Hi Everyone! First off thanks for taking the time to read this. Any and all replies are appreciated and very welcome. I have been reading all I can find about trading futures and am trying to develop my own system. I was wondering if all of you successful and experienced traders could look at my system and let me know if anything strikes you as off or wrong. Since I do not have a lot of time in the morning I was looking for a way to just trade the open of the Russell. I decided on the Russell since it just seems to work the best. I wish I knew why but hopefully that come with experience. I have spent a LOT of hours playing around with different strategies and over the past few months and this is what I came up with. This strategy uses the first 2 minute candle's highs and lows in conjunction with the 12 and 26 period moving averages to determine long or short. Please let me know what you think. Rules: Risk Management: Only trade 1 contract per $2500 in your account. My average loss is about $150 so I figure that gives me a lot of wiggle room. I am only trading 1 contract right now but when I am trading more I will cut my position in half the next day after a loss. Using a 2 minute chart with a MA12 line and MA26 line. If the MA12 is above the MA26: You want to go long when the price goes 1 tick above the high of the 8:30 candle. (Example: The 8:30 candle high is 826.9, then you want your order in for 827) Set your stop 1 tick below the low of the 8:30 candle. The exception to this rule is if a candle after the 8:30 one puts in a lower low than the 8:30 candle. (Example: The 8:30 candle low is 827 but the 8:36 candle low is 826.5. Your new stop would then be 826.4. If the new low hadn't been put in then your stop would have been 826.9) I will then put in an order to sell the contract at 2 points above the trigger price, that way it will automatically go and I will not be tempted to stay in the trade. When the price moves 1 point past your trigger price then move your stop to break even. After one of your orders executes, whether it is your price target or you get stopped out be sure to cancel the other order. You could also use OCO orders but mine does not have them. If the MA12 is below the MA26 You want to go short when the price goes 1 tick below the low of the 8:30 candle. (Example: The 8:30 candle low is 826.9, then you want your order in for 826.8) Set your stop 1 tick above the high of the 8:30 candle. The exception to this rule is if a candle after the 8:30 one puts in a lhigher high than the 8:30 candle. (Example: The 8:30 candle high is 827 but the 8:36 candle high is 827.5. Your new stop would then be 827.6. If the new low hadn't been put in then your stop would have been 827.1) I will then put in an order to sell the contract at 2 points below the trigger price, that way it will automatically go and I will not be tempted to stay in the trade. When the price moves 1 point past your trigger price then move your stop to break even. After one of your orders executes, whether it is your price target or you get stopped out be sure to cancel the other order. You could also use OCO orders but mine does not have them. So basically the system gets you about $200 per successful trade. When I am ready to move up I will then set one target at 2 points and another at 3 points. I started my account with $5000 and have another $5000 in reserve if this system turns out to be a dud. I am only trading one contract for now until i feel more comfortable. I have been trading this for about two weeks now and here are my results so far: Day 1: +200 Day 2: +200 Day 3: +200 Day 4: -120 Day 5: +200 Day 6: Breakeven Day 7: -150 Day 8: BE Day 9: +200 Day 10: -150 Day 11: +200 This was today So for 11 days of trading I am up about $730 after commisions. My biggest hurdle so far has been fear. I get VERY nervous when I enter a trade. It is very difficult to not kill a trade when it starts to tick against me. I am limited to trading just the first hour of the day because of work which is why I came up with this. I tried swing trading but I just do not have the patience for it. I may try it again after i get more experience. I know this was long but thanks for sticking around for the end.
There was one rule I forgot to mention. It happens so infrequently that I completely forgot about it. It just so happens to have happened today of course. If the MAs cross over each other after the 8:30 candle I buy or sell the open of the next candle. Example: Today the 8:30 trigger was to short @ 800.5. But before that could trigger the the MAs crossed again during the 8:36 candle. I bought the open of the very next candle and got filled at 803.1. i then set a limit order to sell at 805.1 which got filled a little under ten minutes later. So day 12 +200 which brings my total so far to about $930
Im wondering how this system has performed over the past month. Also, have u thought of running a more in-depth backtest?
Your rules seem defined clearly enough to allow you to program that and backtest it. Since it is 1 trade / day, you should use at least 2 years of backtesting (500+ trades) to get any chance of having some statistical significance. (Many will tell you to backtest 10 years, to make sure that backtesting encounters enough types of markets ... bull / bear / etc). It is great that you made money in these 12 trades, but totally irrelevant to the long-term performance of your system.
could you please elaborate on how you have breakeven trades do you move stop up when trade gets up a certain amount.