Designing a Trading System in MetaStock - Part 1
In this three article series, I`m going to guide you through the process I use to design a trading system using MetaStock. I’ll cover the four major components that every successful trading system has in common, and then I’ll show you how to code these components into the MetaStock program. Please note that this is by no means investment advice and any information I cover is purely for illustrative purposes. I am a technical analyst by trade. It is my belief that all fundamental and economic influences on a stock price are taken into consideration by the market. Therefore, I focus my attention on price action. All my trading systems are based on this understanding of the market, and the rules of my systems are built to respond to price actions. In this article, I’ll cover the basic rules of trading: - Entry rules (when you get into a position) - Exit rules (when you get out of one) - Money Management rules (how much do you put in a trade?) - Back - Testing (does the system work historically?) These four components make up a proven formula for designing profitable trading systems in MetaStock. Let’s start with the first part. A stock passing through a precise set of conditions creates entry signals before you will enter a trade on that security. I believe the rules set to signal an entry into a position should leave no room for individual judgment. I follow the KISS principal - that is they should Keep It Simple Simon. Remember, there is no Holy Grail of entry systems. There is no MetaStock formula that will get you in at exactly the right time, everytime. With this in mind, it’s your goal to construct a simple, yet robust entry system. Even though I always say that the entry is the least important component of any trading system, you still must have some way to enter a trade. Here are the points that I think are important to consider when identifying possible entry points. PRICE: It is important to set price maximums/minimums because a stock’s price can determine its attributes. For example, speculative stocks tend to be cheaper, and blue chip shares tend to be more expensive. LIDUIDITY: This is a measure of how much money the stock trades at. You need to set minimum levels of liquidity to keep you out of stocks that simply don’t trade enough. You can risk being trapped in stocks where the market is moving against you if they have a low liquidity. VOLATILITY: This measurement tells you how much a stock moves. It is important to trade stocks that move enough for you to make a profit, yet aren’t so erratic that you can’t sleep at night. TREND: This is the cornerstone of technical analysis. Remember that “the trend is your friend” and that you always want to trade with it, not against it. You will need a way to measure trend in your system. TRIGGER: This is the point that will indicate it is time to enter a trade. The trigger condition occurs only at one point in time and doesn’t hold “true” over extended periods of time, such as with a moving average cross over. When combined, these components are going to make up your entry rules. But, before we even begin coding this into MetaStock, you need to determine one of the most critical elements of any system. What time frame are you going to trade? + Short-term, such as a reversal trader or + Long-term, such as a trend follower There are distinct differences between these two types of systems and your choice here will have a marked effect on every other decision you make about your system. Short-term systems tend to require a greater time commitment, and more money. However, the benefit of trading more often is that usually your profits are more consistent, and are realised more frequently. Conversely, longer-term systems tend to require less time, and less money. However, since you are keeping your positions open longer, you need to wait until positions are closed out before you can collect any profits. Generally, I steer my clients, particularly those who are just starting out, to a longer-term trend following system. It takes less time, less money, there is less risk and it is easier to do than short-term trading. In addition, trend following systems tend to have a higher win to loss ratios and are psychologically easier to follow because of this. For the sake of this example, let us construct a trend following system. In the next two articles, I’ll explain how to code the four entry components of a trend following system into MetaStock. David Jenyns is recognized as the leading expert when it
comes to MetaStock and designing profitable trading systems.
His MetaStock website offers a huge free collection of trading
related tips and tricks. Gain free access now.
