Tradingsystem

1. 15/60min system; Entry strategy

There are many tradingsystems. My system is based on candlestick patterns (read more about candlesticks on the Trading links page under Candlesticks) and other chart patterns. Candlesticks decently give you tops and bottoms of bigger and smaller trends. Beside these chartpatterns I use some indicators. The most important are moving averages of the CCI (Commodity Channel Index) and the Ergodic indicator . I also use a moving averages on price. But trading cannot be done mechanically at least not by me. 

So basically i look for candles which give me an indication for a trend turn, be it a bigger or a smaller one. You may expect a trendturn in the daily candles (EOD)  to be bigger than in the 15/60min candles. I watch the CCI and if this gives me a signal and the price is coming or below the moving average I open a position.

2. Futures

I trade futures on an intraday basis. My entries are based on candlesticks but without use of further indicators. The best indicator being the price itself. Indicators are allways derivatives of prices and in my opinion totally unusefull in daytrading futures. Patterns, resistance and support, momentum all decide to take a trade.My trading is based on looking at the markets after years of looking and study them, and I still learn allmost every day.A wise lesson is:take what the market gives you.

A hit and run strategy fits me the best. If I don't trust a trade when I am in,I close it, be it after one point or two points win. It is that I am not a scalper, my initial target is allways 10 points but it is suicide to wait for this target to happen if you are trading futures.  Future trading is a very discretionairy decision making proces.

I allways have a way out, this means I allways have a stop loss.I use a maximum stop of 10 points but in most cases my initial stop is lower and is determined by market circumstances like momentum, resistance/support levels and old tops/bottoms and so on. Quite another type of stop is more discretionary taken. When I feel a position is wrong I close. This type of stop is intuitive. The point is here that if my position is wrong, I should already be out!

3.Exits

My exits depend on the system but in general I use a trail of 20points when my position is 20 points in profit. This is a subject which can be improved and is still under extensive research through backtesting. The trail may be dependant of the volatility which varies during time.

4.Risk and Positionsize

It is allways necessary to have a stop for your position. How big my initial stop is depends purely on my entry but this is my maximum risk i take. Now I use a so called fixed risk position which means that my maximum loss in euro's will allways be the same. In general I take my stop just at or below the last Low or just at or above the last High.  By this way my positionsize will be fixed. 

By doing this, riskmanagement (where do I place my stop?) and moneymanagement (how big is my position?) are intertwinned. Out of the three questions a trader has to make after entering a position (where is my stop?, how many money i can loose? how big is my position?)  I only have to answer the question where my stop will be placed and this being merely charting question. A good article about position size is found on the website Swing Day Trading where also other good articles can be found.