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Is It Difficult To Invent An Effective Trading System?

September 9, 2010 — 7:19 pm

Every trader’s desire is to build an automatic trading system that would trade by itself and make you money. There are many traders who rush forward buying different automated trading systems dreaming to increase their capital without having any trading experience. Unfortunately not every trading system is good.

It doesn’t matter how many attempts were done to create the effective trading system. For today all the existing trading systems don’t provide constant income. Foreign exchange market Forex is a mixture of a number of financial events, economic situation and the nature of a trader. Theoretically it is impossible to make a single strategy that would consider all these points. Some experts believe that the most effective trading strategy is the one that includes as little aspects as possible, but the tests prove that this approach doesn’t give the desired results too.

Needless to say how much time were spent on creation and testing of an ideal trading system that would guarantee profit on Forex trading. Every day millions of traders, mostly the beginners, loose a lot of money trading with the automated systems. We don’t mean that all automatic systems are bullshit and have no chance to succeed – absolutely not. The thing is that when the trading decision lays on a leaving person, sometimes its results are much better than that of a robot.

As for our researches, the best results show the signals in the swing trading. If you look at the graphs, you will see that the currency price always goes up and down. Good optimization of parameters of the indicator can give accurate signals to buy or sell at the peaks of currency’s progression. Using the small orders of 10-15 pips on the minute chart, may show you a good result in a short period of time. Please notice that this method of trading is called scalping, when you open a lot of short term positions. Not all Singapore brokers allow scalping, so before you apply this technique, be sure that your broker will not ask you to close a trading account.

Dreams associated with a fast enrichment in a short time with little effort excite the minds of many online traders. If you are using a trading system that doesn’t work for you, don’t think that there was a mistake in the code upon its building. Still most experienced programmers are not giving up on finding a ideal trading system that brings a steady profit. Every naïve newbie needs to know and remember that Forex trading in Singapore is a sophisticated thing that is not so easy to automate. The most successful trading system may be reached on emotionless calculations and long experience. Before you try to create a trading system, you need to spend many years on studying the Singapore Forex market and the language of programming.

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Forex Trading System
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Hassam
 

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Why Forex Trading Is Not As Simple As It Seems

August 14, 2010 — 8:51 am

Today online trading in Singapore is a quiet business, as you can stay at home and handle your trading account with a click of a mouse as long as you have a computer and internet connection. Even if you trade Forex alone at home, you actually work with the millions of other investors from all the corners of the world who desire to get to your pocket and get more money than you have. Once you have invested to the pool of the global currency market, your fund immediately becomes a target of millions of hungry for Forex profits sharks. Currency Trading is a tough work and according to the law of nature – the strongest survive. If you are tolerant and experienced enough to wait and catch a strong trend it might be possible for you to get a part of profits, otherwise losses are inevitable because financial market is full of hunters for your money.

If you are interested in online trading and desire to succeed in trading, drive away the idea of easy money. A successful and profitable trading needs big experience and professional skills. A trader must develop a character of a hunter: wait as long as it takes for a best moment of a profitable situation, then make a correct action and take your prey. Your knowledge and understanding of the market – these are your teeth that you will use to tear a piece of profit out of a huge carcass of the currency market. Singapore FX trading is a tough work where there is no place for feelings and unnecessary emotions.

There is a good method that traders may use in order to decrease their risks in online market. The psychological pressure of the market sometimes does not allow making correct decisions. That’s why using an automated system will help any Singapore trader to get rid of emotions in trading. Emotions are the main enemy of your trading. Sometimes they do not allow picking up the right time to close or open a trading position and as a result traders have addition losses. If you let emotions control you, it will be impossible to trade Forex successfully. The best solution is to teach yourself leave your emotions aside while trading Forex, but if you cannot succeed to do it yet, use an automated trading system until you learn to control your feeling.

Automated system helps the traders make decisions only according to a trading plan, embodied in its parameters, where there is no place to emotions and doubts. Automated trading system saves a trader from many problems, but not from work. In order to be sure that your automated system works and generates profit, you will have to work a lot to test and improve it all the time.

