Automated Trading Blog

  • What You Ought To Know About the DAX

    No, the DAX is not a new trendy drink.

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  • This Market is Crazy, and Tradng Systems are Loving It

    If you haven’t been paying attention to the market lately, stock indices have been on the move. We’re talking 2% up, followed by 2% down days. This chart from CNBC does a pretty good job of visualizing the markets recent moves. (Disclaimer: Past performance is not necessarily indicative of future results) Source: CNBC While these type of wild swings make

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  • Explore iSystems with Ease

    There’s some exciting news in the trading system world to report. The good folks at iSystems have upped the ante – improving their already industry best platform to allow for better sorting and filtering of systems! You can see the improvements live here: iSystems platform

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  • Trying to Time a System Can Be Costly

    In the terminology of America’s baseball pastime, trading systems hit “Home Runs”, not “Base Hits”. So they are constantly trying to survive the less than perfect conditions while waiting for that one big trade. You don’t want to miss that home run trying to avoid the lowly strike out.

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  • Backtest, Forward Test, Live Trading

    Eureka! You’ve just found the holy grail of market indicators. The indicator of indicators which over the past few days has perfectly called each 30 minute top and low in the e-mini S&P futures… Now what?  Time to put some real money on the thing and retire to the islands…. Not so fast! Your strategy may be looking good over

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  • Creating a “Curve-Fit Free” Trading System:

    We explained last week the definition of Curve Fitting, and the conundrum it creates for potential systematic investors. Having the ability to determine if a system uses curve fitting is essential. But that can be difficult to determine. So how does one find a “Curve-fit Free” Trading System? The secret to creating a non curve-fit system, is to change the

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  • What is Curve Fitting?

    What is Curve Fitting? One of the greatest appeals and advantages of mechanical trading systems is the ability to evaluate their historical performance by “backtesting” the strategies on historical price data. While we may have just a handful of months of actual performance data available, computers and backadjusted data make it possible to see what a system “would have done”

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  • Measuring Slippage: Make it a Top Priority!

    The computer reported a gain of +$1,365.81 for the Sistema SGA121 Daxsystem’s day trade on the iSystems platform on 4/25/14 after accounting for $17.26 in commissions , but clients trading the system earned just $1,249.29 on the trade. What happened? Where did that extra $116.52 go? It’s called slippage, and it is the difference between where the computer signaled the

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  • Bargain Hunting Trading Systems

    One of the original developers on the iSystem platform – Ilpo Kumpulainen of Ges Trading Strategies  recently shared a piece with us looking at how value investing in the stock market has a corollary in the automated trading system world, and we found it so informative – we wanted to post it here… Enjoy: _____________________________________________________________________________________________________________________________

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  • Market Changes Offer Opportunities for Trading Systems

    For the first time in years, the S&P 500, Nasdaq, DJIA are all showing negative returns for the year. These are days in which systems have the opportunity to thrive. But just like investors sometimes have confidence in their decision making skills timing how the market is going to perform, many systematic traders believe the same about timing systems. Because

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  • Analyzing Dollar Range

    While the rest of the world is worried about the price of a stock, how much a certain market made or lost in a day, etc., system traders look at things a little differently. System traders spend the majority of their time looking at moving averages, the highs and lows of the day, and possibility of movement up and down.

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  • Automated Trading Recommended Reading List

    You can’t read your way to becoming a great trader – you actually have to get in there and do it… but that’s not to say learning from the success and mistakes of others can’t hurt.

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  • Ways to Trade Trading Systems

    While trading systems can operate on various markets, not just futures; our focus in this article is on futures trading systems. There are many ways you can trade futures trading systems: You can develop your own system using the built in indicators and backtesting functions of a program like TradeStation, (or purchase a trading system online from someone) and run

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  • Trend Following – The Classic Trading System

    The “old man” of trading systems, trend following is the classic approach employed by some commodity indexes, billion dollar hedge funds, and the infamous “Turtles”. Trend following systems generally operate on a portfolio of commodity markets across the grains, energies, metals, softs, interest rates, and currencies. They continuously monitor each market, waiting for each one to “break out” of its

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  • 7.5 Steps to Finding the Right Trading System For You

    With the ability to get quotes on your phone while driving, online trading rooms, and investing courses and coaches for hire –  individual investors are in the envious (or unfortunate) position of being able to find the “next best thing” or “ultimate trading system” with just a few strokes of the keyboard. But here’s the rub — Out of all

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  • What Is Swing Trading?

    Swing Trading systems hold positions for several days to weeks and operate mainly on highly liquid markets like the stock index futures, bond futures, and more recently energy futures. Their general approach is to ride market “swings” for a few days, then exit or reverse the position and ride the swing the other way. This ability to “book profits” after

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  • Types of Futures Trading Systems – Day Trading

    There are thousands of different futures trading systems which operate on everything from Crude Oil to stock market futures like the e-Mini S&P, with as many different methods for analyzing those markets as there are combinations of the hundreds of technical indicators in the world — making it somewhat difficult to categorize trading systems. The easiest way we have found

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  • History of Trading Systems

    Trading systems trace their roots all the way back to 1949 when Richard Donchian launched Futures, Inc., one of the first publically held commodity funds, which used set rules to generate buy and sell signals. Obviously, without the internet and computers the systems of the 1950s were much different than today. Back then system developers relied on ticker tape and

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  • Trading Systems Volatility Profile

    Trading systems have a long volatility profile. We’ve often talked about trading systems being a long volatility investment, and that stems from their internal makeup which more often than not looks to risk a fixed amount, while allowing for profits to run. This creates a return profile in which the system will have winning trades between 40% and 60% of

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  • Characteristics of Trading Systems

    Perhaps the most important characteristic of trading systems is that their trading rules can be tested on historical data to see how that set of rules (how the trading system) would have done in the past. There are inherent dangers to doing this revolving around the old saying that hindsight is 20/20; but the ability to look backwards remains a

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