LIVE real money S&P500 daily mechanical trading

ordinaryguy76

Active member
Jul 28, 2011
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#1
Right, I've decided to "go for it" and start trading my mechanical system for S&P500 with real money.

To cut the long story short, the formulas are looking at open (previous day close), close, high and low over the previous three, four or five days and try to tell me whether I should buy or sell.

This was tested over the last 10 years of S&P data and the best formula (highest return compared to drawdown) was selected. Of course, historical profits can never guarantee future success. The biggest issue is if the stop loss (set in stone to 150 pips) gets triggered outside of S&P trading hours (currently 2.30pm - 9pm UK time), because my test data did not include out-of-hours movement.

Example:
Trade - Buy S&P @ 1260.0, SL 1245.0 (150 pips)
Order - Sell S&P @ 1244.0 (10 pips lower), SL 1259.0 (again 150 pips)

You can see results of 5 weeks' testing here:
http://www.trade2win.com/boards/tra...-semi-automated-s-p-daily-trading-system.html

What I like about this system is this:

1. it completely ignores fundamental analysis and 99% of technical analysis (it does not use any known indicators, but you can argue that my formulas are indicators on their own). You could say it's totally random :)

2. all trades are opened / closed at 9 pm, so you only need 0.5h per working day. You don't have to spend hours and hours in front of the screen and jump up at some news from EU or else. I am working full-time and have two wonderful little kids, so 0.5h daily is a lot of time for me.

3. you know that you can't lose more than 150 x stake per trade and 300 x stake per day. It's very easy to limit your risk to 1.5%, 3%, 6%, whichever you prefer. I will start initially with 3% risk per trade, but this will increase in 2 months' time, if I am successful.

4. 50% success rate is more than enough. Why ? Because you can only lose X amount of money on a losing trade whereas a winning trade can give you (a lot) more.
It's that 50% you're aiming for.

I am going to post live trades. If you have guts, you can follow them. I will try to make it easier for you and tell you IN ADVANCE how I will trade at 9 pm.

Oh my, what if it does not work ? Well.... I will come back to this forum with a different nickname perhaps ? hehehehe
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#2
ok, so I've opened a fresh account with Finspreads, because they allow you to trade S&P500 with 10p per point for 8 weeks.

My initial bankroll is £1000 (don't worry, I can afford losing it all), but I have only deposited £500 at the moment. Why should I keep too much of my money with some institution that I know almost nothing about ?

Finspreads offer "US SP 500 Rolling Spread". For some reason it's around 15-20 points higher that the actual S&P500. I will try to ask them about it at some point. Just wondering how this might affect my trading.

Initial deposit: £500
First trade:
Sell £0.20 S&P @ 1258.5, SL 1273.5
No opposite trade for now, as this trade is a bit unusual (there is bank holiday on Monday).
 

Lord Flasheart

Well-known member
Jan 20, 2004
9,798
975
173
#3
I wish you good luck with this.
My initial observations are that the stop is too wide for this type of trade to work as the importance of the data is nullified because of the wide stop.what are the expected returns on a £10,000 account in 12 months? Thanks
 

N Rothschild

Well-known member
Oct 13, 2008
5,296
603
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#4
the s&p doesn't even move in "pips". 1258 to 1259 isnt 10 pips it is 1 handle or 4 ticks. might wana learn your market..
 

wackypete2

Well-known member
Sep 24, 2008
10,134
2,012
323
New Jersey
#5
the s&p doesn't even move in "pips". 1258 to 1259 isnt 10 pips it is 1 handle or 4 ticks. might wana learn your market..
You are describing the emini contract, ES.

The full S&P500 futures contract (SPH) trades at a minimum of .10 index points = $25, so 15 points x 10 ticks per point = 150 ticks.

I think he means the full contract but he's trading at 10p stakes.

Peter
 

N Rothschild

Well-known member
Oct 13, 2008
5,296
603
173
#6
geez i never new that! lol. was kinda presuming with his 500 quid account he wasnt trading big spoos in the pit!

also you wil be lucky to get filled on .10's you will almost certainly be fille don 20s 40s 60s 80s etc..locals use the 10s to flip
 

ordinaryguy76

Active member
Jul 28, 2011
618
16
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#8
Hello, I'm not even trying to say that I have a lot of experience in trading. At the moment, I'm using a spread betting provider. They don't use lots, handles etc. In terms of "filling", it does not work this way, either. You just buy / sell at the price offered by spread betting company.

Thanks for the encouragement. Wishing everyone all the best in the New Year !
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#9
I was looking in disbelief at my trade and realised something quite interesting and helpful for newbies. It seems that finspreads allow you to trade S&P per 1.0 (!) whereas all other spread betting companies that I know of, trade S&P per 0.1

This means that trading 10p stake with Finspreads (per 1.0) is like trading 1p with everyone else. Well, it also means that my stake for initial trade was ten times too small, same with the risk.

Anyway, knowing this, Finspreads would be my first choice for spread betting newbies hands down.
I will say it again: you can open an account with £100 and trade 1p per 0.1 of S&P500 ! Everywhere else, it's a minimum of 50p per 0.1, e.g.
- worldspreads - best so far for spreads, hedging trades and opening offer (the only cashback that I had to use :) )
- etxcapital - best so far for quickest financial operations like deposit / withdrawal. Has issues with trailing stops, though
- spreadco - the only spread betting company that shows volume on their weird charts
- capitalspreads - even more risky - min. £1 per 0.1. Also, look out for slippage on your stops.

My next trade on Finspreads will be then for £2 (i.e. 20p per 0.1 of S&P)
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#10
As for the 12 months' return.

I don't really know. What I saw when backtesting was the consistency of profits over longer periods of time. I can mean return of 30% one year and then -5% another year. I am still refining my formulas to reduce losses and increase winnings. One of the methods is to keep risk on the same level, i.e. once the account value goes up by 10%, increase stake by 10% and when it goes down, decrease stake accordingly. We'll see.
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#11
wow, this is what I call start with a bang !
Actually, I was kind of expecting markets to go up on the first trading day in the new year. This is what happened over the past few years. Still, this system pointed to a sell, so I did a sell...

Now, my trade was stopped out @ 1282.4 for a total loss of £4.78 only, thanks to the fact discussed in post #9 (stake / risk 10 times smaller than intended). This was lucky.

No more trades before 9 pm.
9 pm trade will be a buy, regardless of where S&P ends tonight.

I might increase my stake to £3, instead of the planned £2. I just noticed that finspreads have a bonus offer where they add £100 to your account if you make 3 trades £3 each.
 
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ordinaryguy76

Active member
Jul 28, 2011
618
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#12
Phew, I'm still trying to get used to Finspreads interface.

New trade entered:
03/01/2012 21:00
Buy £3 (that's 30p per 0.1) S&P500 @ 1277.9, SL 1262.9
Sell order £3 S&P500 @ 1261.9, SL 1276.9
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#13
Hmm, weird stuff. My trade was kind of closed and reopened (rolled ?) around 3am. The only issue is, I lost £0.60 along the way. Currently, my trade shows opening price of 1277.7. I don't like this and I've emailed Finspreads for explanation. Such a thing never happened when using other providers - rollover never changed opening price of my trades.
 

ordinaryguy76

Active member
Jul 28, 2011
618
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#14
at the moment, it seems you should be doing completely the opposite to what I'm doing :)
Hopefully, my loss will be reduced later on.