Friday, September 29, 2006
With our customer base spanning over 50 countries there is hardly a minute of the day where someone is not testing a strategy with the Odds Maker.
For the early adopters we offer a discount to purchase the Odds Maker for $900.00To take advantage of the $900.00 click on the link below.
Pay for OddsMaker using 2CO
In October the price for the early adopters will increase to $1000.00 and when we release the product in November the official price of the Odds Maker will be a one time fee of $1100.00
Thanks again for all the feedback!
Download the beta version of The Odds Maker.
Read the previous articles about The Odds Maker.
Monday, September 25, 2006
- The Odds Maker keeps you current with the market's activity in that last near turn. On the weekend a program automatically runs maintenance on The Odds Maker. It gets cleaned out so that only two weeks worth of data remain. Then as trading days accumulate during the week new data is added until on Friday there is about 3 weeks worth of data.
- When designing a strategy in The Odds Maker it is critical in the readout that the size of the Average Winner be substantially bigger than that of the Average Loser. Why is that? This is to account for slipage and commission and other market factors that are impossible for us to throw into the mix without adding complexity and programming that frankly doesn't help you in terms of reward/effort. Basically, give yourself a handicap. Avoid the pitfall of an Average Winner being 2 to 5 cents bigger than an Average Loser and then relying on a system trading 50 times a day to make the large Net Gain.
- Here are some example results from actual strategies that make good trading candidates. Get your results to look like these and you'll be fishing in the right waters.
- Day Trade Long Strategy:
170 / 249 = 68.27% up $0.01 in 30 minutes; Average winner = $0.8059, Average loser = $-0.2991, Net winnings = $118.09, Best = $4.22, Worst = $-2.68; Casino Factor = 100%
- Day Trade Short Strategy:
355 / 511 = 69.47% down $0.01 in 30 minutes; Average winner = $0.7078, Average loser = $-0.2644, Net winnings = $215.23, Best = $3.39, Worst = $-1.13; Casino Factor = 100%
- Swing Trade Long:
53 / 82 = 64.63% up $0.01 at the close; Average winner = $0.476, Average loser = $-0.3179, Net winnings = $16.0101, Best = $2.62, Worst = $-1.40; Casino Factor = 99.47%
It takes some experimenting to tune into what the market is doing. Fortunately there are some additional resources available to help in the journey. We just finished a 3-part series on how to generate these kinds of results.
Keep up the feedback!
Friday, September 22, 2006
- Trader-X gives his readers 2 nuggets. The first is how to calibrate Trade-Ideas Pro to find stocks that gap from the open. The second is a description of how he uses the results into his trading plan.
- A huge list of compiled and categorized tools/resources to use on your blog.
- Dr. Brett Steenbarger reviews a list of good day trading resources for traders. Trade-Ideas gets a nice mention for its use of the blog.
- Interactive Brokers' Trader Workstation built-in scanner and Trade-Ideas Pro go toe-to-toe in a blinding flash of samurai swords. Only one warrior emerges (I just finished watching Kill Bill Vol. 2 on the Tivo).
- This introducing broker gets it. They now offer Trade-Ideas Pro free to their clients - mainly hedge funds. Ask your broker to pay for your Trade-Ideas subscription; the answer's always no if you never ask...
- Get a list of stocks breaking out of their opening ranges across several timeframes (i.e., 60, 30, etc.) and see how we use them in our trading plan.
Thursday, September 21, 2006
Here's what was reported:
GS, NCC and SYMC have gone up nine days in a row. In the past three years, this has happened one other time for each of these stocks, and they all went up the tenth day as well.TickerSense is a great source for market insights and commentary - that's why they're a regular contributor to our Round-Up of trading articles. The insights can be augmented by the data Trade-Ideas provides in real-time via our free Stock Scans. This information is helpful to more than potential subscribers, they can be used to great benefit by existing subscribers who want a feel for the long term trends affecting the opportunities they'll see in realtime during the day:
The Bottom Line
Know what stocks are up or down 6 or more days in a row - anytime.
Description: 6 or More Up Days
This list shows which stocks have gone up for more than 5 consecutive days. This is based strictly on the closing price of the stock each day.
The symbol with the longest winning streak are on top. After that they are sorted by volume.
Description: 6 or More Down Days
This list shows which stocks have gone down for more than 5 consecutive days. This is based strictly on the closing price of the stock each day.
The symbol with the longest losing streak are on top. After that they are sorted by volume.
More free scans
Tuesday, September 19, 2006
- The Fed Watcher - uses unusual number of prints to pinpoint key activity
- The News Watcher - similar to above but more emphasis on volume surges
- How to Hunt with the Pack - "go with the flow", here's how to find it
The strategies outlined in these posts look for opportunities to go long. It's a good exercise in understanding how to use Trade-Ideas to see if you can flip the strategies and look for shorts.
