Developing a Trading System?

T

Tyler Durden

Hey guys,

I know this is somewhat of a newbie question so just bear w/me. How do i develop my trading system. I mean, are there proven systems out there that many traders use, or do i pick a stock I like and start doing analysis of the last X months to find trends?

For the most part, i will be trading options. I know i want to just buy calls and puts to begin with until i am more experienced. How do i go about picking the stocks i want to buy calls and puts on? Do most here use the DJIA stocks, or the S&P stocks to trade?

Any advice is appreciated
(btw, i am reading a few trading books, but still baffled)
 
http://www.michaelcovel.com/archives/000471.html#more

consider something more long-term from the beginning, otherwise you'll just be confused. Start with some reasonably priced product with free data : www.amibroker.com is what I use. Not perfect, but your not running a fund at this stage.

I have bought a dozen systems books, and most were written in the wrong languages for me, tradestation or CQG. Most are also quite useless in practice as they rarely write about very profitable systems that you would trade yourself. I suggest buying Michael Covels book trend following, reading it, and then making an equity stock trading system because its easier than dealing with different futures markets initially.

One thing I've thought about is buying the whole www.traders.com CD for systems code and suggestions from all back issues.
Its $500 though, but probably worth it if you want to get to the next level.

Thats about all I can suggest. I'll even send you an amibroker system I am working on if you get yourself up and running. PM Me
 
Quote from Tyler Durden:


For the most part, i will be trading options. I know i want to just buy calls and puts to begin with until i am more experienced. How do i go about picking the stocks i want to buy calls and puts on? Do most here use the DJIA stocks, or the S&P stocks to trade?

Any advice is appreciated
(btw, i am reading a few trading books, but still baffled)
More...

I'm going to give you some good advice that you will probably ignore, but you shouldn't. It is based on years of experience.

You should not go near options, of any kind, until and unless you have completely mastered the trading of equities. Your success with options will be based on your ability to successfully trade the underlying securities. If you have not first mastered that, then options will only accelerate your losses and your pain.

There are many reasons for this. But chief among them is the fact that when buying calls and puts, you are already behind the eight-ball because you will be fighting time decay and spreads. If you don't really have your act together in knowing how to trade the underlying, you will, to put it mildly, have a bad time of it.
 
I am quite new to options but, have been learning a lot in the past 3 months and paper trading too. I just bought 3 options positions on LSCP (sorry cannot remember options ticker), made $460.00 on $740.00 invested, UWTXE (option ticker) bought this at $2.05 a contract (5 contracts) and sold it a $0.95 as the stock continued to rise. Lastly, made a nice score with UAIKH (option ticker) bought 3 contracts @$3.70 and sold 07/28/05 at $9.40 and made about $1,700.00 on about $1,100.00 invested in two months. Keep studying and you will get better. I will trade more when I finish some more seminars lined up in the coming 2 weeks.
 
Quote from smallfil:

I am quite new to options but, have been learning a lot in the past 3 months and paper trading too. I just bought 3 options positions on LSCP (sorry cannot remember options ticker), made $460.00 on $740.00 invested, UWTXE (option ticker) bought this at $2.05 a contract (5 contracts) and sold it a $0.95 as the stock continued to rise. Lastly, made a nice score with UAIKH (option ticker) bought 3 contracts @$3.70 and sold 07/28/05 at $9.40 and made about $1,700.00 on about $1,100.00 invested in two months. Keep studying and you will get better. I will trade more when I finish some more seminars lined up in the coming 2 weeks.
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yeah, but HOW did you choose those options...

I mean, how did you make up your mind that these options where the ones to go for? How did you come upon the underlying stock? these are the types of questions that i have....
 
Quote from TruthTeller:

Your success with options will be based on your ability to successfully trade the underlying securities. If you have not first mastered that, then options will only accelerate your losses and your pain.
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Wrong.
 
Quote from union1411:

Quote from TruthTeller:

Your success with options will be based on your ability to successfully trade the underlying securities. If you have not first mastered that, then options will only accelerate your losses and your pain.

--------------------------------------------------------------------------------

Wrong.
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I have same opinion as truthteller, but i think it should be
very intersing if you can profit from option techniques in some
ways alone.

This is the reason i never bothered to learn options
 
LUCK!

You have about the same odds of makin' any money in options as gambling at a casino. In the long run, the house usually wins.

But when newbies are on a temporary ''roll'', they don't like to hear it as they really think it's due to their ''knowledge''. More like DUMB LUCK, lol.


Quote from Tyler Durden:

yeah, but HOW did you choose those options...
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So no one has anything positive to say about trading options, within an OPTIONS forum?
I know some of you love options, but how are they any different (risk-wise) than trading stocks? THey could go in your direction, or they could go in the opposite direction.......


Quote from risktaker:

LUCK!

You have about the same odds of makin' any money in options as gambling at a casino. In the long run, the house usually wins.

But when newbies are on a temporary ''roll'', they don't like to hear it as they really think it's due to their ''knowledge''. More like DUMB LUCK, lol.
More...
 
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