Simple System for Beginners

Discussion in 'Strategy Development' started by AnomalyResearch, Aug 30, 2004.

  1. The purpose of this thread is to present a simple system for beginners to trade stock index futures.

    We will use the emini Russell2000 "ER2" Globex contract.
    Its value to the trader is $100 per full point per contract.
    It trades in .10 increments so each tick is worth $10.
    If you trade with InteractiveBrokers your round turn commission is about $5.00.

    To keep our risk low, we will only enter trades for the afternoon session. So Rule #1 is:

    1). WAIT until 1:00 Central Standard Time.

    The entry technique to use is a simple breakout method with which we look to catch an afternoon trend.
    We will take a move either long or short whichever comes first.
    The signals are derived by looking at moves AWAY from the day session opening price. This method is sometimes called "Opening Range Breakout". It has been "around" for many years. I first used a variation of it in 1989 on the S&P500 pit traded contract.
    Larry Williams used a variation of it on the 30yrBonds and the S&P500 to pyramid $10,000 to over $1,000,000 to win the Robbins Trading Championship in 1986.

    For this thread we will calculate the signals as follows:

    2). Multiply the opening price of the day session by 1.0033 to get the buy signal.
    3). Multiply the opening price of the day session by .9967 to get the sell short signal.

    At 1:00 enter a buy stop at the buy signal price and a sell stop at the short sell signal price.
    If the market is already past either signal it will become a market order with immediate execution. The remaining unexecuted stop is your stop loss. If the market is trading in a narrow range neither side may be executed and you may have no trade for the day. If your stop loss is hit you are done for the day. You will simply ride the position untill 3:00 pmCST and exit at that time.

    4). Exit trade at 3:00pm if not stopped out.

    Thats it.
  2. open = 548.20
    long signal = 548.20*1.0033 = 550.00 STOP
    short signal = 548.20*.9967 = 546.40 STOP
  3. This should be fun !

    I love simple stuff like this it always makes the people that try and complicate the market look foolish.

  4. Quah


    Simple stuff never works.
  5. It's never the tool but ALWAYS the trader, simple or not.

    I have never needed much more then a 50, 200 ma for position trading for 15 years but lets give this guy his day in the sun to see how he does!
  6. Quah


    Samson77 -

    I'm suprised you missed the extreme sarcasm in my post.

    (ah, I see you werent around the last part of 2002. Nevermind then...).

  7. :) :) :)
  8. Got any "simple" systems for Old Timers??
  9. lol. There is another poster doing a simple system that seems to be doing ok. Andys Journal I think it is. I havent checked to see if hes posting close to real time or not.
  10. rdewey


    I find all these "systems" interesting. A true system would have to make good use of the chaos variable, which at this point in time, is impossible to calculate.
    #10     Aug 30, 2004