how to successfully navigate the transition from reading charts to system trading

Develop a systematized set of rules that you can count on. You can calculate your levels the night before and execute the rules the following morning. The key is that you don't want to have to think in the morning - just focus on executing the plan. That means entering your buy stops to enter long and sell stops to protect your equity. Here are the components of a complete trading system: Breakouts - trading above previous highs or below previous lows; Trailing Stops - to protect your equity after your initial order and also once the trade starts working out in your favor (see Exiting Winners); Position Sizing - calibrated for volatility and your overall account equity; Adding to Winners - systematized so that you don't join the hubris or factors that you can't prove scientifically; Exiting Winners - getting out with the majority of your unrealized equity; Also to consider is the correlation risk between the instruments that are in your universe. These must all be conjugated to work together. One without the other is nothing - they are just data points. Think of them as a perfect complements to one another, like the starting 5 of your favorite basketball team or 9 players on the baseball diamond. For example, your position size only matters to the extent you know how much you are willing to risk per trade, where you get in and where you exit. Knowing how much silver is correlated to gold or how much or Facebook is correlated to Amazon will help you see the unseen risk in your portfolio before you add it. You can't get this level of thoroughness from chart reading or understanding set-ups such as cup and saucer. It's only achieved from backtesting through a simulator that lets you simulate at the portfolio level, not one instrument at a time. Examples of those are Mechanica and Trading Blox.

Release date

Lydbog: 1. december 2017