premierpip
Recruit
- Messages
- 1
i think its alot better and cheaper if we can create strategies of our own and also be able to change strategies according to market conditions. but how do people actually start?
How to start creating your own trading strategies?
- Thread starter premierpip
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automatedtrading
Private
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- 22
I think each people have their own strategy so I don't think they share the most important thing in this trade for you. Just make more trade and you will gain more experience to do your strategy more and more efficient
Pharaoh
Colonel
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- 19,691
To start a strategy, start with risk management. Too much risk and the world's most successful strategy will blow up on the first loss.
Next, look at risk-reward vs. % success. If you risk $10 to make $1, you need to win 90% of the trades just to break even.
Develop your entry and exit rules. Backtest them to see if they've got a chance, then forward test them on demo for 50 or so trades and see how it went.
If it's not a total disaster at this point, go through the trades and check the following:
Entry rules: Can you see the opportunity for a filter to have reduced the number of bad trades you entered into without killing too many good trades? It could be some complex technical indicator. It could be something as easy as "my system has a much lower success rate on Friday."
Exit rules: Were your exit rules getting you out too early or were they leaving you in too long?
Tweak the system and retest it.
Next, look at risk-reward vs. % success. If you risk $10 to make $1, you need to win 90% of the trades just to break even.
Develop your entry and exit rules. Backtest them to see if they've got a chance, then forward test them on demo for 50 or so trades and see how it went.
If it's not a total disaster at this point, go through the trades and check the following:
Entry rules: Can you see the opportunity for a filter to have reduced the number of bad trades you entered into without killing too many good trades? It could be some complex technical indicator. It could be something as easy as "my system has a much lower success rate on Friday."
Exit rules: Were your exit rules getting you out too early or were they leaving you in too long?
Tweak the system and retest it.
fxfrench
FXOpen AU Representative
- Messages
- 392
Money Management and Risk Management are easy if you include one simple rule in your strategies.....
1) Always consider EVERY trade as a LOSER
You might ask, "How can that help me?"
Well... If you are about to open a trade, ask yourself, "How much do I want to lose?". If you are not fixated on what you want to win, greed becomes less of a factor. Greed can make you over leverage yourself, taking too large a position for your account.
If you enter a position thinking, "I'm going to lose $100" instead of thinking "I'm going to make $1000", you might start thinking more about how you don't really want to lose $100, but are more comfortable with losing $50 instead. Straight away you have probably halved the size of the position you are taking meaning if you do hit your stop loss (which should be in an intelligent place anyway but that is another thread
) your account will take less of a hit.
Remember... "Every trade is a loser"
1) Always consider EVERY trade as a LOSER
You might ask, "How can that help me?"
Well... If you are about to open a trade, ask yourself, "How much do I want to lose?". If you are not fixated on what you want to win, greed becomes less of a factor. Greed can make you over leverage yourself, taking too large a position for your account.
If you enter a position thinking, "I'm going to lose $100" instead of thinking "I'm going to make $1000", you might start thinking more about how you don't really want to lose $100, but are more comfortable with losing $50 instead. Straight away you have probably halved the size of the position you are taking meaning if you do hit your stop loss (which should be in an intelligent place anyway but that is another thread
) your account will take less of a hit.Remember... "Every trade is a loser"
automatedtrading
Private
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- 22
It's a certainThere's another psychological advantage of considering every trade to be a loser. When you lose, you expected it and don't feel so bad. When you win, it's a very pleasant surprise.
melati untuk
Private
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- 14
do learning, and practice... experience did't came instantly
Pharaoh
Colonel
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- 19,691
I would disagree with that. A person might need 2 years to become profitable, but that's no reason to not try to develop your own strategy as soon as you get a general idea of how the market works.
You can only sit around reading what others have written for so long. At some point, you've got to try implementing ideas. These can be ideas from others, or they can be your own. Sitting around thinking "I haven't traded for 2 years, so I'm too ignorant to try anything on my own" isn't going to make you a successful trader.
What kills most people's accounts is poor risk management, not bad ideas on when to open and close trades.
Naturally, all new strategies, no matter what the source, should be tested on demo first.
You can only sit around reading what others have written for so long. At some point, you've got to try implementing ideas. These can be ideas from others, or they can be your own. Sitting around thinking "I haven't traded for 2 years, so I'm too ignorant to try anything on my own" isn't going to make you a successful trader.
What kills most people's accounts is poor risk management, not bad ideas on when to open and close trades.
Naturally, all new strategies, no matter what the source, should be tested on demo first.
JohnSkr
Private
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- 21
maybe I just missed smth - if we are talking about experimental strategies, you can start creating them on your first day of trading... but if we are talking about really working strategies (also with intelligent risk management) - they just cannot be generated without rich experience (it is just my opinion)
