Developing systems whilst trading for a living

cd173 · Jan 9, 2006

Afternoon Everyone!

I currently trade part time from home with generally very good success, but I'm getting to a point where I feel the need to bite the bullet and go full time trading. The only thing that concerns me is maintaining a consistent level of income thru a chosen trading system(s).
I'm curious to know from the full time traders how you manage trading systems effectively for the most consistent profit? Do you trade 2 or more systems at a time?
Also, how do you handle the periods when a system doesn't perform or fails altogether?
Is it best to use different time frames?
(So many questions!) :?:
I feel it's all well and good to develop new profitable trading systems, but it's the implementation that's the tricky part!
Any thoughts greatly appreciated.
Thanks
Chris

tech_trader · Jan 9, 2006

cd173 said:
Afternoon Everyone!

I currently trade part time from home with generally very good success, but I'm getting to a point where I feel the need to bite the bullet and go full time trading. The only thing that concerns me is maintaining a consistent level of income thru a chosen trading system(s).
I'm curious to know from the full time traders how you manage trading systems effectively for the most consistent profit? Do you trade 2 or more systems at a time?
Also, how do you handle the periods when a system doesn't perform or fails altogether?
Is it best to use different time frames?
(So many questions!) :?:
I feel it's all well and good to develop new profitable trading systems, but it's the implementation that's the tricky part!
Any thoughts greatly appreciated.
Thanks
Chris

The best way I have found to keep your income more consistant is diversification across markets, systems, etc. The hard part for someone like yourself is finding the time to develop models for different markets, while still trading full time discretionarily.

For myself, once I began making a consistant income on my systems, I was able to cut the discretionary part out and spend my time developing models, while my computer places all the trades.

Best of luck!

cd173 · Jan 9, 2006

tech_trader said:
The best way I have found to keep your income more consistant is diversification across markets, systems, etc. The hard part for someone like yourself is finding the time to develop models for different markets, while still trading full time discretionarily.

For myself, once I began making a consistant income on my systems, I was able to cut the discretionary part out and spend my time developing models, while my computer places all the trades.

Best of luck!

Hi Tech Trader

Thanks for the post. I think that's the hardest part. Trading and trying to develop a new system at the same time.
May I ask how many systems you trade at any given time and across which markets?

C

tech_trader · Jan 9, 2006

cd173 said:
Hi Tech Trader

Thanks for the post. I think that's the hardest part. Trading and trying to develop a new system at the same time.
May I ask how many systems you trade at any given time and across which markets?

C

Currently I have probably 15 systems I am trading. Most of them are traded on a couple of markets. My favorite models are traded on 6 markets. Unfortunatly I am limited to only the electronic markets at the moment, but as others go electronic I will test my models on them as well.

anley · Jan 9, 2006

I wouldn't worry too much about how many systems, short/long term, different markets etc.

Rather, better to have a cash stash of 12 months (or more) of living expenses so you don't need to make money to live. Then the pressure to perform is not there, which means you'll likely perform far better both in your analysis and trading.

Far too many traders who could have made it don't because of this very point. Also, don't burn your bridges from your present job/career you might need to go back to it. Not suggesting that it on't work out for you but better to cover all the possible downsides. Good luck!

cd173 · Jan 10, 2006

Tech Trader

That's alot of systems. I suppose the more systems you run, the smoother the equity curve. Also helps to autotrade. That's another thing to look into!

anley
Thanks for the feedback. The pressure to perform is no doubt the main factor!
I think the key is to come up with a couple of good systems and then build on from there.

Cheers
C

TheSpikeyCrow · Jan 10, 2006

Words of wisdom

anley said:
I wouldn't worry too much about how many systems, short/long term, different markets etc.

Rather, better to have a cash stash of 12 months (or more) of living expenses so you don't need to make money to live. Then the pressure to perform is not there, which means you'll likely perform far better both in your analysis and trading.

Far too many traders who could have made it don't because of this very point. Also, don't burn your bridges from your present job/career you might need to go back to it. Not suggesting that it on't work out for you but better to cover all the possible downsides. Good luck!

Sage advice, anley. Its all too easy to get caught up in the mechanics of trading whilst overlooking the day-to-day practicalities. Best of luck, cd173!

tech_trader · Jan 10, 2006

cd173 said:
Tech Trader

That's alot of systems. I suppose the more systems you run, the smoother the equity curve. Also helps to autotrade. That's another thing to look into!

anley
Thanks for the feedback. The pressure to perform is no doubt the main factor!
I think the key is to come up with a couple of good systems and then build on from there.

Cheers
C

I have all of them auto trading so I have time to develop new models and tweak existing models.

I test all new systems for correlation before adding a system to my portfolio. I did start with 2 good systems as you said though.

charliechan · Jan 10, 2006

cd173 said:
Afternoon Everyone!

I currently trade part time from home with generally very good success, but I'm getting to a point where I feel the need to bite the bullet and go full time trading. The only thing that concerns me is maintaining a consistent level of income thru a chosen trading system(s).
I'm curious to know from the full time traders how you manage trading systems effectively for the most consistent profit? Do you trade 2 or more systems at a time?
Also, how do you handle the periods when a system doesn't perform or fails altogether?
Is it best to use different time frames?
(So many questions!) :?:
I feel it's all well and good to develop new profitable trading systems, but it's the implementation that's the tricky part!
Any thoughts greatly appreciated.
Thanks
Chris

instead of looking at systems, look at developing a methodology /philosophy about trading - a kind of set of proven hypothesis if you like about how markets work. these can then be taken from market to market and time frame to time fame.

this is why 'systems' come in and out of profit as the wind changes.

becoming an expert at trading in a trading range for example - buying the floor, selling the roof. all markets will trend in a congestion at some stage, so you will be able to consistently be able to trade one market somewhere on some time frame at any time.

frugi · Jan 10, 2006

Good post CC. A method that adapts to superficial changes because it sees through them to the essence of the market 'machine' can see you through for life, while a rigid system that depends on concrete variables is far less likely to do so, imho. Didn't someone once say that the market is always the same, yet always different? I finally am beginning to understand what they meant.

That said, I believe that if you have a sufficiently large pot a decent living and smooth equity curve can still be achieved by running several negatively correlated systems simultaneously.

Developing systems whilst trading for a living

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