This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
My trading is driven from Trade Ideas alerts, and so I need to be able to decide quickly on whether to take or reject a trade, and how to manage the trade once I am in it. Sometimes a signal from Trade Ideas comes a little early to trade, but may be tradeable in a few bars. I need to manage this, and react if the trade does become viable.
To meets these needs, I developed a set of visual and auditory indicators within Tradestation to help manage trade events. To provide good visual clues, I have a color coded Hull Moving Average laid over the price bars. When it is green, the bias is long, and when red the bias short. Just below is a second panel which is also color coded green or red to re-enforce the trend direction. Above and below this are trade entry and exit markers (Enter long, short below, and exit long, short above).
The next lower panel is a forward normalized moving average histogram, which is not effected by gap openings common when trading intraday. Strength changes are color coded, weak going to strong and strong going to weak, to prevent going the wrong way even through the trend still showing a bias up or down.
The final panel is a SMI used to trigger trades or exits.
For auditory alerts, I have added ringtones specific to the event: Enter Long, Enter Short, Exit Long Exit Short. When I am not in front of the system, I still know what needs to be done by the type of ring type generated.
This setup allows me to manage multiple active positions, or pending positions without using broker based rules which I do not like to use except for stop loss triggers.
Ideas for improvements would be great, or other methods that have been successful.
-TraderD
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
May 8th, 2007 at 2:29 pm
You’re more sophisticated than I am! Most of my trades are based on geometric setups or breaks of a particular support / resistance. I’ve wanted to try something different like you have done here, but it’s a very daunting task when you don’t know what it is to try. Kind of like Edison making the light bulb through years or trial and error with 1000’s of different material combinations…
May 8th, 2007 at 6:34 pm
D: what is a hull moving average?
May 8th, 2007 at 7:15 pm
The HMA employs weighted moving averages and dampens the smoothing effect (and resulting lag) by using the square root of the period instead of the actual period itself:
waverage(2*waverage(close,period/2)-waverage(close ,period), SquareRoot(Period)
See:
http://www.justdata.com.au/Journals/AlanHull/hull_ma.htm
I have the Jurik JMA also, which is too fast (IMHO) for some applications. This is the second fastest and seems to be about the best because of its characteristics.
- TraderD
May 8th, 2007 at 7:50 pm
D: interesting…thanks
May 9th, 2007 at 6:59 am
Prospectus, your methods have the benefits of always having relatively the same behavior. When you use indicators, you have to make sure you are not using curve fitted values, or indicators that fail in price extremes. That is why I no longer believe in system trading. No matter how much you backtest with out of sample data, monte carlo simulation, etc., they all fall apart. The human brain is the best image processor until some kind of technical break through occurs.
I spend alot of time make sure I have indicators that would across price changes.
- TraderD
May 10th, 2007 at 1:49 pm
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