Monday, September 18, 2006
- Dr. Brett Steenbarger asks, "What if stop losses consistently minimize the profit potential of promising trade setups?" Diagnosis and prescription offered. Ouch.
- "How to put information behind your trades" - another article from the Doctor that describes extra information he uses beyond the usual charting applications - all in the service of enhanced decision support and better trades.
- For those of you in Atlanta next week for Mel Raiman's Precision Trading System and interested in getting together for a drink, email david "at" Trade-Ideas.com.
- TickerSense says bloggers have refused to become bullish even as the S&P approaches multi-year highs.
- Scan of the week: Stocks Near their Bollinger Bands. Interesting names on the list: BBY, CTX, IBKC, LSI, and COMS
- MaoXian singles out SAC's edge in the markets in an interesting WSJ article about the billionaire hedge fund manager. Watch out if he ever gets a hold of The Odds Maker ...
Thursday, September 14, 2006
"I've been using the new Oddsmaker function to ensure that my strategy is profitable before spending energy trying to test it. "
Here is the link to downtowntrader's review of The Odds Maker (with lots of good screen shots).
The official release of the final version of The Odds Maker will be in November. During the beta period the use of the tool is free and an opportunity exists to purchase The Odds Maker at a reduced price which increases October 1 and then again on Novemeber 1. Pricing information is discussed in our FAQ for The Odds Maker (Q#5).
Wednesday, September 13, 2006
Here is our short answer.
There is another related question to answer:
"How does a day like September 12th affect a high odds short strategy working well for the last 3 weeks?"
We are going to answer that question by running a test and looking under the hood of The Odds Maker.
Compare a short strategy and a mirror image as a long strategy in Trade-Ideas, run The Odds Maker on each strategy and examine the results. As of yesterday a strategy that I created called, “Short the Up Move” produced nice results for the last 3 weeks. Note: the alert trigger is a signal to fade off of a small move upward.
Note: ALL TIMES ARE PST (Add 3 hours for EST)
Figure 1.0 Short the Up Move
Here is The Odds Maker configuration for this strategy.
Figure 1.1 The Odds Maker Configuration for Short the Up Move
The same can be asked of a Long strategy. Here is a decent long strategy called, “Buy the Down Move” that is basically the mirror image of the short strategy. It also produced good results. Remember its more than just the win % rate - take a look at how the average winning trade compares to average losing trade. More on this appears in a previous post.
Figure 2.0 Buy the Down Move
Here is The Odds Maker configuration for this strategy.
Figure 2.1 The Odds Maker Configuration for Buy the Down Move
The table is set - Let's compare what happened with each strategy. Those who want the details can start looking at the data set below. Here is the skinny for everyone else:
This shorting strategy did well today inspite of the rally, suggesting to us that we keep our emotions out of the market and simply listen to the numbers. It helps to illustrate that one day does not define a trend and although there was money to be made buying today, the strategies that worked well according to The Odds Maker for the last 3 weeks continued to work well today.
Here are the exact details of all the trades (PST) that were only made yesterday for, “Short the Up Move”.
#1 WCC, Entry time=2006-09-12 07:43:19, Latest Exit Time=2006-09-12 8:15:00, Entry price=56.71, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=57.05, Loser, Moved $-0.34Here are the exact details of all the trades that were only made yesterday for, “Buy the Down Move”.
