The Best Mechanical Day Trading System I Know

Top Gun Day Trading System

The Odds

If you want to trade and win you need to be able to take calculated risks when the odds are in your favour and you cannot do this in day trading, as you have no reliable data.

Consider this:

Countless millions of traders all with different opinions trade trillions of dollars per day and to say that you can measure market movement in just a few hours or a day is ridiculous – you can’t.

Prices can and do go anywhere in a day and support and resistance levels are meaningless.

You may as well flip a coin it will be just as effective.

FACT – If you dont have relaible data you will lose over time its 100% certain – PERIOD

BUT I SEE GREAT DAY TRADING RECORDS ALL THE TIME!

Yes you do, but look at the track record and it will say:

“Hypothetical” and you will get a disclaimer.

In case you have never read one – it basically says that the track record is done knowing the closing prices!

Well that’s hard!

Let’s see if I knew tomorrow’s price in advance would I make a lot of money – of course I would. However, you don’t have the luxury of knowing the closing price when you trade though and you will lose.

Claims with No Proof to Back Them Up

I have always maintained that these hypothetical track records should be banned – There of no use at all.

Vendors use them to dupe people into buying forex day trading systems and normally throw in some outrageous headlines as well that never have any facts to back them up.

The vendor wins You Lose

The vendor’s don’t trade these systems (as they know they have no chance of winning) so they sell them to you take your money and you trade and lose.

The Myth & Reality of Forex Day Trading

The myth of making money in forex day trading is perhaps the biggest myth in currency trading – it’s actually a guaranteed way to lose and if you don’t believe me try and find someone who has made money at it.

Get ready for a long search!

1. The Logic Of Day Trading Is Flawed

The logic of day trading is flawed and doesn’t work.

Sure you see lots of people claim to make money at forex day trading but they don’t and you will never find a real time track record of gains – we will come back to this point in a moment, for now lets look at why day trading cannot work.

The answer is simple:

FACT:

All short term volatility is random and prices can and do go anywhere in a day, so if this is true – it’s impossible to win.

Of course its common sense, there is no order to the markets in a just a few hours.

Think about it:

Millions of traders trade trillions of dollars and to say that you tell what this mass of people is going to do in a few hours is laughable.

You can never win longer term day trading so let’s look at all those wonderful track records, that tell you to give up the day job and trade for a living..

2. Where is The Track Record?

You will see people present track records in day trading and they all have hypothetical or simulated written on them – which means yep you guessed it there done in hindsight knowing the closing prices – How hard is that?

A child could do it and these track records are not worth the paper their written on.

You never see a real one!

The vendor knows it doesn’t work so he is not going to risk his money trading – he can sell the system to you, make a guaranteed profit and you take the loss in the market. The above is what happens as these vendors trick traders with simulated track records and clever marketing copy.

Scams on the net

The internet has bought lots of great information to forex traders – but also a lot of scams and cons and the biggest con of all is anyone who tells you day trading works – it doesn’t.

Try and find a track record if you dont believe me – you wont find a real one if you do tell me about it, I have been searching for 20 years.

Finally…

If you want to make money forex trading, you need to trade in time frames that mean you can get the odds on your side and this means trading longer term – leave day trading to investors who are naive, lazy or just dreamers. If you want to win – get the odds on your side and do your homework and avoid forex myths such as day trading.

Fact is day trading systems will lose you money as by their very nature they can’t work here’s why.

Firstly

If you are ever considering buying a day trading system ask for the real time track record over the long term ( this means 2 years + ) don’t accept a hypothetical track record!

Let’s see we know the prices in hindsight can we make a profit?

Of course we can!

Anyone can win with a hypothetical track record, there worthless, so ask for the real time record and you won’t get one here’s why.

1. Short term moves are random

The currency markets trade trillions of dollars per day and short term moves within any daily period are random.

You could flip a coin or use a day trading system your odds of winning are the same.

2. Volatility

Is random in short time frames and prices can simply go anywhere.

As most day trading systems bang on about keeping losses small, stops are normally taken out creating a loss.

Furthermore, your chances of losing are greater as the odds of being taken out are high.

3. Day trading systems never run profits

A day trading system keep your losses small (albeit you have massive odds of being stopped out) but they never seem to do the other essential of making money in FOREX and that’s run profits.

Day trading systems normally have short term profit targets and are grateful for any profit they can get.

So what do you have?

Lots of small losses and no real profits to make up for them.

This means you get wiped out and normally wiped out quickly.