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Forex
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Hassam

The Crucial Role of an Options Trading System

August 9, 2010 — 5:38 am

An options trade system is nearly the same as any other trading plan used for stocks, currencies and futures. You should however, attempt to comprehend your plan based on the specific market that you are moving around in. To do this for options trading, you need to understand the basic concept of this market type.

Another term for options trading is derivative trading. This suggests what options are really all about. Instead of being real tradable assets, options are really contracts between two entities. The buyer is the one who has the right to pay for an asset in the future. He is not however, obligated to actually make the purchase if he chooses not to. The price is fixed regardless of the duration of the contract. Depending on where you are, an options trade can sometimes be acted upon even before a contract ends.

The two types of options are call and put. When you are in a call position, you have the right to buy. If you are in the put position, you have the opportunity to sell. What makes the contract possible is the fee paid for it. Hence, a buyer initially spends cash on the option to purchase at some future point. Fees cannot be refunded in case a buyer withdraws.

It is only natural that many experienced traders choose this as a second investment form. Traders who know the market well obtain the potential to earn much in the safest way possible. Buyers are at the winning end of an options trade. This is because they have the chance to make decisions that are favorable for them. A buyer can wait and see what will happen before jumping in on an asset. Only when an asset shows signs of profitability can a trader decide to actually purchase it.

Options trading is highly speculative and offers great hedging opportunities. This is why it’s tempting to give in to the chance to get into it. It’s important not to forget though that risks are still very much a big part of this investment type. It therefore pays to make sure that you are prepared to deal with these risks.

To make sure that your risks are reasonable and within your capacity to endure, you need an options trading system. This is the general plan that will tell you when it is best to enter and exit agreements. Moreover, it also defines the kinds of risks that you can live with. Risk management as a whole involves making sure that your maximum loss amounts are bearable. Because you know what you might lose, you never have to lose too much sleep in case you do lose some.

There are preexisting plans that successful traders use and that you can choose to use yourself. It is better though to make a system that is specifically customized for you. There is nothing wrong though with getting a few insights from experts that you can tweak to your specifications.

You can’t lose with an options trading system. Since options trading is riskier than other trade types, having a solid plan is more important than ever.

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Forex
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Hassam

The Top 3 Things To Consider In Choosing A Trading System

August 5, 2010 — 10:20 pm

To be a success is what all of us wants to be. It is often not enough that we can provide the most basic needs for ourselves or our family, that we feel the need to earn even more for the people we love. However, perhaps because we are human, we have that innate desire to achieve success on our own, or at least mostly through our own activities, choices and perseverance. We have that independent spirit within us that’s yearning to come out. Luckily all of that can happen because of the vast opportunities that trading can give us. And to be a success in trading you definitely need the best trading system that you can find to help you learn everything and to do all the trading right.

The great thing is that there are many markets that you can get into. There is the forex, futures, and of course the stock market. The opportunities and the possibilities to earn a considerable profit is endless so to speak. To inspire you even further, did you know that in the foreign exchange market alone there are trillions of dollars that are being traded? And that’s on a daily basis.

Since there are many markets that as a trader you can get into, there are also trading systems specific to each market. If you are into forex, there is of course the forex trading system. The equally popular stock market has its own stock trading system and so on and so forth. However, the principles that can make a trader a success in a certain market can often be applied on other markets as well.

So what should you be looking for in an effective system? You do not want to merely follow the lead of other traders buying a certain system simply because it seems to be the most popular one. You have to research on it first, about the product or the trader who devised that product. Weigh in all the results or factors and you can better judge if a system is the real deal. But here are a few good reminders to help you get started with your search.

Here are a few tips or reminders that can greatly help you in deciding which trading system is best for you. Keep in mind that these are just suggestions and if you want to further verify the efficiency of any system, you must still conduct your own research to find out.

Buy a system that teaches you about trading psychology.
Or at least shows you how to properly react to every changes or movement in the market. Trading psychology encompasses the way a trader thinks, feels or decides on anything related to trading. It’s what differentiates any two traders from each other.

