How to be a Successful Full Time Trader

Dear TraderJi,

Thanks for a very nice explanation. I was just wondering if mechanical system may be automated system or one has to make his trading methodology mechanical? Can you please guide us about working and results of the automated systems?

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Tharp used to tout David Mobley as his most successful student, calling him a 'supertrader'.
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hi friends,
i am new to this forum. can any one help to get the free e-book of
THE WAY TO EMOTION FREE TRADING.
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traderji,

Pl. tell me 3 trading methods for this quote

Thanks

Ajit14

Hiya Ashsih ,

I completely agree with traderji 100% and I've said it before. To be profitable in the long run, you must have a mechanical trading system. All the professionals who have made money trading have said this. If you read the Jack Schwagers books you will find most of the famous traders interviewed have used mechanical trading systems.


The reason is human emotion is discounted in a professional traders life there is no room for human emotions like greed, fear hope etc... and that is where we break the rules.

Once the system is written and optimised it must be backtested thoroughly in different markets and market conditions. Once optimised we must have faith in it and stick to it no matter waht even when the times are bad.

An example of such a system is the dlngroups site. You will notice they have developed and optimised a completely mechanical trading system, there is no human emotion involved. If you calculate the profits had one traded the system you would be very impressed. Unfortunately in India all the we can do is develop our own systems we can not an automate the trading process, so we have to sit at our terminal and trade the buy/sell signals generated by our system this is a big drawback, in other countries even the trades are automatically done by the systems like Tradestation 8.1 and Wealth labs neural networks.

Amyway I am giving an example of a very simple system for nifty futures. I have not developed it but the results are good. Its developed by some guy called Raja Kumar. Please do not trade the system as it has not been backtested more than a year .

Thre are 2 kinds of systems trend following and counter trend systems, this is trend following system using moving average crossovers.

The basic of the system are

1) 70 nmin EMA > 1050 min EMA go long if its the other way go short. C chart if green is above orange long if orange is above green short.
2)210 min EMA magically gives support and resistance very accurately in 10 min charts. You can use this for stoploss or pullback b4 entering or exiting.
3) If RSI<30 dont short.
4) Stoploss 0.8%

Check the chart for example.

Now just see the backtested results for one year in Amibroker on 10 min intraday charts.

Initial capital 5 lakhs for long trades and 5 lakhs for short trades

Rs 3750550 ending capital on long trades and Rs 1906552 ending capital on short trades

Rs 3250550 profit on long trades and Rs 1406552 on short trades

At the end of the year 658% profit on long trades and 381% onshort trades

This is the performance over the last year.

Basically 938% total returns returns on margin capital

In other words if you didn't waste ur time predicting the market index but just sat and followed these rules everyday for the last year blindly you would have made 938% total profit.

This is the power of mechanical trading systems and the 5% of traders in the world who make profits do it this way.

DO NOT TRADE THIS SYSTEM IT IS NOT THOROUGHLY BACKTESTED, THIS IS ONLY TO ENCOURAGE YOU TO DEVELOP YOUR OWN SYSTEM AND SHARE WITH US.

Although I too am workig on such trading systems I am still struggling with AFL.

Attached Images

nifty_system.PNG (23.5 KB, 115 views)

Hello Marcus

Very interesting post.

I think everyone agrees that we stand better chance with a well defined system, which should be used mechanically and the system should be consistently used over a period of time. Almost all the seniors emphasize on consistence (read mechanical implementation) rather than the system itself.

The system you have shared looks quite promising; the simplicity of the system is its beauty.

Since past few days I have been using a similar system using crossovers. I use 50/200 (minutes) EMA instead of the ones suggested by you. I have had some encouraging results. These simple cross over systems give quite a few false signals, (I would estimate more than 50%) but in spite of that if we keep strict stop loss (1 * ATR+, in case of 50/200 Mins EMA) we average out as winners.

The problem is trying to second guess, not taking all trades, not being so strict in putting/taking/honoring stops, booking profit too early, etc. etc. (I know, for many of us, its like, Been there Done that! )

The chart you have uploaded seems to be a 5 day yahoo chart of nifty with EMS specs that you have mentioned in your post. For those who would like to chk out Marcus's system live, here the URL, can save the Link and use it during market hours -- -- Marcus's System


Here's is a link to what i use Nifty 5 Days with 50 EMS, 200 EMA on Yahoo


You have also mentioned that you have back tested your system for 1 year with AB. Can you do the same with 50/200 EMA setting, just curious to know the results. Also can you help me out with the historical intraday data for nifty.

Regards
Sanjay

Regards
Sanjay