#2 FLR, Entry time=2006-09-12 08:01:27, Latest Exit Time=2006-09-12 08:30:00, Entry price=81.05, Exit type=close, Exit time=2006-09-12 08:30:00, Exit price=80.95, Winner, Moved $0.10
#3 ICE, Entry time=2006-09-12 08:03:20, Latest Exit Time=2006-09-12 08:35:00, Entry price=63.24, Exit type=close, Exit time=2006-09-12 08:35:00, Exit price=62.75, Winner, Moved $0.49
#4 VOL, Entry time=2006-09-12 08:35:13, Latest Exit Time=2006-09-12 09:05:00, Entry price=34.64, Exit type=close, Exit time=2006-09-12 09:05:00, Exit price=34.67, Loser, Moved $-0.03
#5 OIH, Entry time=2006-09-12 08:54:38, Latest Exit Time=2006-09-12 09:25:00, Entry price=127.02, Exit type=close, Exit time=2006-09-12 09:25:00, Exit price=125.37, Winner, Moved $1.65
#6 BHI, Entry time=2006-09-12 09:10:37, Latest Exit Time=2006-09-12 09:40:00, Entry price=64.02, Exit type=close, Exit time=2006-09-12 09:40:00, Exit price=62.8, Winner, Moved $1.22
#7 QID, Entry time=2006-09-12 09:11:05, Latest Exit Time=2006-09-12 09:40:00, Entry price=66, Exit type=close, Exit time=2006-09-12 09:40:00, Exit price=65.44, Winner, Moved $0.56
#8 NOC, Entry time=2006-09-12 09:52:45, Latest Exit Time=2006-09-12
10:25:00, Entry price=68.74, Exit type=close, Exit time=2006-09-12 10:25:00, Exit price=67.57, Winner, Moved $1.17
#9 CX, Entry time=2006-09-12 10:03:34, Latest Exit Time=2006-09-12 10:35:00, Entry price=28.46, Exit type=close, Exit time=2006-09-12 10:35:00, Exit price=28.43, Winner, Moved $0.03
#10 CHS, Entry time=2006-09-12 10:19:00, Latest Exit Time=2006-09-12 10:50:00, Entry price=19.67, Exit type=close, Exit time=2006-09-12 10:50:00, Exit price=19.82, Loser, Moved $-0.15
#11 IPS, Entry time=2006-09-12 10:31:16, Latest Exit Time=2006-09-12 11:00:00, Entry price=88.42, Exit type=close, Exit time=2006-09-12 11:00:00, Exit price=88.3, Winner, Moved $0.12
#12 MA, Entry time=2006-09-12 10:42:41, Latest Exit Time=2006-09-12 11:15:00, Entry price=61.53, Exit type=close, Exit time=2006-09-12 11:15:00, Exit price=61.58, Loser, Moved $-0.05
#13 CRS, Entry time=2006-09-12 10:47:48, Latest Exit Time=2006-09-12 11:20:00, Entry price=95.33, Exit type=close, Exit time=2006-09-12 11:20:00, Exit price=94.78, Winner, Moved $0.55
#14 NE, Entry time=2006-09-12 11:39:14, Latest Exit Time=2006-09-12 12:10:00, Entry price=63.34, Exit type=close, Exit time=2006-09-12 12:10:00, Exit price=63.58, Loser, Moved $-0.24
#15 ESV, Entry time=2006-09-12 11:49:36, Latest Exit Time=2006-09-12 12:20:00, Entry price=42.83, Exit type=close, Exit time=2006-09-12 12:20:00, Exit price=42.85, Loser, Moved $-0.02
#16 RIG, Entry time=2006-09-12 11:51:41, Latest Exit Time=2006-09-12 12:20:00, Entry price=68.84, Exit type=close, Exit time=2006-09-12 12:20:00, Exit price=68.22, Winner, Moved $0.62
#17 PD, Entry time=2006-09-12 11:54:48, Latest Exit Time=2006-09-12 12:25:00, Entry price=84.48, Exit type=close, Exit time=2006-09-12 12:25:00, Exit price=84, Winner, Moved $0.48
#18 SLB, Entry time=2006-09-12 11:58:13, Latest Exit Time=2006-09-12 12:30:00, Entry price=55.09, Exit type=close, Exit time=2006-09-12 12:30:00, Exit price=54.64, Winner, Moved $0.45
#19 GRP, Entry time=2006-09-12 11:58:42, Latest Exit Time=2006-09-12 12:30:00, Entry price=38.37, Exit type=close, Exit time=2006-09-12 12:30:00, Exit price=37.86, Winner, Moved $0.51
#20 DVN, Entry time=2006-09-12 11:58:48, Latest Exit Time=2006-09-12 12:30:00, Entry price=65.36, Exit type=close, Exit time=2006-09-12 12:30:00, Exit price=65.03, Winner, Moved $0.33
#21 MRO, Entry time=2006-09-12 12:00:06, Latest Exit Time=2006-09-12 12:30:00, Entry price=74.52, Exit type=close, Exit time=2006-09-12 12:30:00, Exit price=74.32, Winner, Moved $0.20
#22 XOM, Entry time=2006-09-12 12:48:45, Latest Exit Time=2006-09-12 13:00:00, Entry price=64.97, Exit type=close, Exit time=2006-09-12 13:00:00, Exit price=64.69, Winner, Moved $0.28