Click Here ==> http://www.meta-formula.com/subscribe |
Other Trading Tips Articles
Do You Know Which Are The Best Currencies To Trade? Are certain currencies better to trade than others? The answer is yes and there are several points to consider when choosing the best currencies to trade.Perhaps the most important consideration is the volume and liquidity of the currency traded.The reason this is so important is so that you will be able to exit positions quickly t ...Are You Fulfilling Your Destiny? There is something that you are uniquely designed to do. Maybe you are already doing that. Maybe you are not.Let me run some questions past you just to make sure: Do you spring out of bed every morning with boundless energy, eagerly wanting to throw yourself into the day ahead?Does your work fulfill you to the point wh ...Do It Now! Start Planning Your Retirement Strategy Financial Planning for RetirementYou've worked hard all your life and one day the big day will arrive - you'll retire. For now it probably still seems a long way into the future, but the reality is that the sooner you get ready for retirement, the more you'll benefit when that day comes. Starting in your 20s or 30s is the best ti ...A Look At Nationwide Internet Banking Where do you bank? I hope you are not one of those people waiting every Friday after work to deposit your money. Nowadays you have a better option than queuing for ages, you can deposit your check without the teller lady, you can try the direct deposit instead. If you are still not using this time-saving method, then it's high time you started. ...Online Currency Trading – Why It's Harder Today than Ever Before There are many who believe that the markets today, require the same skills as 30 years ago - but today’s markets are actually much harder to trade.It may surprise you, but markets have changed and are now harder to trade - but if you know why, you can increase your profits dramatically.If you don’t already understand why online cur ...FOREX Trading Strategy - The Secret of Timing Once you’ve identified a trading opportunity, the next step is to decide EXACTLY when to buy - and this is where many traders go wrong.Here we explain how to incorporate better market timing into your FOREX strategy - so that you can make bigger profits.Most traders time their entry levels incorrectly, so here’s the right way to do ...Designing a Trading System in MetaStock - Part 1 In this three article series, I`m going to guide you through the process I use to design a trading system using MetaStock. I’ll cover the four major components that every successful trading system has in common, and then I’ll show you how to code these components into the MetaStock program. Please note that this is by no means investment advice ...Oil and Real Estate There are some real differences between the workings of the stock market and those of real estate. At its core the housing market, like the stock market, is all about supply and demand. However, the difference is that stocks and bonds investors base their decisions to buy into stocks on future potential, whereas real estate investors base ...Stock Trading For A Living – Don't Quit Your Day Job There comes a time in almost every stock trader’s life when they entertain the idea of stock trading for a living.Many of us look upon the life of a stock trader as one of great flexibility and freedom. We may see ourselves trading from some remote location or even our own private yacht.Before we embrace the fantasy too much let’s ...Home Teeth Whitening Tips About a decade ago, people knew only one way of getting their teeth whitened- that was through dental in-office whitening. It was a wearisome procedure but slowly when people started showing a compulsive concern of having a whiter set of teeth, the impulsion goaded a number of different bleaching formulas and teeth whitening kits started floodin ...5 Tips for Investing in Penny Stocks Investing in penny stocks provides traders with the opportunity to dramatically increase their profits, however, it also provides an equal opportunity to lose your trading capital quickly. These 5 tips will help you lower the risk of one of the riskiest investment vehicles.1. Penny Stocks are a penny for a reason.While we all dream ...Arbitrage Trading Reviewed 2006 I am sure many of you have never herd of sports arbitrage trading, or know very little about it. If you are into making money working from home or are looking to make extra money working out of your house you can accomplish this with arbitrage trading.So what exactly is sports arbitrage trading? That’s a good questions that many fi ...Stock Brokerages There are number of investment options that investors can choose from in the market. These options range from investments that offer returns over the long term or short term. Usually, investments that offer returns after a considerable amount of time are perceived to be more stable than other forms of investments. Some of these include getting a ...Investors - What Separates the Good Traders from the Bad Traders? There are many forms of investing online. While I can give you a list that is a mile long, these are the most common forms of successful investments. Some of the following know how to invest terms are:1. Option trading 2. Future trading 3. Currency trading 4. Stock trading 5. Future trading 6. Forex trading (or ...Get Noticed - Change Your MySpace Name! When you first sign up for a MySpace profile you’ll see that the name you requested during sign up is shown at the top of your profile. As your profile matures or your interests change, you may want to redefine the direction of your profile and change its name.Your name is practically your MySpace headline and what you select will have an ...Silver