Day Trading Systems

T

Tahoe

I'm gathering information on the preferred mechanical day trading systems. Due the the nature of day trading, I am assuming that most of these systems, if not all, are based in technical analysis approaches. There are breakout, trend following, and pattern recognition approaches, just to name a few. Can others contribute the this message, which may serve as a repository of mechanical day trading systems? Also, please provide the tools used to develop your systems - Tradestation, MetaStock, etc. Also, if there is any information regarding web sites that offer a database of available systems, please let me know. The most difficult thing I'm finding as I develop day trading systems is the lack of truly useful information. Most systems are fee-based. Unfortunately, there are never any guarantees, and I would like to see hard and fast rules associated with the systems, rather than just buy and sell signals.

Thanks for the help,

TAHOE
 
I second that! Id really like to know HOW to make (or start making for that matter) a system and follow its rules....

It would be great if senior more experienced members would give away some systems with exact parameters (obviously the ones that dont work anymore or not so well) so the rest of us can see what is the basis for building one. For instance what premises should make the foundation, what indicators would be appropriate accordingly, etc etc etc...


DO NOT GIVE YOURBREAD AND BUTTER AWAY , you can PM me with those he he :D :D

Alex
 
Tahoe,

Its been my experience that you will have a hard time finding "hard and fast" rules that you can get for free (that work, there is plenty of free crap for the taking...). I agree with you that you shouldn't pay for buy and sell signals. I would go one step further and advise you against buying any system, even if the rules are fully disclosed. There will be those here that disagree with me (although I think the majority of mechanical traders will agree) that there is nothing for sale that is worth trading over the long term. Most of what you find for sale will have been over-optimized to show fantastic past performance, only to flop when traded real-time.

At some point in your search you will come to the realization that the only way to have a profitable mechanical system is to develop it yourself. I see from your other posts that you use Metastock, so you have a powerful tool to help you. I think there are some limitations that may make you want to switch down the road to something a little more flexible like TradeStation or Ensign, but MS should be plenty for finding ideas that work. And I'm not talking about their built in systems, they don't work very well.

I don't know where you stand in terms of knowledge of system development, but a good place to start is by reading "Trading Systems That Work: Building and Evaluating Effective Trading Systems" by Thomas Stridsman and "The Encyclopedia of Trading Strategies" by Jeffrey Owen Katz and Donna L. McCormick. Those books will give you a good idea of how to go about developing your own ideas, and some prefab ideas you can test out to get you started. (Note to Alex: There are some sample systems in these books that will give you an idea of how to go about building your own). Always keep in mind though that simpler is better, and there are no magic indicators.

Its a long, difficult road, and you will get discouraged many times, because the bad ideas far outweigh the good ones. Its hard work, but the traders who have developed profitable systems will tell you it was all worth it. You will also begin to understand why no one wants to give those ideas away, and why the vast majority of systems being sold aren't worth anything. Remember, if it was easy, it wouldn't be worth doing, so keep at it and don't quit.

Best of luck,

Kirk
 
There are no "day trading systems" that work...period. If there were, then we would simply program our computers to implement them. And if you develop one, then the game would be over, since without variable conditions (that cannot be responded to effectively), you have no market.

Many people have tried to develop such systems based on TA, if-thens, trailing stops, breakouts, breakdowns, closing day overnights, and a plethora of others not even worth mentioning. Without having a live body connected to respond to market conditions, it won't work simply by definition.

Don't get me wrong, you do need the "cool tools" to make the actual trading easier and more efficient (hot keys, triggers, warnings, etc.), but don't expect to find a consistent winning program.
 
Don.. Don...
what are you using if not a day trading system ?!
don't you have a method to trade ?
don't you have rules to enter and exit ?
dont' you have risk management ?
don't you have statistics about how many times you are right or wrong ?

unless you flip a coin to trade each day, what you are doing is. well.. that's what I call something systematic, isn't ?

if you can do it, a program can do it too. Unless you are telephatically reading the minds of the other traders (which I don't know how to code), a software can do what you are doing.

And even if all the markets were managed by software robots there would still be a market. why ? because the owners want different rewards, with different risks, with different strategies and in different markets.

of course you can't easily find in the public domain software which can trade any market, any time and make money for you today ! Please call now, if the lines are busy, call later but do call !!!
Seriously, the trading activity of a good (or bad) trader can be modeled and put in software. then this software can act like the model. Specially since successful traders do keep it simple (so it is simple to code). And sure you are right, again, repeating myself, you won't find such a software on the shelves of 'best buy'.
But don't say it does not exist, that makes me laugh so much.

tntneo
 
Let's clarify our definitions first. When I say that there are no "systems" that work, I simply mean that I have never seen an effectual robot or response program that will work on its' own. There are many "systems" that will give you good entries (opening plays, MOC plays, breakouts, and all the rest), but it is usually the closing where these systems break down and must be monitored by a human being. Putting is stops is foolish, because you cannot account for block trades and ST's and the like.

I have an open offer to everyone: If you have a system that you know works, and all you lack is enough trading money - show me! You put up a token amount, I will see that you have enough capital to trade with. I don't want anyone to take a shot with our money (I have a long line of those people already :-) ), but If anyone wants to risk a few grand, but needs a $100K to day trade with to test it, let me know.

I see the best "systems" are humans using good tools.

Good comments!!
 
Don please don't post the same thing on 2 different threads. The majority of members will read it.

I agree and disagree with you. There is no magic trading system yes. But there are systems that work. The key is to recognize when they don't work. Breakout systems are great during a heavily trending bull market. Trying to use one in a bear or sideways market will get you killed though. A system of selling highs and lows that are at an extreme is a great system if done during a non trending market. A trending one will kill it.

I can go on and on. The public in general will float towards systems that are heavily working. When the majority are trading those system there will be no other side to take the trade and that system will no longer work. The public will then float towards something that is working in the current environment and the cycle repeats.

There are systems that work. But they only work under certain conditions. It is a master trader's job to recognize those conditions and adapt.

A real life example of this is Trendstat management. They are usually in the top 10% of hedge fund returns. This is Tom Basso's fund he manages who was featured in the New Market Wizards. All of his trading systems are fully automated



Robert Tharp
 
what Don described is intuition . I don't think how you can program that.

sometimes it how often screen blink,sometimes it tone of the voice CNBC commentators, sometimes it what people talk about in chat rooms ...
 
As your reply indicates you reputation for being anti-computer (automated) base trading is richly deserved. Is that why you don't tell your trader about REDIFIX? I have and I know of others that have automated system that makes profits consistently. The bottom line Don is when it comes to computer and automation you have know Idea what you are talking about.
 
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