#1 PBR, Entry time=2006-09-12 07:11:18, Latest Exit Time=2006-09-12 07:40:00, Entry price=80.11, Exit type=close, Exit
time=2006-09-12 07:40:00, Exit price=80.7, Winner, Moved $0.59
#2 DE, Entry time=2006-09-12 07:43:23, Latest Exit Time=2006-09-12 08:15:00, Entry price=79.65, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=81.17, Winner, Moved $1.52
#3 GM, Entry time=2006-09-12 07:47:21, Latest Exit Time=2006-09-12 08:15:00, Entry price=31.84, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=32.87, Winner, Moved $1.03
#4 WHR, Entry time=2006-09-12 07:47:26, Latest Exit Time=2006-09-12 08:15:00, Entry price=84.85, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=87.04, Winner, Moved $2.19
#5 UNP, Entry time=2006-09-12 07:47:26, Latest Exit Time=2006-09-12 08:15:00, Entry price=79.9, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=81.29, Winner, Moved $1.39
#6 JCI, Entry time=2006-09-12 07:47:27, Latest Exit Time=2006-09-12 08:15:00, Entry price=68.85, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=70.81, Winner, Moved $1.96
#7 FTI, Entry time=2006-09-12 07:47:28, Latest Exit Time=2006-09-12 08:15:00, Entry price=56.11, Exit type=close, Exit time=2006-09-12 08:15:00, Exit price=56.99, Winner, Moved $0.88
#8 WCG, Entry time=2006-09-12 07:48:25, Latest Exit Time=2006-09-12 08:20:00, Entry price=56.84, Exit type=close, Exit time=2006-09-12 08:20:00, Exit price=56.9, Winner, Moved $0.06
#9 ET, Entry time=2006-09-12 07:58:29, Latest Exit Time=2006-09-12 08:30:00, Entry price=22.75, Exit type=close, Exit time=2006-09-12 08:30:00, Exit price=22.79, Winner, Moved $0.04
#10 ANF, Entry time=2006-09-12 08:05:18, Latest Exit Time=2006-09-12 08:35:00, Entry price=65.3, Exit type=close, Exit time=2006-09-12 08:35:00, Exit price=66.58, Winner, Moved $1.28
#11 NFX, Entry time=2006-09-12 08:28:01, Latest Exit Time=2006-09-12 09:00:00, Entry price=38.96, Exit type=close, Exit time=2006-09-12 09:00:00, Exit price=38.96, Loser, Moved $0.00
#12 UNT, Entry time=2006-09-12 08:29:42, Latest Exit Time=2006-09-12 09:00:00, Entry price=48.43, Exit type=close, Exit time=2006-09-12 09:00:00, Exit price=48.42, Loser, Moved $-0.01
#13 SU, Entry time=2006-09-12 08:30:07, Latest Exit Time=2006-09-12 09:00:00, Entry price=68.06, Exit type=close, Exit time=2006-09-12 09:00:00, Exit price=68.08, Winner, Moved $0.02
#14 TSO, Entry time=2006-09-12 08:54:17, Latest Exit Time=2006-09-12 09:25:00, Entry price=58.45, Exit type=close, Exit time=2006-09-12 09:25:00, Exit price=58.13, Loser, Moved $-0.32
#15 VLO, Entry time=2006-09-12 08:55:49, Latest Exit Time=2006-09-12 09:25:00, Entry price=50.97, Exit type=close, Exit time=2006-09-12 09:25:00, Exit price=50.99, Winner, Moved $0.02
#16 NXY, Entry time=2006-09-12 09:03:51, Latest Exit Time=2006-09-12 09:35:00, Entry price=52.1, Exit type=close, Exit time=2006-09-12 09:35:00, Exit price=51.74, Loser, Moved $-0.36
#17 FTO, Entry time=2006-09-12 09:08:08, Latest Exit Time=2006-09-12 09:40:00, Entry price=26.77, Exit type=close, Exit time=2006-09-12 09:40:00, Exit price=26.63, Loser, Moved $-0.14
#18 RIG, Entry time=2006-09-12 09:31:28, Latest Exit Time=2006-09-12 10:00:00, Entry price=68.75, Exit type=close, Exit time=2006-09-12 10:00:00, Exit price=68.41, Loser, Moved $-0.34
#19 GSF, Entry time=2006-09-12 09:32:04, Latest Exit Time=2006-09-12 10:00:00, Entry price=46.33, Exit type=close, Exit time=2006-09-12 10:00:00, Exit price=46.35, Winner, Moved $0.02
#20 GLW, Entry time=2006-09-12 09:32:04, Latest Exit Time=2006-09-12 10:00:00, Entry price=21.88, Exit type=close, Exit time=2006-09-12 10:00:00, Exit price=22.59, Winner, Moved $0.71
#21 PTR, Entry time=2006-09-12 09:34:51, Latest Exit Time=2006-09-12 10:05:00, Entry price=105, Exit type=close, Exit time=2006-09-12 10:05:00, Exit price=105.08, Winner, Moved $0.08