Jewelry History That Became Legend Part III – The Lydian Trite Asia Minor And Its History And LegendsDuring the 6th and 5th Centuries before Christ, the Lydian empire with its impregnable capital of Sardis perched high on Mount Tmolos changed world history. Contrary to the neighboring Phrygians, who had been in Anatolia since just 1200 B.C., the Lydians were an ancient race whose origins were ...Earn Money Using Sports Arbitrage Trading Are you looking to make extra money working online? Well you have come to the right spot. Stop sit back, and I will tell you how easily anyone can start making and good amount of money using sports arbitrage trading.On average each week I make $300 to $500 a week trading on ARBS for no longer then a few hours a day. Now arbitrag ...Basic Skills And Knowledge To Start Your Internet Marketing Career People are taking more and more to the internet marketing these days. After all, who would not be enticed at the opportunity of earning 5 to 6-digit income every month aside from your day job’s salary? Other than the fact that internet marketing is a very lucrative business, internet marketers can work with their online internet marketing busi ...Management Accounts and Small Business Many small and medium sized businesses, as well as some large companies, have little idea of the financial state of the organisation.It some instances a daily, or even a less frequent check on the bank balance, purports to represent the financial control exercised by the business owner. Other performance indicators may also be used, but ...Online Futures Tradings The futures markets are organized and used not only for speculation but also for hedging, which is a method of eliminating risks arising from fluctuations in prices. Hedging may be referred to as the practice of covering the risks attaching to transactions in the cash market by contra-transactions in futures trading. If a commodity is purchased ...Birthday Ecards For Friends: How To Select? Friend's birthdays are always very exciting. If the friend is a very close friend, you may begin making plans to select the gift many days in advance. A good friend is rare and his/her birthday will come only once in a year. Sharing friend's birthday is very joyous occasion for all of us. In this article you will get tips about how to get free b ...The Impact of MNEs The United States is the home -country for the largest amounts of foreign licensing and direct investment. Therefore, its policies understandably arouse some of the major trade unions of such outward moments. One of these critics is organized labor, which argues that foreign production often displaces what would otherwise be US production. For e ...The Biggest Secret to Successful Currency Trading Successful currency trading looks deceptively simple, yet few traders succeed - despite the fact that there is plenty of material around to show them how. So why is this? - The fact is, much of the conventional wisdom given about successful currency trading, actually leads to the opposite - it actually causes traders to fail.So, let’s loo ...Forex Trading With Economic Indicators Forex trading with economic indicators is the best way to minimize your losses and make intelligent choices when it comes to investing in futures. There are several ways you can get this information - one of the easiest being from the news. Simply keeping abreast of world events, watching CNN and reading industry trade news sites and newsletters ...Important Tips When Selecting a Cosmetic Dentist To find a capable, experienced cosmetic dentist, you could do a Google search (or Yahoo, MSN etc.) for “cosmetic dentist in [your location]”. This will give you many possibilities.1. Look at the website Most experienced cosmetic dentists have a website which: · Explains the procedures they offer, · Gives background informatio ...Loans for Self-Employed One of the most fundamental details that all banks will look for in all loan applicants is a steady, dependable income. The amount of this income will decide how much the applicant will be granted. If there were no dependable income, then on the face of it, it would appear to a lender’s calculation, that the loan amount should be zero. This is t ...Why Splits Are Exciting and Profitable One thing that generally gets us smiling is when we have a mess of good companies doing splits when the overall market tone stinks. Why? Well think about it for a minute. If XYZ announces that they are going to do a 2 for 1 split and the stock is at 100, it stands to reason that they will be trading in the 50's in the near future. But, if befor ...Ten Tips for Translating Your Business Card International business today necessitates people travel all over the world for meetings, negotiations and other business functions. Along the way one will meet numerous people that all have the potential to give recommendations, pass over work or provide some sort of benefit. The business card is the key to remaining in their sphere of contacts. ...Energies Update – We Made BIG Gains Using This Indicator - You Could Too We piled up huge gains this week in unleaded gas and crude and want to share with you our favourite timing indicator.If you have read our recent reports you will know we are great admirers of the stochastic indicator.It’s the best indicator for timing trades. Use it correctly and not only will it make you money, it can also help yo ...Brokerage Firms Brokerage firms facilitate the trading of stocks, commodities and currencies by providing opportunities to the interested sellers and buyers for a specified fee. These firms also provide borrowing facilities against an underlying asset to enhance liquidity in the markets and to spur trading.Brokerages are required to register with a recog ...
|
