then need a merchant account size of a minimum of $63,200, just to meet the margin requirement. That is why martingale methods do not work. In the event you claim to dig up more on Positive Aspects Of Currency Trading 27221, there are many libraries you should pursue.

Rule #7: Automate your trading

Feelings and human errors are the most frequent problems that traders make. By all means you have to prevent these problems. Particularly throughout fast areas, it is vital that you determine the entry and exit points accurately; and fast otherwise, you might miss a trade or end up in a losing position.

Thus you must automate your trading and choose a trading program that both already is or can be automated. Automating your trading causes it to be free from human emotion. The buy and sell operations are automated, hands-free, with no manual treatments and you could be sure that you make gains when you must based on your plan.

Concept #8: Have a high-percentage of winning positions

Your trading strategy should produce over 50 winners. There's little doubt that trading systems with smaller earning proportions could be profitable, also, but the mental pres-sure is enormous. Taking 7 losers out-of 10 investments and not doubting the system takes good discipline, and many investors can't stand the stress. After the sixth loser they start 'strengthening' the device or stop trading it com-pletely.

Specifically for beginners it is a big help if you have a high winning percentage greater than 65% to acquire confidence in your system and your trading.

Principle #9: Choose a system that's tested on at least 200 trades

The more positions you use in your back-testing (without curve-fitting), the higher the probabilities that your trading system will achieve the future. Consider the following table:

Number of Trades 50 100 200 300 500 Margin of Error fourteen days 10-7 62-40

The more deals you have in your back testing, the smaller the margin of error, and the greater the probability of making profits in the future.

Concept #10: Chose a legitimate back-testing period

I recently found these ad: 'Since 1994 I have taught a large number of merchants worldwide a Straightforward and Reliable E-Mini trading strategy.'

That's very interesting, because the e-mini S&P was launched in September 1997, and the e-mini Nasdaq in June 1999, therefore, none of the deals existed before 1997. What type of e-mini trading did this dealer teach from 1994-1997???

Exactly the same applies to your back testing: If you created an e-mini S&P trading method, then you must back test it limited to yesteryear 2-4 years, because though the contract has existed since 1997, there was practically nobody trading it (see chart below ):

Now you realize how-to separate the scam from great working trading systems. Through the use of this listing you will quickly recognize trading systems that work and those that will never allow it to be.

Writers name

Markus Heitkoetter

Author's Info:

Markus Heitkoetter is the CEO of Rockwell Trading and a 19 year veteran of the markets. For more free information and tips and strategy how to make steady profits with online daytrading, visit his website http://www.rockwelltrading.com..
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