Trading Systems for Metastock

Saturday, June 25, 2011

Trading systems for Metastock usually use indicators and oscillators known from the technical analysis. Apart form simple systems which are based on one or two indicators, there are also many complex platforms that are able to adapt themselves to the current market conditions. They recognize whether there is a trend or consolidation and choose the most suitable strategy.

Metastock trading systems enable testing your individual trading ideas based on historical data which makes it easier to take decisions on their future use. Although creating and testing the Metastock trading systems is usually time-consuming and requires considerable expertise, it brings profits in the long term. To earn high profits you should combine particular tools of technical analysis into one coherent and logic integrity. While building a Metastock trading system you need to make sure it is logic and coherent, not only thinking of the possible profits it could bring you based on historic data. First of all you should define the operating conditions of the system, when it should be unbeaten and when it might fail. This will let you check if the eventual losses result from the error in the strategy itself or it is due to particular market conditions.

When the system is built randomly with accidental indicators and oscillators selection, it often generates profits only in the case of the historical data but in the real market conditions it brings losses. The parameters of trading systems are usually being matched to the historical data by optimization. It consists of choosing such indicators that would bring the highest profit in the testing period. Different values of parameters are checked for each indicator or oscillator and then the possible profit that would have been reported is being calculated. The next step includes combining the outcomes and choosing the most profitable parameters. There is a risk of over-optimizing the system. That means that the values of tested indicators failed to match the historical data without logic and cohesion of the strategy.

After understanding the general idea of the trading system and defining the rules of entering and exiting the market there comes a testing process. Thanks to the programs such as Metastock or TradeStation it is possible to make thousands of tests in order to choose the best parameters of the indicators. It is possible if you follow several rules. In both of them setting the value of indicators lies at the end. They are usually connected with generally accepted value or with the ones selected in the optimization process. Both ways have their own advantages and disadvantages but none of them should be rejected beforehand. The selection of the parameters for indicators should be considered according to the philosophy of the entire system and its tools. At the same time however, taking into account the accepted assumptions, the decision about their precise value shall proceed to a larger extent by optimization.

The second most important issue, apart from optimizing parameters of the metastock trading system, is evaluating its efficiency. In order to do it you can use various statistics such as the proportion of the profitable transactions to the lost ones, comparison of the average transaction profit to the highest loss or average profit of profitable transaction to the transaction at a loss. Safety of the system is also defined by a proportion of total profit from all transactions to total loses from all transactions. The analysis of the capital curve is also a useful tool. It brings a lot of precious advice. Thanks to the capital curve you can easily find out whether the profit, which the system brings you, has risen evenly or it was the result of the one very profitable transaction. You will also know how often and how strong the changes of the capital are etc. By comparing the capital curve with the quotation, you can easily notice the moments when the system fails or define whether the system is better during strong trends or during horizontal movements.

Evaluation of the Metastock trading system efficiency is not a simple task. At the beginning you can get the wrong impression that the best system is the one that brings the highest profit. But the truth is much more complicated. Although in a final reckoning the rate of return from invested capital is always important, you should remember that system is tested based on historical data which usually are matched to the value of parameters. It means that a good result which was achieved in the last year doesn’t necessarily have to be repeated in the next period. That is why first of all we should take into account the safety of the system and as the second thing its profitability.

Way to Lasting Success in Trading

Thursday, June 23, 2011

Why is it that some people are successful in trading the markets? And why is it some people fail? Is it luck that determines if you are successful or not in making money from the market? Is it the system or strategy that a person use which determines their success?

A lot would say that it is the system or strategy that they employ which ultimately determines if they come out winning from the market.

Every system that exists on the internet will show you how to make money using it. Without a doubt, it will make money for you. The question is usually how much money will the system make for you. All the system that out there will show to you how their system has work base on historical data or activity and then at the bottom of the page there would be a disclaimer clause that states ‘.. Historical data does not determine or guarantee future earnings....’

So why is it that these sites or page include this disclaimer clause?

The disclaimer clause is incorporated in it because they know that there are certain elements which they can not control. Human emotions.

Human emotions are always the key to either success or failure in any business. And it is no difference when trading the markets. Read all the books about trading that you want, buy all the successful system that you want. If you can’t control your emotions, you can’t succeed in the markets.

That’s the reason for the disclaimers clause because the one thing that the author can not control is their subscribers or customers emotions.

In the market there are but only two main emotions that every trader will experience; GREED and FEAR. When this emotion appears it is not how we eliminate it but rather how we act on it. There are natural emotions that can not be eliminated. This emotions forces us to action, thus how we act on it will determine the outcome.

Like anger, when we are angry at someone, it’s either we say something nasty or we can just kick a bucket or we can just dive into a pool of water. Which ever action that we take, it produces a different outcome or result.

All too often when we begin to see two to three consecutive loses on our trading activities, we would begin to have doubt. When this happens we are already at the state of fear, we fear losing more of our money and thus begin to doubt that the system is working.

While no system is absolute, meaning no system will guarantee that you will make money ALL the time. The system seller would say that we would be able to make money consistently, provided we follow their system to the dot.

