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Trading Systems Help

  • Post #1
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  • First Post: Nov 24, 2005 11:34pm Nov 24, 2005 11:34pm
Being fairly new to forex trading. I've noticed from reading different forums that in order to be successful trading forex, one subset includes designing a trading system that contours to that traders need. My question is what criterias should one be trying to fulfil in order to design such a system. Be it automated or not, does anyone know of any web links or any suggestion to help me. I've ordered Peter Bains Pivot system, but i'm still a bit lethargic with different ideas and thoughts not well implemented.

Thanks for your help.




"Teach me to pip, and i'll pip for the rest of my life"
Quoting fidel2414
Being fairly new to forex trading. I've noticed from reading different forums that in order to be successful trading forex, one subset includes designing a trading system that contours to that traders need. My question is what criterias should one be trying to fulfil in order to design such a system. Be it automated or not, does anyone know of any web links or any suggestion to help me. I've ordered Peter Bains Pivot system, but i'm still a bit lethargic with different ideas and thoughts not well implemented.

Thanks for your help.




"Teach me to pip, and i'll pip for the rest of my life"
fidel, you are right. Your trading system is designed to fit your needs.

What criteria should you use? Well, maybe a combination of SMA's, RSI, CCI,MACD, and DMI or ADX..... Remember, never rely on one indicator. A combination or those and a trial period will help you determine which ones work the best for entrances and which one work the best for exits.

Good Luck
Quoting xspowerx
fidel, you are right. Your trading system is designed to fit your needs.

What criteria should you use? Well, maybe a combination of SMA's, RSI, CCI,MACD, and DMI or ADX..... Remember, never rely on one indicator. A combination or those and a trial period will help you determine which ones work the best for entrances and which one work the best for exits.

Good Luck
xspowerx, thanks for the reply. Question though, which trading platform do you use to test your strategies? I'm currently using Metatrader 4 and Tradestation II trying to see which one works best.
Hi
I too am in the process of building my system. You should definitely build a system which is tailored to your needs. As part of your plan , you may want also to keep in mind time zones (opening and closeing of certain markets bring high volumes of trading) . Your tradeing plan is best tested, written out and followed explicitly. I like MACD , RSI SMA/EMA , pivots, FIB extensions retractions, and Stochastics . I am not familiar with CCI , DMI or ADX which power recommended. I will PM you with the website that got me started on my plan.
Quoting howwwndog
Hi
I too am in the process of building my system. You should definitely build a system which is tailored to your needs. As part of your plan , you may want also to keep in mind time zones (opening and closeing of certain markets bring high volumes of trading) . Your tradeing plan is best tested, written out and followed explicitly. I like MACD , RSI SMA/EMA , pivots, FIB extensions retractions, and Stochastics . I am not familiar with CCI , DMI or ADX which power recommended. I will PM you with the website that got me started on my plan.
thanks howwwndog. this forum is great indeed.
Hello fidel2414,

I am new to the forum and also use metatrader for testing the system. I am currently using 3.83 because I have problem with metatrader 4 that only do one order and then stop completely.
Anyway, to build a good system, you should know the strength and weakness of those indicator you are using. The good thing about the metatrader is that you can see the arrow for the point of order and get to know where does the order go wrong. After you backtest your system, you need to demo it "live" to know where it will go wrong because backtest won't necessary do the order that will happen in real life. I originally used 2 SMA for the order and then found some orders are exactly in the criteria for both entry and exit points. What happened is that it enters and exits the trades many times during that period and of course lose huge amount of $$$ by paying the spread and the slight tick away. Luckily it was just a demo.
Hope you will build up your own system and be successful.
When working on any system with indicators, it is important to avoid multicollinearity. Multicollinearity is using several indicators that tell you the same thing. For example, there are oscillators, trend following indicators, momentum indicators, and etc.... If you use say RSI, ROC, and Stoch together, they will all tell you the same thing because these are momentum indicators. If you use MAs, MACD and ATR together, they will also tell you the same exact thing, becaues they are trend indicators. A good way to overcome this is to pick one indicator from every category and take action only when they ALL confirm your signal, ie all are bullish or bearish.

Good luck on your journey through Forex!
~If you fail to plan, you plan to fail~
  • Post #8
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  • Last Post: Nov 26, 2005 7:02pm Nov 26, 2005 7:02pm
ATR is not a trend indicator - it is a measure of volatility.

Simon
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