#22 PD, Entry time=2006-09-12 09:36:53, Latest Exit Time=2006-09-12 10:05:00, Entry price=84.52, Exit type=close, Exit time=2006-09-12 10:05:00, Exit price=84.2, Loser, Moved $-0.32
#23 TIE, Entry time=2006-09-12 09:36:55, Latest Exit Time=2006-09-12 10:05:00, Entry price=24.75, Exit type=close, Exit time=2006-09-12 10:05:00, Exit price=24.79, Winner, Moved $0.04
#24 RTI, Entry time=2006-09-12 09:37:41, Latest Exit Time=2006-09-12 10:10:00, Entry price=40.57, Exit type=close, Exit time=2006-09-12 10:10:00, Exit price=40.54, Loser, Moved $-0.03
#25 MA, Entry time=2006-09-12 09:37:50, Latest Exit Time=2006-09-12 10:10:00, Entry price=61.26, Exit type=close, Exit time=2006-09-12 10:10:00, Exit price=61.41, Winner, Moved $0.15
#26 UBB, Entry time=2006-09-12 09:39:17, Latest Exit Time=2006-09-12 10:10:00, Entry price=71.57, Exit type=close, Exit time=2006-09-12 10:10:00, Exit price=71.59, Winner, Moved $0.02
#27 CCJ, Entry time=2006-09-12 09:39:59, Latest Exit Time=2006-09-12 10:10:00, Entry price=38.37, Exit type=close, Exit time=2006-09-12 10:10:00, Exit price=38.17, Loser, Moved $-0.20
#28 XTO, Entry time=2006-09-12 09:40:10, Latest Exit Time=2006-09-12 10:10:00, Entry price=41.11, Exit type=close, Exit time=2006-09-12 10:10:00, Exit price=41.13, Winner, Moved $0.02
#29 CRS, Entry time=2006-09-12 09:44:04, Latest Exit Time=2006-09-12 10:15:00, Entry price=94.86, Exit type=close, Exit time=2006-09-12 10:15:00, Exit price=94.75, Loser, Moved $-0.11
#30 RRC, Entry time=2006-09-12 09:44:46, Latest Exit Time=2006-09-12 10:15:00, Entry price=25.1, Exit type=close, Exit time=2006-09-12 10:15:00, Exit price=24.99, Loser, Moved $-0.11
#31 THE, Entry time=2006-09-12 09:48:56, Latest Exit Time=2006-09-12 10:20:00, Entry price=36.43, Exit type=close, Exit time=2006-09-12 10:20:00, Exit price=36.03, Loser, Moved $-0.40
#32 NOV, Entry time=2006-09-12 09:54:16, Latest Exit Time=2006-09-12 10:25:00, Entry price=58.16, Exit type=close, Exit time=2006-09-12 10:25:00, Exit price=57.9, Loser, Moved $-0.26
#33 PCU, Entry time=2006-09-12 10:06:59, Latest Exit Time=2006-09-12 10:35:00, Entry price=88.31, Exit type=close, Exit time=2006-09-12 10:35:00, Exit price=87.92, Loser, Moved $-0.39
#34 IPS, Entry time=2006-09-12 10:10:48, Latest Exit Time=2006-09-12 10:40:00, Entry price=88.22, Exit type=close, Exit time=2006-09-12 10:40:00, Exit price=88.45, Winner, Moved $0.23
#35 X, Entry time=2006-09-12 10:20:39, Latest Exit Time=2006-09-12 10:50:00, Entry price=57.4, Exit type=close, Exit time=2006-09-12 10:50:00, Exit price=58.19, Winner, Moved $0.79
#36 TEX, Entry time=2006-09-12 10:56:01, Latest Exit Time=2006-09-12 11:25:00, Entry price=40.98, Exit type=close, Exit time=2006-09-12 11:25:00, Exit price=40.66, Loser, Moved $-0.32
#37 AL, Entry time=2006-09-12 10:57:25, Latest Exit Time=2006-09-12 11:25:00, Entry price=41.81, Exit type=close, Exit time=2006-09-12 11:25:00, Exit price=41.52, Loser, Moved $-0.29
#38 OS, Entry time=2006-09-12 11:08:47, Latest Exit Time=2006-09-12 11:40:00, Entry price=47.63, Exit type=close, Exit time=2006-09-12 11:40:00, Exit price=48.02, Winner, Moved $0.39
#39 ERF, Entry time=2006-09-12 11:14:27, Latest Exit Time=2006-09-12 11:45:00, Entry price=50.33, Exit type=close, Exit time=2006-09-12 11:45:00, Exit price=50.08, Loser, Moved $-0.25
#40 BRL, Entry time=2006-09-12 11:22:17, Latest Exit Time=2006-09-12 11:50:00, Entry price=54.16, Exit type=close, Exit time=2006-09-12 11:50:00, Exit price=54.3, Winner, Moved $0.14
#41 SWN, Entry time=2006-09-12 11:23:59, Latest Exit Time=2006-09-12 11:55:00, Entry price=32.44, Exit type=close, Exit time=2006-09-12 11:55:00, Exit price=32.91, Winner, Moved $0.47
Tuesday, September 12, 2006
According to our database The Odds Maker is being run by someone around the world every 5 minutes throughout the day - including before and after market hours. International traders and insominacs unite!