The Myth and The Reality

The myth is that day trading systems make money, the reality is day trading is one of the best ways to not only lose your equity, but lose it quickly.

People day trade because they are greedy or simply fools.

When I read a lot of the sales blurb of day trading systems its obvious these vendors have never traded, they make their money selling courses.

They make money from book sales not from trading, so they win you lose.

Saw one promising me 90% successful trades for a few hundred dollars.

Well if I had one of those, would be making millions and certainly wouldn’t sell it I would be to busy enjoying my riches.

Finally

If you want to trade currency markets you can make money, but be realistic and sensible and make sure that you don’t fall for the hype of day trading systems.

If you do get ready to lose your equity and lose it quickly.

…the bad news is that there really isn’t a robot to day trade stocks. Sorry to burst your bubble.

But…the good news is that there is one that day trades currencies (you know, the great forex market that I love and have bored you over and over with throughout this website?).

No folks; this is not “Forex Made Easy.” This is “Forex Made Easier”- An automated day trading system that NOT ONLY comes with a highly sophisticated set of conditions to enter and exit the market, but one that also pulls the trigger (that is, executes the trades) for you, using proper money management without which day trading is doomed to failure. [If you have not read why I strongly believe that the forex (short for foreign exchange) market is the purest and best market to day trade in the world, go to the currency trading section of this website]. This automated system is also known as Forex Robot or FX Bot (for frequently asked questions about the trading robot, click here).

Yes day trading fans. This day trading robot (or bot) not only finds the trades, it takes advantage of them when it finds them.

When the forex trading robot was presented to me for the first time, it was difficult for me to accept the whole concept. I got to admit, I was pretty skeptical. If the explanation wouldn’t have come from the best two money managers and traders I know (and personal friends of mine), I wouldn’t have even listened. But after a while, I was sold. “You, Dan? Mr. Day Trading Tutor?” – “Telling us that you believe in a day trading robot after writing an endless amount of information about how people could learn how to day trade, how much you believe in day trading, how you have helped day traders in the past, etc., etc.?”

Whoa, whoa!!! People, don’t get so exited. All of these things are still true. There are people that will learn how to day trade successfully and become successful traders. I am still involved on a very limited basis on the training of some day traders. But there are also many people out there that will never succeed as day traders and others that, after having tried it, will realize that it is not for them.

This is the truth; plain and simple. And even if the day trading robot wouldn’t have existed, this would have still been reality. The FX robot is just something extra that I feel can help not just unsuccessful traders, but also investors who can add something different (a new component) to their investment portfolios; and believe me, this is completely different than any investment I have ever seen before.

I created Day Trading Tutor to give you the reality of trading. Well, talking about the trading Bot is an extension of this goal. Since it exists and can help you, I must tell you about it – period!

Ladies and gentlemen; I am sorry if I sound really exited about this trading Bot thing – so exited it made me that I even became part of it in order to be able to offer it to my clients, friends, and family members (read “How are you involved in the day trading Bot and are you doing it just for the money?” below. I like to be very clear about the things I say. It makes me sleep peacefully at night. The thing is that I haven’t been part of a great project like this for a long, long time. The money managers and traders that designed and monitor the day trading robot on a daily basis have become personal friends of mine in the last few years. They are great guys and exceptional traders. They have been top-ranked in the past in the forex money management industry. I don’t like recommending traders or money managers to people, but this is an exception.

The robot program rocks!

Then again, you could take a year or so and read every available text on day trading and then put together a system, back test it, trade it on a demo, and see if it works. Crazy as it sounds, I have done this on several occasions with day trading systems I have designed. It is a lot of work, but you get to know an awful lot about the ins and outs of day trading systems and the computer programming that goes into a day trading system.

So you are left with two very challenging approaches to day trading; you can spend a ton of cash on one or more day trading systems and eventually find one that suits your needs; or you can spend a ton of time monkeying with oscillators and indicators and price action, find a program that can back test the system design and see if it works. If your day trading system doesn’t work, it’s back to the drawing board. Neither one of the choices sounds very enticing, nor is either choice glamorous. They both entail a lot of hard work and money.

There are several skills that must be mastered in order to become a successful and profitable day trader. I would place your trading system near the top of the list of important items to learn. Of course, there are other very important skills that go into it day trading; like money management, psychological and emotional control, and mastering the software you will use to trade futures contracts. But you must have a system for trading, and the system must work, and you must feel comfortable and confident when you trade the system. It is nearly impossible to day trade successfully when you do not trust your trading system methodology.