Get a system that is easy to understand and use.
What good is a system if you cannot fully comprehend it, more so apply it? A good creator of any trading system keeps in mind that his product’s end user are complete newbies and therefore makes sure that every step or guide is simple.

3. Time is gold.
You time is very important especially because you are dealing with a very active market and at the same time you are living your own life and perhaps establishing another business for yourself. An effective trading system will have every procedure streamlined for you and help you better manage your trading time.

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Forex
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Hassam

Analyze Your Trading System Using 7 Metrics

July 20, 2010 — 2:58 am

1.When you are taking a look at the performance of a particular system, first off you need to take a look at the win-to-loss ratio, as this is a good indicator of it’s tradability. Essentially this is the how many times on average the trade wins in contrasts to it’s losses. If you are winning more than you are losing, then your trade system might just be sound.

However, do not become reliant or caught up in statistics, because statistics do not tell you everything that is happening. It definitely does not take into account how large your winnings are in contrast to your losses.

2.With that win to loss ration, try to make sure that your winning value is overshadowing your losing value. One thing that you could think about, is if you have 200 trades and 150 losses, then your percentage is 25:75. It looks bad, but is it?

Something that you need to have a look at is the size of your wins. For instance if you have a winning of $2000 and a loss of $5000, you’re still not doing too bad.

3. Expectancy A trading system’s expectancy is perhaps one of the most powerful statistics you can have because it is a way of quantifying the performance of a system that is independent of the size of the trading float.

In short, it produces the expected dollar return for each dollar risked by the trading system. This is different to the reward-to-risk ratio and average wins to losses that we described above, in that it defines a return in dollar terms for every dollar that you risk. If your system has an expectancy of +0.75, on average, you would expect to make 0.75 times the amount you risked in the trade. If you risk $1, then you would expect to make, on average, $0.75 for every trade you take.

As a guide, if you can achieve expectancy of $0.60, you’re heading in the right direction.

4. Maximum consecutive losses Look back through your testing results to see, statistically, how many losses in a row your system sustained while still being profitable. This is important to know upfront, since this statistic will give you confidence during those low times when it feels like you should throw in the towel.

For example, imagine you have been hit with five or six losses in a row. Without knowing your maximum consecutive losses, you might think your system isn’t working. This is where most naive traders go wrong. The truth be known, based on the historical data, your system may have actually sustained 10 losses and still been profitable.

5. Then you have the maximum drawdown, which is basically the worst performance of your system. It doesn’t matter whether or not the drawdown consists of consecutive negatives.

You will find that the statistic is calculated automatically, therefore all you need to do is determine whether or not you are actually comfortable with the size of the losses. If you are not comfortable, then you will need to change up the system in such a way that you are comfortable with it.

Once again, this all has to do with that risk-to-reward ratio. The greater the risk, the more reward you are going to reap in the end. There was a time that I traded a system which returned with 140% p.a. It’s great in theory, however it also had a max drawdown of 80%. Whether or not you can handle losing that kind of capital is really up to you.

Make sure that you are comfortable with the system you choose to trade with.

6. Number of trades Then there’s the number of trades a system gives over the course of a year. I find this an invaluable, yet rarely talked about, statistic.

Your trading system should not give too many or too few trades. The number of trades that a trading system gives should be approximately the same as that which can realistically be taken.

The two sides of the coin are equally dangerous. If a system gives too many trades, you will be forced to choose between signals, therefore adding ambiguity to the system. With ambiguity comes human discretion and this often has a detrimental effect on the performance of the trading system.

On the other hand, if a system gives too few trades, your trading capital will not be fully utilised and you may not be taking full advantage of the available trading opportunities.

So how do you calculate the optimal number of trades for a trading system?

This is done with the calculation called ‘opportunity’. Opportunity helps determine your optimal opportunity for a trading system.

7.Then you have Profitability, which is the number of returns on an annual basis.