How to cut losers and let your winners run
Let's make sense out of a very important and often overlooked aspect of the trade: Time in relation to Risk/Reward. Understanding time in terms of risk management can be the deciding factor in making one trade a winner or a loser.
Everyone who trades or has traded can tell this same story. This story continuously plays itself out in the markets no matter what time frame:
"Dear [Insert mentor, coach, spouse name here],So the question is, how long should you be in any trade? Using stops? Where do you put them? Of course there is the popular proverb, "Cut your losers and let your winners run," but everyone that trades knows that it is not that easy. The reason it is not easy is because we don't know what is or is not a good winner or loser, furthermore, what should we expect to gain or lose from a trade? Kudos to those who frame a trade with targets. Is there room to improve how these targets are set?
I was in this trade. The trade was doing very well, so I hung on saying, 'Let my winner run'. Then it started to pull back and I thought, 'Well it is just a little pullback', so I stayed in the trade. Then it started to really come in and I decided I am going to wait until I get to flat cause I am playing with the "house" money.
Then it went against me and I thought, 'Man, I am down - I want to get even before I get out'. Finally after the losing trade crossed the infamous PPT or Point of Pain Threshold (i.e., the exact point where you simply can't take the pain of holding the losing trade any longer) I cursed and bailed out - at market. I then hit myself."
Enter The Odds Maker. Before The Odds Maker was introduced answering this question usually meant getting a Ph.D. in Bloody Noses from the University of Trial and Error. Today however, there is a much easier approach.
Let’s look at the example of a strategy that looks to buy strong stocks on a pullback from highs.
We ran The Odds Maker on this set up and got the following results:
84 / 141 = 59.5745% up $0.01 in 30 minutes; Average winner = $0.4003, Average loser = $-0.268, Net winnings = $19.96, Best = $2.28, Worst = $-0.87.
We tested holding the trade for 30 minutes.
Notice that the average winner is $0.40 cents while the average loser is $-0.268 cents. It is important to make sure that your average winner is considerably bigger than your average loser.
Then we ran the test on a shorter time frame of 5 minutes. The results are interesting.
When holding the trade for a much shorter time frame we reduced our winning % just over 3% in overall profitability, but our average winner at $0.32 was now almost three times as large as our average loser at$-0.139. Having your winner being almost 3X your loser is a big positive. Overall our net winnings dropped slightly, from $19.96 to $18.63. But in terms of risk we reduced our risk by reducing the time in the trade considerably.
When you run The Odds Maker to evaluate the strategy that works with your trading style, consider how long you are planning to stay in the trade. The example that we illustrate clearly proves that less is more. It also helps to illustrate another important aspect of what The Odds Maker provides: gauging what to expect from a particular trade in a strategy. In the 5 minutes example you should expect to gain $0.32 cents per trade and lose $-0.139. Before The Odds Maker this type of analysis was simply very hard to determine.
For another example of Risk/Reward take a look at the post and comments from Fallon D's latest look at The Odds Maker.
Friday, September 08, 2006
The last of this week's posts on How to Build a Trading Strategy Using The Odds Maker examines which Trade-Ideas filter makes a big difference in determining a strategy's performance, what other measure in The Odds Maker results is as important as the win %, and a useful method of developing a conceptual trading strategy.
Many thanks to those leaving comments and providing feedback on The Odds Maker during this beta-version. Thanks especially to Dr. Brett Steenbarger for his insights and TraderMike for helping to get the word out.
How To Build A Trading Strategy Using The Odds Maker - Part III (Part II, Part I)
- Try to articulate what strategy or situation you are looking for in the market. Try also drawing a chart on a piece of paper, think about what increment of price and time are used on each axis and draw the type of trade you seek. Ask yourself these questions: Does this picture and theory mesh with observations and the market outlook of traders and commentators that you trust? (Read our Round-Up for some good sources) Is the trade a breakout that follows through or is it a bounce from a counter trend move? The answers to those questions will help a great deal in setting up the appropriate filters and trigger event (i.e., alert) to test.
