Hi, I have been trading a few months (not very successfully). I am trying to develop a system with a set of rules in order for me to follow and prevent me from acting impulsively. However, where does one start? Also, is a good set-up pattern the only thing between a good an a bad trader? At the moment i am finding most of my profits come on 2-3days a month, and the rest of the time i am trying to mitigate losses/break even. Is this everyone elses experience?
You need to read "trading as a business" by Charlie Wright. This book is an excellent starting point if your considering system trading. Its out of print but you can get it used on Amazon for about four dollars. A small investment compared to what you will continue to lose.
I have not read that book yet. Will definately try it soon. I am a relateively new trader (2 years or so), and i found Come into my trading room, and trading for a living by Alexander Elder two good books for beginers. They won't tell you a system, but how to develop one depending on your trading style. Definately at least one of them worth a read. Tom
You really ARE new here. You guys should start by clicking the "Training" link at the top of the page and reading it ALL... Look around, use the Search function -- every once in a while someone actually says something worthwhile (getting kinda rare, but it still happens). And stay alive long enough for genius to hit you. And lots of traders make their whole year with half a dozen or less great trades, and the rest of the time is treading water trying to stay alive long enough for those trades to happen.
Actually, as Cable pointed out above, you'll find the entire contents of this book right here on ET: http://www.elitetrader.com/tr/ Also, there are any number of books on trading system development, some of which are actually not bad; just do a search on, well, Amazon. My top recommendation for you would be to invest in Van Tharp's "Developing a winning trading system that fits you", a home study course from IITM (workbook + 18 hours of audio on 12 CDs). A must; not inexpensive at $1,000, but look for it on sale or eBay. And, whatever you do, subscribe to System development with acrary journal, as well go over previous posts by acrary. Have fun.
Cab's right. best thing you can do is to trade to stay alive for a year first. most don't make it that long.
To reiterate, read all acrary's posts and EricP's posts which take his edge test one step further. Also read all abogdan/meistro posts, steve46/lefty posts. Study all the prior ET Gems posts http://www.elitetrader.com/vb/showthread.php?s=&threadid=55637 and study the different approaches others are using, such as Example http://www.elitetrader.com/vb/showthread.php?s=&threadid=44092 Trading System and Simple http://www.elitetrader.com/vb/showthread.php?s=&threadid=37520 System for Beginners. Also, even though he is painfully vague most of the time, read over cheese's posts and get familiar with the concept of a zero sum game, and what your goals should be as a trader, and why many must lose for a few to win. Also MacroEvent is posting some good stuff in the ER2 thread http://www.elitetrader.com/vb/showthread.php?s=&postid=879914#post879914 now. Get to know the sharp cookies and follow them around on the boards. This could take you a few weeks to a few months depending on how much you read. After soaking up all that information, study the markets for a few months looking for relationships. Form some opinions and test those opinions to see what is valid and what is not. Discard all the ideas that prove invalid. All it takes is a single good idea and you can build dozens of profitable systems (edges) off from that. This part of the process could take you several years, just to come up with a good idea, or shorter if you are lucky. Good Luck,
One final thought. My systems did not become profitable until after I had become profitable as a discretionary / semi-mechanical trader, so in the end the advice to just trade and develop your own strategies may be the best advice. If you don't know how to trade profitably then how are you going to teach a computer to trade profitably? "You cannot give what you have not got."
You need to read "trading as a business" by Charlie Wright. See: http://www.elitetrader.com/tr/ Be sure to include all principles he mentions. After than you might try the forum with System development with acrary
My friend, you must trade with demo and read more about money management this is firstly, then read more about technical analysis, economic and indicators news, then you will be able to trade by using your real money Do not hurry to trade with your money, plz Good luck