Trading-Mastery-school-The joy of being an End of Day Trader using automated trading strategies
One of the biggest joys of being an end of day trader is that I can do my work in less than 30 minutes a day. Those 30 minutes I can decide myself when to work. I basically just need to download each day the updated database, check if there are new trade setups and if so enter them in the brokers platform.
An automated strategy consists of the following:
- 1. My hypothesis of how the stock market works - In order to trade successfully you need to have a clear vision of your beliefs. The beliefs are the core fundament to any trading strategy. Without a clear vision of your beliefs you will not be able to define rules and trade a strategy successfully.
- 2. A rule based process of entry and exit criteria for what stocks to buy and sell - So, as soon as we have a clear view on our beliefs and taking into account that these beliefs are sound and based on sound market principals we need to quantify these beliefs into specific rules. The more specific the easier it is.
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- 3. This is all converted into an algorithm by my programmer in my backtesting software
- Automating my beliefs and rules will help me in the daily process of deciding what to trade. The human mind is not able to process such large quantities of information on a daily basis and the computer, when correctly programmed, can do this in a matter of a couple of minutes. It saves time, but most importantly it is done correctly without any bias. It just spits out the data.
- 4. I need an historical data provider to backtest my strategy in order to obtain the scientific results that will prove I have an edge with this strategy.
- Testing on historical data is crucial to actually know if the strategy is any good and if there is an edge. We need a first class dataprovider that actually gives a real good representation of what the strategy, based on our specific rules, would have done in the past. By knowing this we at least have an indication if there is an edge, how big the edge is and what to expect for the future.
- 5. I optimize the combinations to get the desired results and decide if it is tradable.
- Once we have a data provider and our rules correctly coded we are going to define the exact parameters. There is a specific process for this and this must be done correctly. The task is NOT to create a set of parameters that show us the best results but might have been optimized, but we look for robust parameters that actually can tell us something that the parameters that create the results was not through coincidence but are expected to perform in a similar way in the future.
- 6. Each day I download the daily price updates.
- 7. Then I scan with my software and the code that my programmer wrote for stocks that fit the criteria of my strategy.
- The above two actions are such a simple daily process of clicking a couple of buttons and the computer does the rest for us.
- 8. The software provides me each day with the buy and sell orders.
- 9. I enter these orders in my broker platform
As you see the process above can be divided into 3 different areas:
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- My beliefs of the stock market and how I can make money
- Programming and testing
- Execution
Now, the whole trading process does not take me longer than 30 minutes a day as I just need to do the execution part which is generating the buy and sell orders and enter the orders into the brokers platform.
It is my pleasure to share my knowledge of how to trade successful with you and to share that it is easy to generate consistent profits, outperforming all benchmarks, while doing what I love most; travelling in South America, eating the delicious ceviche in Peru or enjoy the sun in one of the many wonderful Carribean islands.