- Strategies with a clear bias are affected by the volume filter settings within Trade-Ideas Pro - especially the Min/Max Current Volume filter. Therefore test a strategy for unusually high volume results versus unusually lower volume and compare the results. In Trade-Ideas Pro use the Min Current Volume and Max Current Volume setting to test these scenarios. Does a stock behave differently when it moves in a clear direction on weak or light volume? Where are those stocks 30 minutes later? Does The Odds Maker confirm any trading advantage in these situations? Remember that if you want to find stocks trading at least 2 X their normal amount for this time of day set the Min Current Volume to 2, if you want to find stock that are trading at least 30% below normal for this time of day set the Max Current Volume to 0.7. A setting of 1 means the stock is trading at its normal, average rate for the day.
- Take all of The Odds Maker results into consideration when evaluating if this a good strategy. Do not simply look for high odds winners (i.e., the first measure or win rate %). Make sure your average winner is bigger than your average loser. I like to make a ratio of the average winner over the average loser. A number great than 2.5 or 3 indicates a good strategy. It says that if a trade is a winner it's likely to produce a result that is 3x larger than the loss that's possible in this strategy. The values themselves also help you with your stops and where they should be.
- Take a look at the history of the alert window to see what time of day the alerts took place. Perhaps most of them occur well after the open. Perhaps more of the winning trades occur in the afternoon session. Set The Odds Maker to begin running after the first hour or any time after the open to see if the numbers change significantly.
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Thursday, September 07, 2006
There's already positive feedback regarding this series of posts (Part I) that discuss techniques on getting the most out of our soon to be released add-on tool, The Odds Maker. In fact Dr. Brett Steenbarger offers some excellent advice on the type of trading hat a user should wear below. He is rapidly becoming an expert since downloading the beta version featuring The Odds Maker last week.
The Odds Maker changes the approach towards using Trade-Ideas. Some beta-users confide with us that's changing their trading plan too. Hopefully these insights translate into a better experience testing strategies.
How To Build A Trading Strategy Using The Odds Maker - Part II
- Prepare yourself to run The Odds Maker many times and test many filter variables in order to find the strategy that works best for you in the current market. In our "lab environment" it can take anywhere from a couple of hours to a few days to finally get the metrics within the desired range (i.e., a high win percentage, large average winning trade to average losing trade ratio, etc.)
- Be creative, use your imagination. Sometimes the best opportunities exist by exploiting situations that are not common. Try different alert and filter combinations. The only way to take full advantage of The Odds Maker is by understanding the Trade-Ideas filters - especially ones you don't regularly use. Reread the filter definitions of Trade-Ideas Online Help section: http://www.trade-ideas.com/Help.html#configure_window_specific_filters
- Keep things simple with alerts. Start by using just one alert as an entry signal and work the filters around the alert to build the desired strategy
- This tip is from Dr. Brett Steenbarger's comments earlier today on his TraderFeed blog:
My experience, FWIW, is that you have to think like a market maker to come up with the good patterns. If you think like a trend follower or retail trader, you get randomness. The patterns I'm finding involve countertrend trading: buying dips under overall conditions of strength and selling bounces under conditions of weakness. Holding period is 30 min. I'll tweak and hopefully have something to share later this week. Have a great day.
Wednesday, September 06, 2006
I will post the details of the meeting here as soon as Michael finalizes the date, time, place, etc.
If you are not able to join us and you would like to meet other trading colleagues, check out the Trader Locator from T2W. Enter your zip code and this neat little tool will display other registered traders who trade within 25 miles of you on a Google map. It even shows you when they were last active on the site (which can serve as an easy icebreaker to a conversation).
Here is our list of upcoming events we'll be attending:
- New York, NY: Conference TBD, meetings, mid-October, more details coming
- Las Vegas, NV: The Traders Expo, Mandalay Bay Resort, November 16-19, 2006
Here is the entire email. If you would like to express your appreciation for Trade-Ideas or another vendor in any of the categories list, please send your nominations to:
Other: If you know someone upon whom you depend to keep your P&L humming along (more P than L) yet doesn’t fit into one of our categories --- give us the skinny and we’ll try to figure out how to work them into the mix.
abarber "at" tradermonthly.com
GIVE US YOUR BEST IDEAS --- FOR THOSE BROKERS AND SALESPEOPLE WITH THE BEST IDEAS.
Recently, as we were sifting through the hundreds of nominations received as part of our Top 30 Traders Under 30 research, scores of sell side professionals --- call them "idea generators" ---came to our attention. They weren’t necessarily traders per se but they are key industry players who play a pivotal role keeping traders in the know, and in the black.
Inspired by this feedback from our readers, the editorial staff at Trader Monthly is psyched to announce our first annual "Value Added" survey, a ranking of top brokers, institutional salespeople and transactional research professionals nominated by the traders who depend upon them.
