Developing a System to Trade Live

[Milk Man]

Can we decide on start-up capital?

My vote is $10000 and a further $10000 on margin.
This keeps it in range of the common man but should still give enough lee-way
for decent stops and the effect of brokerage.

As for the universe discussion; if we use margin the lender will decide the initial candidates. I think a margin list is the go for starters anyway. Then we should narrow it a bit further.

This is where I hit the wall. I'm getting Amibroker soon so i'll be more help then.

 

[mit]

$20,000 with 4 or 5 positions seems reasonable, I don't think smaller positions are worthwhile (there are of course exceptions!).

So it looks like we're heading down the path of short term system with a relatively small universe of stocks with a maximum of 4 to 5 positions at any one time? Sounds interesting!

tech/a, when you mentioned optimising individually for each stock, does that mean you effectively have a slightly different system (within the overall system) for each stock?

Rod.

Rod,

This probably mainly me. I thought most people wanted to medium to long term system with a large universe of stocks. I was going to set up a vote but I am not sure how to do it. A vote would be good as some of the lurkers will feel more comfortable voting. My thoughts on choices are:

1 Medium-Long term portfolio based on Large Universe (Margin List) based on $100k funds (This can also be margined)
2 Medium-Long term portfolio with a smaller start $20k
3 Short Term Share System based on 4-5 stocks with $100k
4 Short Term Share System based on 4-5 stocks with $20k
5 Short Term Share System based on 4-5 stocks with $5k CFDs
6 Futures (SPI?) Short Term System

5 is what I think is an interesting one. You would start with a high risk and reduce the risk as the capital build. Sort of like Darryl Guppy's $2k to $20k on overdrive. The idea is that you can handle a lot of volatility when you capital is small rather than when your capital is large. That is losing $2k on $5k is easier than losing $40k on $100k.

Any other choices? Can anyone work the polls?


Also bad news Tech has left all Forums (Unless people can convince him to come back)

MIT

 

[Battman64]

Also bad news Tech has left all Forums (Unless people can convince him to come back)

Come back Tech/a

 

[RodC]

Rod,

This probably mainly me. I thought most people wanted to medium to long term system with a large universe of stocks.

You may well be right, my impression was the leaning was more towards a shorter (faster?) system. My initial idea was for a longer term system, but I didn't see any point in duplicating techtrader, as that's already out there.

A medium-long term portfolio with a $20K start is probably more accessible to most, can be margined if necessary. If we want to make a system which is reasonable for most then I would think that CFD's and Futures are probably outside the comfort zone. For the same reason a short term system may be too fast/volatile for many.

I think the important thing is learning the process of developing a system. I'm currently trading 2 different systems myself, both of which I've found from other sources then adapted/modified to suit my temperament/style. As everyone is slightly different I think this should be a "how do you build a system" exercise rather than a "this is the best system" exercise.

If this works, then we should all be in a better position to develop a system which suits our own style.

regards,

Rod.

 

[RodC]

Come back Tech/a

I too would like tech/a to come back, he can be confrontational and abrasive on occasion but I reckon I've personally learnt and gained a great deal from his postings.

Rod.

 

[dutchie]

Rod, as a beginner at this trading game I agree with both your last two posts.

 

[RodC]

thanks dutchie,

I've been playing with stocks for about 10 years now but when it comes to systems development I certainly consider myself a beginner.

Rod.

 

[Artamon]

Also bad news Tech has left all Forums (Unless people can convince him to come back)

Did he give a reason for leaving? Not that one needs to, of course. But, if it's to do with the goings-on in the forums then it's a shame.

On here and other forums, I found Tech/a's posts to be, above all else, informative.

Andrew.

 

[RichKid]

I think the important thing is learning the process of developing a system. I'm currently trading 2 different systems myself, both of which I've found from other sources then adapted/modified to suit my temperament/style. As everyone is slightly different I think this should be a "how do you build a system" exercise rather than a "this is the best system" exercise.

If this works, then we should all be in a better position to develop a system which suits our own style.

regards,

Rod.

Rod,
Agree there, although we could use this thread as a starter to create a new thread with a specific system to trade live if required.

So I think that 10k float to trade stocks (no margin/leverage) direct seems a good start. For those who have 20k they can trade double the position size. Does that sound okay for starters? Just to get things going.

 

[mit]

Rod,
Agree there, although we could use this thread as a starter to create a new thread with a specific system to trade live if required.

So I think that 10k float to trade stocks (no margin/leverage) direct seems a good start. For those who have 20k they can trade double the position size. Does that sound okay for starters? Just to get things going.