On the other hand, when we begin to see two or three consecutive we begin to feel on top of the world. We begin to feel that we can start making good money from the market and then start tweaking the system or maybe putting more money in the market to leverage our earnings or maybe begin to take on more positions, which ultimately make us deviate from the system which we were using. This is when greed has already stepped in to rule our thoughts.

There is saying ‘The system is only as good as the person using it’. So if we don’t follow the system either with we are making loses or when we are creating profits. We would ultimately fail. And to follow the system requires discipline. The discipline to act on our fear and greed when it sets in, will determine how well we do in the market.

Once again discipline is the key. We must have the discipline to say ‘I have reached my target. I should take profits now even though it may go higher’ when greed sets in. And when fear sets in one should say ‘I have to take a position even though the market does not seem to be moving in my favor’

While these are but two circumstances when greed and fears arises, there are, and will be many instances when we need to make a decision to either enter or exit the market. And these are very two most important decisions to take in order to succeed in the markets. The discipline to follow the system diligently no matter what happens to the market

So no matter how good the system is, the only and sure way is to lasting success in the market depend on the discipline to overcome our personal emotional to follow a particular system religiously.

Winning Stocks Always Leave "Foot Prints"

Tuesday, June 21, 2011

SIX STEPS and the IRREFUTABLE LAWS of the MARKET Every Investor and Trader MUST KNOW to Succeed

Step 1:

A move begins with the sponsors (smart traders) who have insider knowledge as it relates to a particular stock or market. This information will move a market up or down depending on the insiders' information. These buyers are smart, very smart, and recognize trading/investment opportunities very early in the markup cycle.

Step 2:

Days, weeks, or sometimes months after a move has started, there is a brief mention in the electronic media (radio, cable, TV) or on one of the internet chat boards that a market has moved. The public hears for the first time and begins to get interested, but does not buy.

Step 3:

A blurb of information appears in print media. The move also begins getting more exposure on blogs and internet message boards. The public starts paying a little more attention, and will buy a little bit.

Step 4:

Wall Street and LaSalle Street brokers go into full hype mode and hawk the market to their customers. The public begins buying in greater volume.

Step 5:

A full-blown front-page article appears about the particular stock or market in one of the major financial newspapers, magazines, or financial websites. This is often six months after the fact and after a market has shown its greatest appreciation. There is often heavy public buying, even a possible frenzy, as all media, brokers, and so-called "gurus" start to tout the market.

Step 6:

As step 5 gets underway, the sponsors or smart traders begin to move out of the market and take their profits off the table.

The finale: The move ends, the market falls, and investors lose money.

Vonage Shorts Out, Under Armour Has Lofty Ambitions

Tuesday, June 7, 2011

Under Armour, Inc. (UAI) debuted on November 18, 2005 at $31. The maker of branded performance clothing is growing its brand recognition via the use of hip brand promotion that is trying to wrestle away interest from the traditional buyers of Nike (NKE).

Under Armour has targeted the youth and athletic market where it competing with the established and strong Nike brand. Under Armour has a projected five-year annual earnings growth of 22.50% versus 14% for Nike. But on the valuation side, Under Armour is discounting in significant premium growth over that of Nike. Under Armour is trading at 46.19x its FY07 and a PEG of 2.75 versus 14.27x and a PEG of 1.06 for Nike. Clearly, Under Armour will need to perform to its lofty expectations going forward; otherwise, the stock will sell off. Nike is a superior value play.

Vonage Holdings Corp. (NYSE/VG) debuted on Wednesday at $17, the mid-point of its estimated IPO pricing range of $16-$18. The provider of Voice over Internet Protocol (VoIP) is an early entrant into the rapidly growing area of VoIP and presently has about 1.6 million subscribers but the company has yet to turn a profit. VoIP uses a broadband connection to make phone calls.

High advertising costs to acquire customers have hindered margins. Vonage is the current leader due to its early entry into the VoIP business but I see the company facing a difficult uphill climb as intense competition surfaces from major cable companies and the Skype service from eBay (EBAY).

The reality is Vonage has to spend extraordinary money on acquiring customers whereas for cable companies and eBay, there is already a significant customer base to market to. Vonage will soon realize this.

Hedge fund manager and the host of the hugely popular ‘Mad Money’ show on CNBC said Vonage is a “piece of junk,” which I have to concur with. And with Vonage currently trading down at $13, the market may also view Vonage as over hype and not enough substance.

A DIFFICULT MARKET CONDITION

Tuesday, February 24, 2009

It is not looking particularly well for GBPUSD. In the other hand, EURUSD and AUDUSD is looking good for a long term trade. I am taking the long position. It may take a very long time to profit but looking at the chart from a technical view, EURUSD and AUDUSD is in a good position for a long term trading.

I dont exactly know the entry point but I do know the direction. It is time to monitor the shorter time frame in order to find the best possible entry and to minimize stop loss.

It may take sometime but I dont care. I have been waiting for this moment almost 2 months. Look at the charts and see the formation of daily, 4 hour, 30 minute and 5 minute. You may see something that took me over 2 years to see.

Only time can tell if my calculation is correct. At the moment I am still waiting for the 5 minute chart to give and entry signal.

Good luck to us all.