Let’s not beat around the bush. This is all about making money, and the one important thing here is profitability. While you’re trying to make money, just make sure that you maintain a balance. The previous six items in this article will help you immensely with any questions about your stock trading system. Watch below for more trading information

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Forex
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Hassam

The System Of Option Trading Development

February 21, 2010 — 3:03 am

There are 4 stages to any option trading system: selecting the stocks, option selection, and the entry and exit procedures. Option trading can be approached either as a discretionary or a mechanical trader.The discretionary option trading system doesn’t follow any particular rules. The trader is reliant on their gut, doing whatever they feel is right at that time. They prefer a trade, and decide when to enter and exit based on their own understanding and experience.

A mechanical trader follows a pre-determined process using all their skills to build an objective set of rules to control all levels of trading, from selecting stocks to entry and exit. These rules are often laid down in a computer application that can make the task as automated as it can be. Mechanical style traders eliminate the influence of human emotion on their task, thus reducing human mistake. As a way to create a mechanical system, all phases of the task require to be cautiously considered.

First you need to make a list of all the quantifiable requirements that enable you to decide whether a stock would be a good choice for options trading. They have to be quantifiable to be able to chart them on the computer, granting all qualified stocks to be automatically analyzed each day. This could drastically reduce how much time it takes to identify qualifying stocks. Utilising quantifiable features also prevents you against counting on your own judgment. The sort of key elements you should look at include a last close that is at least 10 dollars, last price rising during the last 3 days and having a PE that’s positive. Using the requirements is how you would consider which stocks to watch.

The second stage is to determine which options will qualify for your trading system. This will depend on what you need to base your system on. You could utilize ITM or OTM options, or base it on bearish or bullish spreads. Whatever you choose is the way you will choose the option to buy for the stock chosen in the first step.

3rd, you will need to determine the conditions under which you will actually buy. There are actually a number of different entry procedures that can be used. You may come to a decision that it’s best for you to purchase at the beginning of the market, or that you require a more complex procedure which could require watching the movement of underlying stock for a specified period of time before it matches the circumstances for entry. Design a process that matches with your own trading style. This process is how you will use to decide when to buy.

It is always best to find out as much as you can before jumping in. Start little while you get the feel of trading. That lets you minimize losses over the learning curve.
learn forex trading forex trading strategies forex free trading

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Stocks
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Hassam

HVMM High Velocity Market Master Unleashed-Win Your FREE Copy ($2,997)!

October 21, 2009 — 5:30 am

Meet the HVMM (High Velocity Market Master)! Get your Ultimate Day Trading System copy free just now before it gets pulled down by HVMM. This Ultimate Day Trading System can trade forex, stocks and futures. Grab this Captial Growth Application for serious trading FREE before it’s gone!  Just as the Capital Growth App is universal, so is the HVMM System.  It works on any market and timeframe.  Whether you are a day trader or swing trader that trades forex, futures, stocks, commodities, ETFs, bonds or options you’ll want to step-up to this challenge. Now is the time to join the contest for the HVMM and win your FREE COPY of HVMM course worth $2797. To win a copy of the HVMM just take the short HVMM Quiz, answer the 9 questions and make sure you enter your email address at the end.  As long as you complete the quiz you’ll be entered to win, no matter what your final score is.

Have you been seeing those mega moves in the forex market?! Monday we saw the GBPUSD down 400 pips at one point.  Yikes.  See the HVMM ‘trick’ to bringing in 19 successful trades at one stretch during the European and U.S. market hours.  All with subjectivity and discretion removed.  They just focus on placing the trades and managing the targets and stops.  Simple enough? Let me know what you think.  From what I’ve seen, these guys thrive on giving out ‘tricks’ like this.  Word has it they’ll be holding a live webinar in a week (Wednesday March 10th at 12:00pm EST/ 9:00am PST/ 5:00pm GMT).  Join the HVMM Virtual Training!