The categories for nominations are as follows:
Floor Brokers: The one who never lets you down and gets you filled at the best price available even if it means getting into a fistfight with another lug in the pit.
Institutional sales: Those whose calls you always take --- and why it’s worth every commission penny.
Transactional Research/Strategy: Those analysts or strategists who may never appear on CNBC or an II poll but nevertheless produce crucial valuable insight you can trust.
Other: If you know someone upon whom you depend to keep your P&L humming along (more P than L) yet doesn’t fit into one of our categories --- give us the skinny and we’ll try to figure out how to work them into the mix.
As this is our first attempt, we are grateful for any suggestions that you have about methodology, and ultimately we will likely refine the categories. Please provide names, firm names, type of coverage and a few reasons why the candidate merits inclusion.
All nominations are held in the strictest confidence. We look forward to the feedback, and thanks to everyone in advance.
(646) 723 2168
Tuesday, September 05, 2006
The Odds Maker changes the approach towards using Trade-Ideas. Some beta-users confide with us that's changing their trading plan too. Because The Odds Maker is so new, this week's blog entries feature ways to use the new tool in the best way.
(Link to Part 2 of the series is at the bottom)
Hopefully these insights translate into a better experience testing strategies.
Tips on How To Build A Trading Strategy Using The Odds Maker
- When you start working with the Odds-Maker be prepared to drop all of your past preferences for alerts and filters. This tool makes experimenting with different and new combinations easy and painless. In fact it's encouraged because the feedback is instantaneous.
- Your usual strategies may reveal some shortcomings. This means that if you only like to buy breakouts or sell breakdown or only like to trade one direction long or short, be prepared to be frustrated. It may not be tuned in to what the market is currently doing.
- It is very possible and even most likely that you will find the things you have believed to be working are actually not well suited for a trading strategy.
- Be prepared to trade in both directions, long and short. The Odds Maker will tell you what is working right now. If you have trouble creating a good strategy for going long it may simply be that the odds favor shorting at this time, and the same thing works for shorting.
Friday, September 01, 2006
Download the beta release v2.0
The beta version of 2.0 is open to existing subscribers and anyone else willing to evaluate Trade-Ideas Pro in its demo mode. In this beta-version The Odds Maker is free to use until rendered inoperable with the formal release of v2.0.
Non-subscribers can sign in using the username 'DEMO' and 'OddsMaker' as the password (case sensitive). Those in demo mode will have limited access to the alerts within a strategy, i.e. you'll see only a few of the symbols, but you will see all of The Odds Maker results. Scottrade ELITE customer? Follow these steps for testing The Odds Maker.
The Odds Maker as previously mentioned is a one-time cost of USD $1100 beginning in November with the formal release. An opportunity during the beta-test exists to purchase The Odds Maker at a lower price. For the entire month of September The Odds Maker is USD $900. In October the discounted price will rise to USD $1000. If you are convinced The Odds Maker enables you to trade better and manage risk, you can purchase the feature via the following links:
Pay for The Odds Maker using 2CO
Pay for The Odds Maker using PayPal
How to Use The Odds Maker
Even though The Odds Maker and v2.0 are not yet formally released, there exists a lot of information on how to use this powerful tool and the new version.
Preview of Trade-Ideas Pro v2.0 : New features and improvements in addition to The Odds Maker
Product Information for The Odds Maker:
Articles about The Odds Maker:
- Declan Fallon Reviews The Odds Maker
- What the Odds Say so far [about this market]
- Is Your Trading in Tune with this Market? It Will Be
- Strategy Session: Which Strategies Are Most In-Tune with this Market?
- Calculating the Odds in Real-Time
- Users of Trade-Ideas Pro (TI Pro) are always encouraged to download the latest version of the application in order to benefit for our latest improvements. This is unrelated to any new alerts or filters we may add from time to time. Downloading the latest version of the application is necessary to benefit from other aspects of the service, like the visual enhancements described above and background "plumbing" maintenance that keeps the service as fast as possible.
- No matter which platform you use (e.g., browser, TI Pro), you can always access any new alerts and/or filters we add. These are automatic to subscribers because both applications make a "call" to our servers for the latest list whenever someone interacts with our alert window settings via 'Configure'. When we add such alerts or filters, you receive them instantly. Note that The Odds Maker, however, is a feature found only in TI Pro.
- This beta version lacks additional improvements and features that the final release will include. This is by design since we plan to include user feedback and solve any issues that may appear with heavier traffic and use. No flaws appear in our own testing of this beta release. However, should you find anything unusual (e.g., a bad print), please let us know at info at trade-ideas.com. We'll also take any praise there too!