Lets develop a trading system...!

[rajendrani]

30 min charts

15 min charts

5 min charts

 

[rajendrani]

check on the afl parameters, try to play around with those, to get the good chart entry and exit which you are trying to look for.

Also please consider one important part which will put you in profitable situation most of the time - Profit booking. At what levels will you will be going for profit booking or what factors will be using for profit booking.

All the best linkon7, for developing the trading system, will chip in as and when i get time.

Thanks and regards,
rajendrani

 

[Rajadhiraj]

The reason, i have ignored volume as most people track nifty spot and they dont get volume.

I dont like having a fixed target as situations are different everyday. under different conditions, same set of rule for exit will give mixed result. I prefer trailing SL as that will help us capture 80% of the trend.

Probability of tight SL hitting early is high, so my expectancy of success is just 60%. Out of 10 trades, i expect a false break out at least in 4 occasions. and 4 times, we get stopped out early due to whipsaws. Profit of the 4 trades will nullify the loss of the other 4. But those 2 trades, were i am successful, will ensure a decent profit at the end of the day.

lets be very clear about what to expect from our system. at the end we just want 2 big trades per day. thats all. the rest is just noise that we have to bear with every day.

No trading plan can have 80-90% success rate. So simplicity, is what we are after. Lesser the clutter, less we have to think and more mechanical we can become.

Wonderful ..... :clap:

I consider these failed or scratch trades as cost of entry, to get the right entry into a trend (on your choosen TF) we need to pay this cost.

This also brings us to a very critical factor of "Frequency"

On average how many trades the system will generate? Yes, this will depend on the timeframe we choose

If you need your big 2 winners, everyday then you have to choose a TF that gives you those 10 trades to average out :thumb:

So effectively Frequency of the trades is one of the criteria for selecting the TF

Great going Linkon

 

[linkon7]

Wonderful ..... :clap:

I consider these failed or scratch trades as cost of entry, to get the right entry into a trend (on your choosen TF) we need to pay this cost.

This also brings us to a very critical factor of "Frequency"

On average how many trades the system will generate? Yes, this will depend on the timeframe we choose

If you need your big 2 winners, everyday then you have to choose a TF that gives you those 10 trades to average out :thumb:

So effectively Frequency of the trades is one of the criteria for selecting the TF

Great going Linkon

TF is 2 min....
in 5 and a half hours...thats 30 bars per hour...totaling 165 bars per day...
we get over 15 trades....

 

[AW10]

Thanks Linkon7 for starting this thread.
If you can maintain the the focus, then it can turn out be one of the most popular thread here.

My suggestion will be - to define your objective from the system clearly.. and
keep logging all extra points that come up on seperate sheet and address them later.
Priority should be to develop the base system first and improve it later..

Generally the points related to stop mgmt, money mgmt, profit exits etc have always pushed me into the loop in my earlier days of system development.

All the best.

Happy system development.

 

[shivipahwa]

Seniors,
I need your help in getting sound alert in this indicator for buy and sell signal. Is it possible to get sound alert when the buy signal generates or sell and it filters the stock in which the signal is generated. If any one could help me out or could tell me the concerned person who would help me i will be really thankfull. My email id is [email protected]
_SECTION_BEGIN("RSI Divergence");
//------------------------------------------------------------------------------
//
// Formula Name: RSI Divergence
// Author/Uploader: Aron Pipa
// E-mail:
// Date/Time Added: 2006-03-19 22:00:02
// Origin:
// Keywords:
// Level: medium
// Flags: indicator
// Formula URL: http://www.amibroker.com/library/formula.php?id=603
// Details URL: http://www.amibroker.com/library/detail.php?id=603
//
//------------------------------------------------------------------------------
//
// + scanner
//
//------------------------------------------------------------------------------

/*---------------------------------------------------
RSI Divergence
Aron Pipa, March, 20 , 2006
--------------------------------------------------------*/

GraphXSpace=7;
n=Param("% Reverse ",20,0,100,1);

Buy=Sell=0;
Var = Zig(RSI(), n);
t= Trough(RSI(), n, 1);
p= Peak(RSI(), n, 1);
x[0] =Var[0];
price[0] = C[0];
j=0;

// bearish divergence
for ( i=0; i<BarCount; i++)
{
if(Var == p)
{

j++;
x[j] =Var;
price[j] =C;
if(x[j] <x[j-1] && price[j-1]< price[j])
Sell =1;
}
}

// bullish divergence
for ( i=0; i<BarCount; i++)
{
if(Var == t)
{
j++;
x[j] =Var;
price[j] =C;
if(x[j] >x[j-1] && price[j]<price[j-1])
Buy =1;
}
}

Plot(Var, "", 39);
PlotShapes ( IIf(Sell, shapeSmallCircle, shapeNone), colorRed, 0 , Var,0);
PlotShapes( IIf(Buy, shapeSmallCircle, shapeNone), colorBrightGreen, 0, Var,0);

Title ="RSI Divergence" ;
_SECTION_END();

Regards

 

[linkon7]

Selling at resistance and buying at support...

I keep hearing from successful traders that they focus only on price actions. Indicators are just there to confirm a decision and to tell them where to hold on or get out. The stress is more on how price is behaving.

The more i look into this, the more fascinated i get with the simplest ways of trading. "Selling at resistance and buying at support"... seems the hardest thing to implement into a trade. even though it offers us the high probability, low risk entry with a very good risk-reward ratio.

somewhere down the line we need to make it more complex. I started this thread with an intention of proving a point to myself that such simple setups, give a good return.

i will skip today's charts for analysis. There was a single big trade that gave me 130 points and am carrying if forward for tomorrow after buying a call (as hedge) for tomorrow. I'll dispose of the call first thing in the morning if nifty continues its downward drift.

I am waiting for a bad choppy day to analyse the effectiveness of this setup. On a trending day, like today, with hardly any upside, this system cannot go wrong.

 

[linkon7]

Good goin linkon, but still volume does plays an important role too, well the trade what you are looking for may not be volume dependent.

If you would have gone through kartik blog http://stocktechnician.blogspot.com/ there he had posted an NWA system v 1.1 which gives the profit and loss in the chart itself. Explore this system it is really good.

I have seen his system. Its really good. If one takes all the trade it offers without filtering anything, then he will end with a profit at the end of the day. I had tweaked a few settings to match my preferences and found it better that ATR exit.

But what i am targeting here is pure price actions. Selling a stock at its resistance and then buying it at support. NWA does the same thing, but tomorrow, if my TA software breaks down, and i have to rely on yah oo charts, then me or anyone interested in following this system, can still trade successfully.

 

[GokaSingh]

But tomorrow, if my TA software breaks down, and i have to rely on yah oo charts, then me or anyone interested in following this system, can still trade successfully.

Are you looking for a system where person should be able to just see the chart and trade (without any indicator) ?

 

[linkon7]

Are you looking for a system where person should be able to just see the chart and trade (without any indicator) ?

yes... that's the way...it seems most successful traders do it... it makes sense too... when u look at something for so long.... ur eyes get used to it...u no longer need to see indicators...