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How to Find a Day Trading System that Works
#1
Big Grin 
Trading with something will significantly boost your chances of earning profits in the areas.

Another problem would be to find a program that works. You've the opportunity to choose from over 300 trading systems available to-day. Small Blue Arrow includes more about when to acknowledge it. Unfortuitously just a large number of them are trading profitably.

Within the next three minutes I'll present you the 10 Power Principles for Successful Daytrading Systems, which will assist and assist you in your research.

Principle #1: Few rules - easy to understand

It could surprise you the most useful daytrading systems have less-than 10 rules. The more rules you have, the more likely you 'curve-fitted' your trading system to the past, and this over-optimized system is very unlikely to make gains in real markets.

It is important your principles are easy to understand and perform. The areas may respond very wild and go fast, and you will not have time to be able to make a trading decision to calculate complicated formulas. Think of effective floor traders: The only tool they use is really a calculator, and they make tens of thousands of dollars everyday.

Theory #2: Trade electronic and liquid markets

We highly recommend that you trade electric areas as the profits are lower and you get instant fills. You have to know as quickly as possible if your order was filled and at what cost, because based on this information you plan your exit.

You should not place an exit order before you realize that your entry order is filled. You may need to wait a-while before you get your fill when you deal open outcry markets (non-electronic). By that point, industry might have already turned and your profitable business has turned right into a loss!

You receive your fills in less than one 2nd and can immediately place your leave orders when investing digital markets. Trading liquid areas you can prevent slippage, that may save yourself you hundreds if not a large number of dollars.

Theory #3: Make consistent earnings

You should always look for a trading system that provides a smooth and nice equity curve, even though in the long run the web revenue is somewhat smaller. Most professional traders would rather take little profits every day in the place of big profits every now and then. If you trade for-a living, you must pay your expenses out of your trading profits, and thus you should often deposit profits into your trading account.

Making steady earnings may be the secret of successful merchants!

Principle #4: Maintain a healthy balance between risk and reward

I'd like to give you an example: If you go to a casino and bet everything you have on 'red', then you have a 49% chance of doubling your cash and a 512-410 chance of losing everything. Exactly the same applies to trading: if you're risking a lot You can make a lot of money, but risk of ruin is quite high. You need to look for a healthy balance between risk and reward.

Let us say you define 'ruin' as losing 20% of your account, and you define 'accomplishment' as making 20% gains. Having a trading program with past performance results let you determine the 'danger of ruin' and 'possibility of success.'

Your threat of ruin should be always less-than 5%, and your potential for success should be 5-10 times greater, e.g. if your risk of damage is 4%, in that case your chance of success must be 40% or more.

Principle #5: Find a program that produces at least five trades each week

The bigger the trading fre-quency small the probability of having a losing month. If you have a trading system that has a winning percentage of 700-watt, but only provides 1 industry per month, then 1 loser will do to have a month. In this example, you might have many losing weeks in-a line before you finally start making profits. In the meantime, how do you buy your costs?

If your trading system provides five trades per week, then you definitely have-on average 20 trades per month. Having a winning percentage of 70-ss - your chances of a month are incredibly high.

That is the goal of all traders: Having as many winning months as possible!

Principle #6: Start little - grow major

Your trading system must allow you to start small and grow big. A good trading system lets you start with one or two agreements, and then increase your position as your trading account increases. This is contrary to many 'martingale' trading systems that want increasing situation sizes when you're in-a losing streak.

You probably found out about this strategy: Double your contracts every-time you drop, and one winner will win back all the money you formerly lost. It is maybe not unusual to have 4-5 losing investments in-a row, and this may already require to trade 16 contracts after only 4 failures! Dealing the e-mini S&P you'd then need a free account size of a minimum of $63,200, just to meet the margin requirement. That is why martingale programs do not work.

Rule #7: Automate your trading

Feelings and human problems are-the most frequent errors that professionals make. By all means you have to prevent these mistakes. Specially throughout fast areas, it's crucial that you establish the entry and exit points accurately; and fast otherwise, you might miss a trade or find yourself in a losing position.

Therefore you ought to automate your trading and choose a trading program that either already is or could be automated. Automating your trading causes it to be without any human emotion. The buy and sell functions are all automatic, hands-free, without manual treatments and you could be sure you make gains when you must based on your program.

Principle #8: Possess a high percentage of winning trades

Your trading strategy should produce over 50 winners. There's little doubt that trading systems with smaller earning rates can be profitable, too, but the mental pres-sure is enormous. Using 7 losers from 10 trades and not doubting the device takes good discipline, and many professionals can not stand the stress. Following the sixth loss they start 'improving' the machine or stop trading it com-pletely.

Particularly for beginners it is a large help to acquire confidence in the body and your trading in case you have a higher winning percentage in excess of 65%.

Concept #9: Look for a program that is tried on at least 200 positions

The more positions you use in your back testing (without curve-fitting), the higher the possibilities your trading system may flourish in the long run. Look at the following table:

Number of Trades 5-0 100 200 300 500 Margin of Error fortnight 10% 7% 64-42

The more deals you've in your back testing, the smaller the margin of error, and the higher the likelihood of making gains in the future.

Concept #10: Chose a appropriate back-testing period

I recently found these ad: 'Since 1994 I have taught a large number of dealers global a Simple and Reliable E-Mini trading technique.'

Therefore, none of those agreements existed before 1997, that is very interesting, as the e-mini S&P was launched in September 1997, and the e-mini Nasdaq in June 1999. What type of e-mini trading did this merchant show from 1994-1997???

Exactly the same applies to your back testing: If you developed an e-mini S&P trading method, then you must back test it just for the past 2-4 years, because though the contract has existed since 1997, there is practically nobody trading it (see chart below ):

Now you understand how to separate the con from good working trading systems. By making use of this list you'll quickly recognize trading programs that work and those that will never make it.

Authors name

Markus Heitkoetter

Author's Info:

Markus Heitkoetter is a 19-year veteran of the markets and the CEO of Rockwell Trading. For more free information and tips and strategy steps to make steady profits with online daytrading, visit his website http://www.rockwelltrading.com..
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