Did you see the HVMM go head-to-head with the live markets? Then you saw them come out on top. Any comprehensive methodology that is put through the wringer of the live market is worth looking into in my books. If you didn’t catch the live demo, watch HVMM Live Session here!  They’re now giving away an entire High Velocity Market Master HVMM course!  Just visit the HVMM Blog, answer the questions posted, and you’re entered to win an entire HVMM course! It’s simple, get your hands on the HVMM.  Then, submit your ‘before’ story (as many of you already have) and 45 days from now submit your ‘after’ story.  In other words, tell the guys where you are currently in your trading career – even if you’ve been at this a long time – then in 45 days give them an update on how things have changed by trading the HVMM.  Finally, the community chooses the $2,500 winner!  That’s it.  But first things first, you’ll need the High Velocity Market Master and now you can grab it for just 6 affordable payments!  The 30-day money back assurance is still in effect so there’s seriously no risk whatsoever.

Get your HVMM and be a step closer to winning $2,500.00! The HVMM has been ‘unleashed’ so they say.  Did you see the results? I attended the High Velocity Market Master webinar yesterday and the results, the strategy, and the simplicity of the system spoke for themselves. Not only were the results impressive, but I was awed by the level of support the HVMM guys provide.  They truly seem to be dedicated to your success which is vital in this business.  They definitely had my attention (and I’m sure they did yours)! 

Often it’s the support not just the system that will make the difference between victory and collapse.  With guidance you can be conditioned to take on the markets, and hit them with everything you’ve got! Along with the dedicated, ONGOING HVMM Support, the package comes with everything you need to transform your trading career…

*Lifetime High Velocity Market Master Indicator Suite that you’ll immediately be applying to your charts. These indicators make the HVMM tick and you’ll use the exact same suite of indicators across all markets and timeframes for the ultimate in simplicity.

*5 Full Length In-Depth HVMM Training CD’s – that will play right in your computer, so you can watch and learn The High Velocity Market Master strategy step by step, at your own pace.

*HVMM Manual and Guide to Markets & Timeframes – these will let you see the key trade set-ups in detail.

*PLUS one (1) entire year in the exclusive Owner’s Club where you’ll have admittance to live training rooms, be able to see trade walk-through, get additional video training, receive marketing condition reports, have access to all system upgrades, and more! 

The way I see it, this system will give you what you need to be up and running in no time, plus help cut your trading time down significantly. It’s about building your account by getting in, getting out, and getting done. You’ll have the tools you need to change your trading career for the better.  And, they’re anxious for you to transform.  So anxious in fact, that they’re giving a $2,500.00 cash prize for the trader with the biggest transformation.  When you purchase the HVMM your eligible to win just by submitting your “transformation story” in 45 days! See how you can win $2,500.00 once you get your hands on the HVMM!

You only have a small window of opportunity to grab the system. Providing a high level of support means the guys over at the HVMM headquarters need to limit the number of new subscribers to ensure they have the resources to handle the initial batch (a wise decision, in my opinion). That’s why they’re stopping at just 250 copies! Get your HVMM before they’re gone! Seize this chance to start living your trading transformation story! I know some of you had some trouble ordering yesterday.  Try it again today – with onslaught of orders, their payment processing had a few hiccups. Not to worry though, you still have a bit of time left!

So do not order the HVMM until you hear what I’ve worked out with the guys over at the HVMM camp…Instead of one larger payment upfront, how about a few more *affordable* payments spread out over the course of 3 months?  3 monthly installments mean you can start building your capital WHILE you’re paying for the system. (This way, the system literally does pay for itself!) Enroll with the 3-time HVMM payment plan right now!

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Bonds, Day Trading, Forex, Futures, Options, Stocks, Swing Trading
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Hassam

High Velocity Market Master-Win Your FREE Copy ($2,997)!