There are several systems which are successful and reliable that are free for the asking on the Internet. One in particular is especially good. (Due to conflicts of interest and article marketing rules I won’t be able to name the specific system, but it shouldn’t be hard to find because it is very popular) The problem with overly popular systems is the herd mentality of the followers of the system. Often times, followers of these popular trading methodologies tend to pile into trades at an alarming rate and volume due to the sheer popularity of the system itself. No, my personality does not allow me to be part of a herd mentality system of trading.

So when choosing a system a day trader needs to be mindful of exactly what day trading methodology is being employed. A casual perusal of the available day trading systems will bring to light a number of different styles of trading. If it were me, I would trade a system that has gotten favorable reviews on the chat boards and is within the mainstream of current day trading methodology. I should warn you, there are a number of odd day trading system designers out there and they promote systems that truly border on the bizarre. For instance, one very famous technical trader is currently promoting a system based upon astrology. There are other systems based on biorhythms, the weather, and just about any other odd occurrence you might be able to dream up. As I said at the beginning of this paragraph, stick with a system that is in the mainstream of day trading thinking and master that system. You should know your trading system top to bottom, inside and out; you need to be able to execute your system without thinking, it should be second nature.

I did mention earlier that you could self-education yourself and design your own trading system. I don’t seriously recommend this option, because you are likely to burn through several trading accounts before you settle on a system that truly works for you. In short, self educating your self is generally a very expensive proposition. On the other hand, you will know much more about day trading systems than the average trader. I designed several systems after I had settled on a system I learned at a major investment brokerage house. I do believe that working with some of my own trading ideas was a great idea, as it gave me some real insight into how systems for day trading are designed and implemented.

In short, you have two options from which to choose and I highly recommend investing in a trading system and mastering the system. I also recommended that the system that you settle on is within the mainstream of day trading methodology and comes with some favorable recommendations from third-party sources.

Author: David S. Adams
Article Source: EzineArticles.com
Make PCB Assembly

Some Facts You Should Know In Day Trading:

1. The more faith there is in the trend line, the better it acts as a support for you.

2. According to the day trading system, when there is no good trade opportunity, the day trader makes a pass and stays in cash for that day.

3. The longer the stock stays at a particular level; the better is the day trading signal of support.

4. Day trading stock picks are chosen based on a set of strategies or methodologies, of which the most important are technical analysis, trend analysis, relative strength ranking, fractals and volumes, chart formations, and algorithms.

5. This is an ideal investment opportunity for the investor with a small amount of cash.

Some Benefits Of Day Trading:

1. One advantage of day trading is that you do not need to invest a lot of money to make profits.

2. First of all, it is a safer way for people who do not have a lot of know-how in stock trading; therefore, they can easily follow their stocks during the day and sell them off as soon as they see a rise in the value.

3. Stock market day trading is a great means of making money with a little of gambling.

4. Secondly, day trading allows for lesser speculation as the trader may not see a lot of variation in the values during a span of a day.

Some Tips For Day Trading:

1. The secret of stock market day trading, or any trading for that matter, is to always buy stocks low to sell high.

2. One point to remember in stock market day trading is that there is a limit on the gains from a single share.

3. Be conservative, and do not let the position take control of your account.

4. Day trader should not believe advertising claims, which promise quick and sure profits from day trading.

5. The key with trading is to give yourself a chance, and you really don’t with traditional day trading.

The Forex Trading;

Day trading, despite differences in times zones throughout the world, is also popular because the forex market remains open 24 hours a day. Forex Trading generates a volatility of 500 versus 60 to 100 in liquid stocks, and there are no transaction fees or commissions in the trading of currencies. There are many forex-trading companies that can train you for day trading so that your transactions are not reduced to gambling.

Trading Software:

Recognizing good trading software is an easy task, as the basic requirement is that of a data provider which will help you analyze the market before you start online trading. Many traders and investors rely too much on software’s used for these purposes, but you do not get a true picture of the market just by using these software’s, as there are many factors which constitute a stock market and some of them can only be assessed through skill and experience.

Some Trading Media:

1. While there are many day traders who do their trading using only the computer, there are others who trade using telephone and mobile phones.

2. Computers are the best medium for all kinds of trading, but particularly for day trading.

Day Traders Should Be:

1. Day traders are more particular with buying and selling not the bottom line.

2. In day trading, the trader does not hold stocks until the next day; instead dispose it off by the end of the day.

3. A person is considered a day trader when they can accomplish four or more day trades in a five business day period and has two unmet day trade calls in 90 days.

