This past Saturday I was in Chicago for, among other things, to present at the inaugural Scottrade User's Summit. I was invited to talk about modeling techniques and features of Trade-Ideas as it exists in the Scottrade ELITE platform - thanks to our integration over a year ago. The Summit's agenda covered about 5 hours and featured myself, members of the NASDAQ exchange, and the product development team from Scottrade. It gave the 250+ attendees a chance to get personal questions answered and see first hand how the platform performs in the hands of its custodians.
I want to share with you the essentials of what I presented to them; namely, what challenges Trade-Ideas resolves for traders and what modeling techniques consistently yield the best results in Trade-Ideas or any other tool.
Common challenges facing traders – in their words:
(Note: these are culled from our customer support experiences and testimonials)
- “I’ve been taught a certain method of trading, but it’s hard for me to find the stocks in terms of time and the effort it takes”
- “I’m looking at the same information everyone else is – often times I’m shaken out of a trade”
- “Keeping track of just the 10+ stocks I follow means I miss some opportunities with a stock while I’m watching another”
- “I need something to help me find some good trades that I will like, as well as keep me out of bad trades”
- “I am limiting myself by trading the best of what I am watching, which on some days was not worth waking up for”
- Information overload: like having 500 channels and nothing to watch
- How much research has to be done ahead of time to prepare for a day of trading?
- How many analysts exist doing the same thing for institutional firms?
- How can an individual really compete with large hedge funds that pay thousands of dollars for such analysis and research?
Modeling Techniques - Rules of Thumb
These techniques work in any other decision support tool. Let me know if others come to mind as well.
- Don’t start from scratch at the beginning; Do modify an existing strategy to fit your trading plan
- Articulate clearly the pattern you wish to idenitfy – writing it down first (like a grocery list) can clarify your purpose (vs. shopping while hungry)
- Draw your best trade on a chart and clearly label each axis – this works in selecting the correct alerts and filters for your timeframe
- Separate bullish or up-trending strategies from bearish or down-trending strategies – this allows for more ways to ‘stack the probabilities’ of movement in a certain direction