Trading System Concepts and Design


Trading models are created so that the so called human factor can be minimized. Most of the time, production trading models are utilized by firms like hedge funds and larger institutions. Retail traders having access to backtesting tools like TradeStation and other trading platforms can build their own trading systems easily but rarely do they successfully deploy any models to trade their own money.

Over the years I have helped many hedge funds and pro traders developing, refining and maintaining trading models. The sharp contrast between professionals and the retail traders in understanding what trading systems are driving me insane sometimes.

Here is a partial list of articles I have written on building trading system over the years. I have organized the material below into several sections so that it would be easier to find them. Whenever I can locate the rest of the articles I have written will add them here.


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alphabetical order | posting date

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QQQ EOD 2Percent Down System_20121022_211144
NDX Down 2 Percent Daytrading Model  member onlypremium content

Many of you have read my Nasdaq 100 Down 2% Trading Setup article. Some of you complained that it is very difficult to convert the bias into an usable edge. Here is an example trading model showing you how. [DTBMember] The Performance Followin ...

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FX 24H EURUSD ApexType2_20121017_185527
Forex Trading Open Secrets: Euro Dollar Apex (Type 2) Trading Model  member onlypremium content

No market moves in a straight line. Most of the time strong directional moves will result in pullbacks. Euro Dollar Apex (Type 2) Trading Model is a counter-trend strategy taking advantage of that fact with very good consistent results. With about two third winners and low drawdown, it is a very reliable trading setup to lean on.

The Performance

Following is the 24 hour chart of euro dollar with bottom panel showing the net dollar gain based on a small lot ($10000) since early 2003. 2 pips spread discount is taken into account for all trades.

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2 comments


FX 24H EURUSD Simplex_20121016_125331
Forex Trading Open Secrets: Euro Dollar Simplex Trading Systems  premium content

Simplex was created along with several other models long time ago to provide daily guidelines to a group of forex traders who worked with me long time ago. These models are still working fine through the turbulent years since 2008. I think this set of trading models a good starting point for all traders to understand what mechanical bias is all about.

The Daytrade Model

Following is EURUSD 24 Hour chart with dollar gain per $10K lot (small lot size) in the bottom panel. The amount of money made is not that much on the first glance. But if you know that it only traded 93 times over 2500 trading days, with almost 70% winning rate, you would understand why it is a superior trading setup all by itself.

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One comment


SPY NFP Play_20121011_174413
Nonfarm Payroll Week Trading Models  member onlypremium content

It is well know among many professional traders that NFP week has a strong bullish bias. But as I have shown in the article, Nonfarm Payroll Report Bias, it is not that simple in utilizing this bias in reality. I am going to show you 3 trading models ...

5 comments


SPY NFP Play_20121011_123238
Survival Guide To Trading Nonfarm Payroll Report Week

US Nonfarm Payroll (NFP) Report is a monthly report coming from Bureau of Labor Statistics (BLS) that summarizes the employment condition within United States. The week of NFP Report has a special bias that all traders should be aware of. The Irregu ...

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Seeking Alpha - Bankable ETF Strategy: Festina Lente

Article published at Seeking Alpha, Bankable ETF Strategy: Festina Lente ...

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Seeking Alpha - Bankable ETF Strategy: Simpleton Counter-Trend

Article published at Seeking Alpha, Bankable ETF Strategy: Simpleton Counter-Trend ...

One comment


Seeking Alpha - Bankable ETF Strategy: Double Up

My first article published at Seeking Alpha - Bankable ETF Strategy: Double Up My plan is to publish a series on swing based timing models there for swing traders. Enjoy! ...

3 comments


Defensive Money Management Explained (Part 6) - The Crash and Burn of a Winning Trading Model

Part 6 of the series - The crash and burn of a winning trading model ...

2 comments


Quantum Mechanics and HFT

Quantum Mechanics sounds like it has nothing to do with High-Frequency Trading (HFT) except the fact that they both have sound bites coming from an alien planet. However, if you examine the concept of HFT closely, you would be surprise that some prin ...

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