Designing a System from scratch

[SwamiNathan]

Dear CV,
I kindly request you to clear some of my doubts.

1)I have a doubt - "People who have trendfollowing systems will do better only if they add some sort of contra trend setups which may help them trade in markets which are moving sideways"?
We have two options
a) we use a trend following system, and also a contra trend system.

b) we use some conformatory market direction signals togetther with some price range to filter out the sideways movement of prices. That is if the mkt direction is + and STock direction is + then enter buy otherwise filter out as sideways.

Can be use the second option. Will that be better?

 

[sara]

Dear CV

You Are A GENUS
Very Good work, it would be one of the most useful System for all, Keep going,

Regards,
Sara.

 

[amarnath]

Third step
This is the meaty part about trade setup.Will get back with this tomorrow.Meanwhile couple of important terms to remember

Expectation/Expectancy of a trade = (PW * AW) - (PL * AL)
Expectation of profit factor = (PW * AW) / (PL * AL)

where

PW = probability of a winning trade
AW = average size of winning trade
PL = probability of a loss
AL = average size of a loss



CV

How you calculate probability of winning trade ?

 

[bhangima]

CreditViolet, thank you for that information and write up on Medved quote tracker. Have you been able to configure the Medved Quote Tracker for the F&O live datA (first of all, does NSE provide live data for the F&O?). Please let me know.

 

[SGM]

Hello CV

It would be nice if you could revive this thread.

I am using AmiBroker as a charting tool and have some familiarity with afl coding. I would be interested in a system based on EoD data which needs minimum amount of discreation in geting the signals.

Warm Regards
Sanjay

 

[CreditViolet]

Hi CV,
Thanks for the very nice article on Designing a system.

I have been groping in the dark for a long time on what is wrong with my trading. I was confused about so many often contradicting sggestions on Moving averages, Indicators etc., and did not know when to use what.

You have mentioned in your article: "There are as many setups as there are traders,infact I have to keep them indexed to keep track of them."

Is it possible to let me know the various systems that exist ? Or could you please point me to a source where I could know the various systems ?

I shall also be greatful if you could advise me with your experience, what is the best suited system for Cash and Derivatives trading in Indian conditions.

Thanks

Hi Investock

Kinda a very late reply..almost a year and a half

Anyhow..I hope you are still trading and have found something that works

To answer your question, contrary to what is widely belived that system trading is about torturing the data to find some sort of a consistent money making combo is plain wrong. Trading systems are just market observations of a trader tested iteratively and described in a looping language.

For good system my suggestion is to watch as many charts as possible preferrably realtime, make note of your observations and then test them out in a controlled environment.

For a few system ideas I would suggest Kaufman's excellent book 'New Trading System and Methods'.Its a good read and puts you on the right path.


Regards as Always

CV

 

[CreditViolet]

Dear CV,
I kindly request you to clear some of my doubts.

1)I have a doubt - "People who have trendfollowing systems will do better only if they add some sort of contra trend setups which may help them trade in markets which are moving sideways"?
We have two options
a) we use a trend following system, and also a contra trend system.

b) we use some conformatory market direction signals togetther with some price range to filter out the sideways movement of prices. That is if the mkt direction is + and STock direction is + then enter buy otherwise filter out as sideways.

Can be use the second option. Will that be better?

Hi Swaminathan

Second opinion is better of the two. However if you think about it..the moment you add the filter it becomes another system altogether..Adding filter to systems is pretty common, and you can have them as inputs which can be turned on/off discretionarily.

CV

 

[CreditViolet]

Dear CV

You Are A “GENUS”
Very Good work, it would be one of the most useful System for all, Keep going,

Regards,
Sara.

Ah Thanks for your colorful compliments
Very nice of you


CV

 

[CreditViolet]

How you calculate probability of winning trade ?

Explained it on the first page


Regards
CV

 

[CreditViolet]

Hello CV

It would be nice if you could revive this thread.

I am using AmiBroker as a charting tool and have some familiarity with afl coding. I would be interested in a system based on EoD data which needs minimum amount of discreation in geting the signals.

Warm Regards
Sanjay

Hi Sanjay

Very nice of you to bring up this thread. I have completely lost track of it

Will look up and post something useful from my notebooks soon.

Regards
CV