You will need to decide what your personal style is going to be and master it.

One of the most popular trading styles is Day Trading which, as I said, means making many trades during the day. How many exactly depends on you.

But is day trading right for you or is a different style the one you should choose?

To really find out for sure, you need to answer these 4 questions:

1. Do you have enough free time – Day Trading requires you to spend many hours in front of your computer screen and watch the charts. If you’re busy at work or with other obligations this is not possible for you.

2. Do you suffer from trading anxiety – Traders are subject to a lot of stress. It’s very difficult to watch your trade turn sour. The problem is that the emotions this brings up in you may cause you to make the wrong decisions and lose a lot of money. This is one of the main reasons why over 90% of traders lose money in Forex.

When you day trade, you make more trades and your anxiety is naturally higher. Be honest with yourself. If you have trading anxiety, make fewer trades each day.

3. Do you like Forex – In order to make multiple trades each day, to follow the market, and immerse yourself in charts and prices, you need to love Forex trading. It’s okay if you don’t. You can still make money. But you can’t day trade. It will drive you crazy.

4. Do you have a day trading system – Naturally, you will need a solid trading strategy which is suitable for day trading. If you don’t, you will lose big.

Day Trading can be highly profitable. Answer the 4 questions above. If you answered yes to them all, then you may be the sort of trader who will profit massively with day trading. If not, then a different trading style is better for you.

Author: John J. Drummond
Article Source: EzineArticles.com
Provided by: Mobile device news

Lets take a closer look at these steps.

Step 1: Select a market and a timeframe

Every market and every timeframe can be traded with a day trading system. But if you want to look at 50 different futures markets and 6 major timeframes (e.g. 5min, 10min, 15min, 30min, 60min and daily), then you need to evaluate 300 possible options. Here are some hints on how to limit your choices:

Though you can trade every futures markets, we recommend that you stick to the electronic markets (e.g. e-mini S&P and other indices, Treasury Bonds and Notes, Currencies, etc). Usually these markets are very liquid, and you wont have a problem entering and exiting a trade. Another advantage of electronic markets is lower commissions: Expect to pay at least half the commissions you pay on non-electronic markets. Sometimes the difference can be as high as 75%.

When you select a smaller timeframes (less than 60min) your average profit per trade is usually comparably low. On the other hand you get more trading opportunities. When trading on a larger timeframe your profits per trade will be bigger, but you will have less trading opportunities. Its up to you to decide which timeframe suits you best.

Smaller timeframes mean smaller profits, but usually smaller risk, too. When you are starting with a small trading account, then you might want to select a small timeframe to make sure that you are not overtrading your account.

Most profitable day trading systems use larger timeframes like daily and weekly. These systems work, too, but, be prepared for less trading action and bigger drawdowns.

Step 2: Define entry rules

Lets simplify the myths of entry rules:

Basically there are 2 different kinds of entry setups:

Trend-following

When prices are moving up, you buy, and when prices are going down, you sell.

Trend-fading

When prices are trading at an extreme (e.g. upper band of a channel), you sell, and you try to catch the small move while prices are moving back into normalcy. The same applies for selling.
In my opinion swing trading is actually one of the best trading strategies for the beginning trader to get his or her feet wet. By contrast, trend trading offers greater profit potential if a trader is able to catch a major market trend of weeks or months, but few are the traders with sufficient discipline to hold a position for that period of time without getting distracted.

Most indicators that you will find in your charting software belong to one of these two categories: You have either indicators for identifying trends (e.g. Moving Averages) or indicators that define overbought or oversold situations and therefore offer you a trade setup for a short term swing trade.

So dont become confused by all the possibilities of entering a trade. Just make sure that you understand why you are using a certain indicator or what the indicator is measuring. An example of a simple swing daytrading strategy can be found in the next chapter.

Step 3: Define exit rules

Lets keep it simple here, too: There are two different exit rules you want to apply:

Stop Loss Rules to protect your capital and

Profit Taking Exits to realize your profits

Both exit rules can be expressed in four ways:

A fixed dollar amount (e.g. $1,000)

A percentage of the current price (e.g. 1% of the entry price)

A percentage of the volatility (e.g. 50% of the average daily movement) or

A time stop (e.g. exit after 3 days)

We dont recommend using a fixed dollar amount, because markets are too different. For example, natural gas changes an average of a few thousand dollars per day per contract; however, Eurodollars change an average of a few hundred dollars a day per contract. You need to balance and normalize this difference when developing a day trading system and testing it on different markets. Thats why you should always use percentages for stops and profit targets (e.g. 1% stop) or a volatility stop instead of a fixed dollar amount.