Sounds fine to me. I might to the ST system myself and post if I get anywhere. Don't hold your breath it has taken me on average 9months to develop a system I am happy to trade.

MIT

 

[Joe Blow]

Did he give a reason for leaving? Not that one needs to, of course. But, if it's to do with the goings-on in the forums then it's a shame.

On here and other forums, I found Tech/a's posts to be, above all else, informative.

Tech/a has made a significant contribution to the forums and his posts are appreciated by many here.

If he has decided to take a break from posting, then I hope it's a short one.

 

[RichKid]

Sounds fine to me. I might to the ST system myself and post if I get anywhere. Don't hold your breath it has taken me on average 9months to develop a system I am happy to trade.

MIT

So an EOD daily system (hope that sounds correct) that allows us to act on signals the next day? So next step is the universe?

As for tech, I hope he comes back too but he may just be taking a well deserved breather. There have been some heated debates here and elsewhere recently and Tech may have thought it wasn't worth the flak he was copping.

Let's keep this on topic, anyone can pm tech if they have further queries. I really hope he comes back as he has certainly become more restrained over the last few months imo and is a valued contributor.

 

[DTM]

Rod,

5 Short Term Share System based on 4-5 stocks with $5k CFDs
6 Futures (SPI?) Short Term System

5 is what I think is an interesting one. You would start with a high risk and reduce the risk as the capital build. Sort of like Darryl Guppy's $2k to $20k on overdrive. The idea is that you can handle a lot of volatility when you capital is small rather than when your capital is large. That is losing $2k on $5k is easier than losing $40k on $100k.

Any other choices? Can anyone work the polls?


Also bad news Tech has left all Forums (Unless people can convince him to come back)

I like 5 and 6, mostly because I'm a short term trader but also because I'm beginning to notice that once I make a profit, I leave the stock and look else where, not noticing that the stock will make a bigger move. I'm reassessing my strategy because I think that once you become familiar with a stock, it becomes easier to read its movements.

PS Come back Tech. Your knowledge and input is invaluable to beginners like me...

 

[RichKid]

I'm reassessing my strategy because I think that once you become familiar with a stock, it becomes easier to read its movements.

DTM,
Agree completely there, in line with tech's comments as well. So maybe 6 is good to start with? So at least 3 non-correlative markets then? What do people think about that last suggestion? It also goes to the next point which is the stock universe and how to trim it down.

 

[mit]

So an EOD daily system (hope that sounds correct) that allows us to act on signals the next day? So next step is the universe?

ASX200 as a start?

Reasons are that all of these shares would be available for margin and as CFDs. I know that the system will be set-up as a $10k non margin system but I think our notional beginner may want to move to other pastures once he gets the hang of trading.


MIT

 

[RichKid]

ASX200 as a start?
Reasons are that all of these shares would be available for margin and as CFDs. I know that the system will be set-up as a $10k non margin system but I think our notional beginner may want to move to other pastures once he gets the hang of trading.
MIT

Sounds fine to me, also means they are more likely to be liquid and people can even use options to take synthetic positions (hope that's the right word).

So ASX200 is the first step, still a huge number to cull.

 

[Milk Man]

So in a nutshell weve decided (have we?):

Aussie shares as a vehicle
$10000 startup capital (unleveraged)
Daily charts for signals
EOD data for buy/sell on open next day
ASX 200 for the Universe of stocks (to begin with)

Is everyone happy with this?

 

[GreatPig]

I'm unclear on how the ultimate live-trading part of this will work.

Is the intention that individuals will each trade their own version using their own capital? If so, will each individual be using different parameters and thus selecting different stocks so that everyone's not trying to make the same trades in the same stocks at the same time?

GP

 

[RichKid]

I'm unclear on how the ultimate live-trading part of this will work.

Is the intention that individuals will each trade their own version using their own capital? If so, will each individual be using different parameters and thus selecting different stocks so that everyone's not trying to make the same trades in the same stocks at the same time?

GP

Although it was mentioned earlier that this is a good exercise for those who would like to start their own system later on we should really concentrate on starting one system now. Once all is in place we can start a new thread to show the system being traded live. I think it defeats the purpose of us putting our heads together if we go off on our own at the first opportunity. I assume we will be just testing one system for the first few months of operation before starting with real money.
So basically GP I think we are looking to create one system which we can start with and later people can modify it if required.

 

[Artamon]

So in a nutshell weve decided (have we?):

Aussie shares as a vehicle
$10000 startup capital (unleveraged)
Daily charts for signals
EOD data for buy/sell on open next day
ASX 200 for the Universe of stocks (to begin with)

Is everyone happy with this?

Yep, sounds like a plan to me.

Andrew.