October 15, 2009 — 11:34 pm

Get the ULTIMATE DAY TRADING SYSTEM free just now before it gets pulled down! Trading is a serious business! If you want to trade full time than grab this Capital Growth Application FREE just now and see what it can do to your trading. Just as the Capital Growth App is universal, so is the High Velocity Market Master.  It works on any market and timeframe.  Whether you are a day trader or swing trader that trades forex, futures, stocks, commodities, ETFs, bonds or options you’ll want to step-up to this challenge. Now is the time to join the contest for the High Velocity Market Master and win your FREE COPY of High Velocity Market Master course worth $2797. To win a copy of the High Velocity Market Master just take the short HVMM Quiz, answer the 9 questions and make sure you enter your email address at the end.  As long as you complete the quiz you’ll be entered to win, no matter what your final score is.

Have you been seeing those mega moves in the forex market?! Monday we saw the GBPUSD down 400 pips at one point.  Yikes.  See the HVMM ‘trick’ to bringing in 19 successful trades at one stretch during the European and U.S. market hours.  All with subjectivity and discretion removed.  They just focus on placing the trades and managing the targets and stops.  Simple enough? Let me know what you think.  From what I’ve seen, these guys thrive on giving out ‘tricks’ like this.  Word has it they’ll be holding a live webinar in a week (Wednesday March 10th at 12:00pm EST/ 9:00am PST/ 5:00pm GMT).  Join the High Velocity Market Master Virtual Training!

Did you see the High Velocity Market Master go head-to-head with the live markets? Then you saw them come out on top. Any comprehensive methodology that is put through the wringer of the live market is worth looking into in my books. If you didn’t catch the live demo, watch High Velocity Market Master Live Session just now! How stoked are you about the TradeTrack software?  I’ve already thrown out my trade journal and I’m thrilled that I no longer have to lug that thing around. If you haven’t started using it, what’s stopping you?  Pressed for time?  Go to the High Velocity Market Master blog to view a quick tutorial.  See how the tool is used on the High Velocity Market Master (a system with 26 straight sessions of winners…).

Don’t stop at that blog posting, there is something else you must see. Those crazy guys at the High Velocity Market Master headquarters love to give things away.  They started with the “TradeTrack” software and now they’re moving on to bigger and better things.  They’re actually giving away an entire High Velocity Market Master course!  Just as the TradeTrack software is universal and works on any market and timeframe, so is the High Velocity Market Master.  Whether you are a day trader or swing trader that trades forex, futures, stocks or options you’ll want to participate in this contest. 

Why get in on this little challenge?  Who doesn’t like getting things for free?  Especially when that ‘thing’ has a track record of 26 straight positive sessions and, since August 1st, only 2 days that were negative — that’s about 95%+ of  trading days ending positive. To win the very first copy of the High Velocity Market Master visit the blog and answer the questions posted.  It’s that simple, just tell your story and you can have a crack at winning.  High Velocity Market Master System is live now ! So what you get with the High Velocity Market Master System along with the dedicated, ONGOING High Velocity Market Master Support, the package comes with everything you need to transform your trading career…

*Lifetime High Velocity Market Master Indicator Suite that you’ll immediately be applying to your charts. These indicators make the HVMM tick and you’ll use the exact same suite of indicators across all markets and timeframes for the ultimate in simplicity.

*5 Full Length In-Depth High Velocity Market Master Training CD’s – that will play right in your computer, so you can watch and learn The High Velocity Market Master strategy step by step, at your own pace.

*High Velocity Market Master Manual and Guide to Markets & Timeframes – these will let you see the key trade set-ups in detail.

*FREE 8-Week High Velocity Market Master Training BootCamp! Starting the first week of January 2010 (Wednesday the 6th, that is) they’re hosting an 8-week intensive High Velocity Market Master Training BootCamp that’ll whip you into shape regardless of experience level.

*PLUS access to the exclusive Owner’s Club where you’ll have admittance to live training rooms, be able to see trade walk-throughs, get additional video training, receive market condition reports, have access to all system upgrades, and more! 

The way I see it, this system will give you what you need to be up and running in no time, plus help cut your trading time down significantly. It’s about building your account by getting in, getting out, and getting done. Visit the High Velocity Market Master Blog to see for yourself how powerful this trading system is! Grab your copy of the High Velocity Market Master System just now and transform your trading career with it! Now get going! With the 3-time pay plan for the High Velocity Market Master, Bonus Training BootCamp, plus 30-day money back guarantee, you have nothing to lose. Sign-up now before they sell clean out!