A time stop gets you out of a trade if it is not moving in any direction, therefore freeing your capital for other trades.

Step 4: Evaluate your day trading system

The first figure to look for is the net profit. Obviously you want your system to generate profits. But dont be frustrated when during the development stage your day trading system shows a loss; try to reverse your entry signals. On our website http://www.rockwelltrading.com you already learned that trading is a zero sum game: So if you are going long at a certain price level, and you lose, then try to go short instead. Many times this is the easiest way to turn a losing system into a winning one.

The next figure you want to look at is the average profit per trade. Make sure this number is greater than slippage and commissions, and that it makes your day trading worthwhile. Day trading is all about risk and reward, and you want to make sure you get a decent reward for your risk.

Take a look at the Profit Factor (Gross Profit / Gross Loss). This will tell you how many dollars you are likely to win for every dollar you lose. The higher the profit factor the better the day trading system. A system should have a profit factor of 1.5 or more, but watch out when you see profit factors above 3.0, because it might be that you over-optimized the system.

Here are some more characteristics you might want to consider besides the net profit of a system:

Winning percentage

Many profitable day trading systems achieve a nice net profit with a rather small winning percentage, sometimes even below 30%. These systems follow the principle Cut your losses short and let your profits run. However, YOU need to decide whether you can stand 7 losers and only 3 winners in 10 trades. If you want to be right most of the time, then you should pick a system with a high winning percentage.

Number of Trades per Month

Do you need daily action? If you want to see something happening every day, then you should pick a day trading system with a high number of trades per month. Many profitable day trading systems generate only 2-3 trades per month, but if you are not patient enough to wait for it, then you should select a day trading system with a higher trading frequency.

Average Time in Trade

Some people get really nervous when they are in a trade. I have heard of people who cant even sleep at night when they have an open position. If thats you, then you should make sure that the average time in a trade is as short as possible. You might want to choose a system that does not hold any positions overnight.

Maximum Drawdown

A famous trader once said: If you want your system to double or triple your account, you should expect a drawdown of up to 30% on your way to trading riches. Not every trader can stand a 30% drawdown. Look at the maximum drawdown the system produced so far, and double it. If you can stand this drawdown, then you found the right day trading system. Why doubling? Remember: your worst drawdown is always ahead of you.

Most consecutive losses

The amount of most consecutive losses has a huge impact on your trading, especially when you are using certain types of money management techniques. Five or six consecutive losses can cause you a lot of trouble when using an aggressive money management.

In addition this number will help you to determine whether you have enough discipline to trade the system: Will you still trade the system after you have experienced 10 losses in a row? Its not unusual for a profitable trading system to have 10-12 losses in a row.

Step 5: Improving your system

There is a difference between improving and curve-fitting a system. You can improve your day trading system by testing different exit methods: If you are using a fixed stop, try a trailing stop instead. Add a time stop and evaluate the results again. Dont look at the net profit only; look also at the profit factor, average profit per trade and maximum drawdown. Many times you will see that the net profit slightly decreases when you add different stops, but the other figures might improve dramatically.

Dont fall into the trap of over-optimizing: You can eliminate almost all losers by adding enough rules. Simple example: If you see that on Tuesdays you had more losers than on the other weekdays, you might be tempted to add a filter that prevents your day trading system from entering trades on Tuesdays. Next you find that in January you had much worse results than in other months, so you add a filter that enters trades only from February December. You add more and more filters to avoid losses, and eventually you end up with a trading rule that I saw recently:
IF FVE > -1 And Regression Slope (Close , 35) / Close.35 * 100 > -.35 And Regression Slope (Close , 35) / Close.35 * 100 -.4 And Regression Slope (Close , 70) / Close.70 * 100 -.2 And MACD Diff (Close , 12 , 26 , 9) > -.003 And Not Tuesday And Not DayOfMonth = 12 and not Month = August and Time > 9:30 …

Though you eliminated all possibilities of losing (in the past) and this trading system is now producing fantastic profits, its very unlikely that it will continue to do so when it hits reality.

Author: Markus Heitkoetter
Article Source: EzineArticles.com
Provided by: Smart cooker