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Forex, Futures, Options, Stocks
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Hassam

Trading Systems Teaches Covered Calls

October 8, 2009 — 10:32 am
by Maclin Vestor

A covered call strategy within a cycle will require people to sell options against the stock. If the stock is above the strike price, the stock will be “called” away. The seller receives the premium, but the owner of the call receives the shares at the strike price. There are various strategies involving this covered call strategy.

Some people prefer to have the covered call eventually pay back the stock owner his investment, so that he or she can reinvest that money, and upon receiving the investment back, the person will let the stock run. If this is the strategy, ideally you want to sell covered calls as the stock falls, as it stays flat, and then you want to have your cash back and let the stock run when it is on its way up again. This can allow you to buy an out of favor stock that is still in it’s decline, but in the second half of the decline, reduce your cost basis to zero, and still own the stock near it’s bottom. In the cycle mentioned earlier, depending on how fast the yield will allow you to recover the price of the stock, You will invest in the stock as early as the beginning of “dogs” and as late as contrarian, and recover your cost as early as contrarian, and as late as the start of estimate revision.

Another covered call strategy would be to buy a neglect, contrarian, or positive earnings surprise stock, sell out of the money covered calls, and continue to do so until the end of the growth stage of the stock, and not only stop selling the calls, but to just sell the stock.

Yet another strategy would be to write a covered call until around 20% can be gained, either through capital appreciation or collecting the option, then to convert the stock into a LEAP call as soon as selling the stock plus the premiums collected can pay for the call. This allows you to have a quicker turnover rate in terms of getting your money out, and playing with the house’s money.

This would be great for anyone who intends on having the stock paid for, and expecting to own the stock option through the entire length of the option or longer if they intend on rolling over the gains by buying another LEAP. It is also a good strategy if the stock’s future becomes less certain, and the investor wants to protect his or her initial investment. Now if someone rolls a stock into a stock option that doesn’t necessarily mean they are done collecting income from covered calls. There is far more to be learned about covered calls, so make sure to do your research before considering if its right for you.

About the Author:
Maclin Vestor teaches about varioustrading systems and teaches you system trading skills that can make you a better trader.
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Investing, Options
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Maclin Vestor

Trading Systems

October 4, 2009 — 10:29 pm

Traders use different approaches in their trading. There are always advantages and disadvantages of different systems. Majority of successful traders use self developed mechanical trading systems. The majority of unsuccessful traders depend on discrete trading method. Besides the many traders using their own developed trading systems, there are many actively developed trading systems for sale as computer programs also known as Expert Advisors or Robots. Theses robots vary widely in prices from a few hundred dollars to a few hundred thousand dollars.

The significant advantage of these computer programs is that they generate signals. These signals can be used by the trader for trading. Sometimes these computer programs are developed for a certain bank or a corporation. The discrete trading method used by many traders is like an artist trying to adapt to different market conditions and using flexibility and tactics corresponding to the particular market condition. The main disadvantage of the discrete trading approach is the unstable trade results due to the stress factor influencing the trader. The traders mood and health can greatly affect the outcome of each trade.

Using a mechanical trading system almost completely removes the influences of the stress factor. It also reduces the negative pressure on a trader which is obviously a big plus. However, it prevents the trader from quick adjustment of trade tactics and strategies under changing market conditions. It also doesn’t allow the quick customization of the trading system in cases like the change of the account size. There are eight requirements that any ideal trading systems should fulfill.

1. It should allow for the maximum adjustment to any traders psychological character.

2. The trading system should depend on trading methods that are universal. It should not depend on a particular market condition at any moment of time.

3. It should be simple, logical and depend on understandable ready to use elements and units.

4. The trading system should provide specific price signals for the trader to open and close positions at the levels chosen some time in advance.

5. The trading system must allow some room for the traders creativity.

6. Without violating its main principles and elements of the trading system, there should be some flexibility to modernize. The trading system should adjust in accordance with the changing market conditions.

7. The trading system should relieve the trader from emotional and psychological stress in trading.

8. It should be customizable so that different traders can use the same method.

No one trading system can fulfill all these requirements. Change of market conditions could lead to negative results from a previously effective trading system. The only way of satisfying these conditions is through developing a diversified trading system consisting of a set of systems that can be used as the basis for specific trade tactics at any given moment. Trade systems based on these requirements could be complex and adjustable.

You need to develop your own trading system overtime. Using someone else’s trading system won’t help if you really want to become a successful trader. At one point in your trading career that might come soon rather than later, you would want to switch over to a mechanical trading system.  Using a mechanical trading system not only helps traders to make decisions and increase profits but it also provides great psychological comfort to the traders. You will also have to develop a systems approach to your trading. You will find most of the traders using a trading system approach to trading. You will realize the necessity of switching over to the system trade in order to lower the psychological pressure experienced when making every market transaction. Some of the traders may use a discrete trading system while others prefer a mechanical trading system. Trading without a system can be stressful.

Once you have a mechanical trading system you can easily develop it into an automated trading system. The mechanical trading system set of rules may be translated into a computer program for automated trading.  However, the mechanical trading system lacks fundamental analysis capacity. With the advancement in computer programming, these automated trading systems have the capability of entering or exiting trades automatically without human intervention. The creator of such a mechanical trading system then becomes just another user of the trading system monitoring the computer generated signals. The trading system then generates trading signals that can be used by traders having access to the trading system.

Developing these automated forex trading systems is the name of the game these days. These automated forex trading systems are also known as forex robots. These trading systems may be taken as grey and black boxes. Their prices might vary from a few hundred dollars to hundred of thousands of dollars. Many traders over their trading careers develop their own trading systems. Besides the traders using their own trading systems, there are now many actively developed trading systems for sale as computer programs. One way is to develop these forex trading systems and use the trading signals generated by them in your trading. The most significant thing about these programs is that the traders should be able to accomplish transactions in accordance with the signals generated by the trading system. The other solution is to completely automate these forex trading systems. Sometimes theses trading systems are developed for big banks and corporations.

However, it is very difficult for a mechanical trading system to cope with different market conditions. This is the most serious flaw in these trading systems. When the market conditions change, these trading systems start generating erroneous trading signals. Majority of the successful individual traders use self developed mechanical trading systems. Change of market behavior leads to negative results from a previously effective trading system which obviously would require replacement. For example, many trading systems that are satisfactory in trending conditions become highly ineffective in nontrending environment. How do you deal with the challenge of changing market situations? This is the most serious challenge that automated forex trading has to solve. One way is to use a diversified forex trading system.

YouTube Preview ImageThese automated trading systems require thorough testing under different market conditions before they can be used in actual trading. One of the ways is to backtest them with the historical market data. Backtesting is now an integral part of any mechanical trading system’s performance evaluation. However, there is no substitute for live performance test. The most common disadvantage of these trading systems is the negative balance between he profitable and unprofitable trades. Many trading systems now depend on complex mathematical formula which is not understandable by the trader if the trader is not the author of the trading system. What you need is a trading system that is profitable in the long term. In other words, it gives more winner than losers. Obviously the trading system can only be profitable in the long run if the ratio of the profitable trades is higher than the non-profitable trades. In other words the average profit of each profitable transaction is greater than the average loss of each unprofitable transaction.

However, as a user of a mechanical trading system your options are limited. The trader must accurately and unconditionally follow the trading system without making any attempt to adjust it to the market conditions. Making correction in any mechanical trading system in the process of the trade is almost impossible until and unless you are the developer of that trading system. This is one of the reasons why you need to develop your own trading system. Discover the 25 best trading systems. These trading systems have been developed by each person and have ROIs like 2000-3000% per month.

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Commodities, Day Trading, Forex, Forex Trading System, Futures, Options, Stocks, Swing Trading
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Hassam
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