At a recent trading convention two well known traders discuss the ins and outs of trade exits. Read on to find out how successful traders make their trade exit decisions…

Mark McRae is surprisingly forthcoming about his worst trade experience when asked.

On one occasion he explained, I was long on the euro, and I was long for quite a large amount – and I got a visitor come in from nowhere. So instead of closing the trade – (or I thought I closed the trade by going short)- I actually bought again. So after a few hours, my visitor had gone. I can’t remember the exact amount, but I was down $20,000 or $30,000 on this trade, and it was one of the worst trades, not because of the amount I lost, but because I couldn’t believe I was so silly about not checking it. With this particular trade, I left it, for about four hours and watched it, and eventually got out with a loss luckily!

On the other hand, one of his best trades wasn’t in the Forex market. It was in the indexes where America had a surprise rate increase. Mark just happened to be the right side of the market. “I couldn’t believe it. It took me about five minutes to figure out why I had almost tripled the amount I was trying to get that day, (which was very nice of course). I think that was one of my favorite trades. I was on the phone to the broker, and I was arguing with the broker about the price that he had given me. Actually it was the NASDAQ. And he said to me, they’ve just changed the interest rates. Do you want in or do you want out? He said you get ten seconds. I said, ‘I’ll stay in.’ And I didn’t really know it, but I was trying to figure out in my brain whether this was good or bad, but I said I will stay in, and then there was this huge leap, so that was definitely one of my nicest trades” Mark advises.

So How Does Mark Decide When To Make A Trade Exit?

When something unexpected like the NASDAQ experience occurs, it’s almost like a windfall. He then went on to explain that he got out about five minutes after seeing the peak. It wasn’t technical at all, he just thought whoopee, this is good, and closed the trade.

But that’s not how he trades now. Mark has refined his level of patience now. “You know, the big fluctuations don’t frighten me anymore. And also, I don’t know if you find this, but I’m very often on the wrong side of the market when I go in. In other words, I don’t go into the market, and then immediately I am successful, or the trade goes in the right direction.

Very often, the market will move against me for a bit, so I’ve got to be comfortable with the market moving against me. It doesn’t scare me anymore. Although this does take discipline to stay in long enough and not panic and pull out. Obviously, it takes a lot to frighten Mark out of a position. He now makes up his own mind when to make a trade exit based on his target established.

Mark advised us that for a long time, he used to trade indices. The reason is because this is a much faster moving investment. Previously, Mark believed Forex was fast until he started trading the SMP.

Mark explained that exiting trades requires a plan and established targets so he knows what to head for. Generally speaking, due to Marks experience he tends to use the stop losses as the orders to get in and out of a market as a safety valve.

An example of this is if you look at the recent break in the dollar – you’d be crazy to get out of the market. Mark explained it just kept dropping like a brick.



If you’re involved in trading, or technical analysis these are names we’re sure you’re familiar with.

The experts listed above all use MetaStock for making their trading decisions. You have an opportunity to join them in Las Vegas on October 16th for 3 days of Intense MetaStock Training.

This includes a day of Live market trading which will be conducted by Rahul Mohindar!

The Experts

Rahul Mohindar, creator of the RMO and RMO ATM trading models, will teach how and when to incorporate the classic indicators into your everyday trading strategies. You will also learn how to master trading with the RMO and RMO ATM and how to detect counter trend “reversal” modes. Lastly, you will get to put everything Mr. Mohindar teaches you into action on Monday during the live market training session he is hosting!

Greg Morris, who manages $3.5 billion in assets using MetaStock, will discuss a phase of technical analysis rarely reached by most traders: money management. Decades of experience have convinced Mr. Morris that his methods work. You’ll be convinced too when you attend this powerful session.

Martha Stokes, co-founder of TechniTrader, will give you an intensive, hands-on training session to help you hone your skills at entering and exiting fast-paced trades. You will be actively involved in a simulated trade that will show you how to enter earlier and exit later for higher profits and lower risk.

Jake Bernstein, internationally known commodities analyst, author, trader, and financial consultant, will reveal the truth about trading, profits, and discipline. You will learn why so many traders fail due to the dangers of vague rules, the tyranny of “looks-like,” and the lack of clarity and discipline.

Kevin Nelson will kick off the 2010 MetaStock Conference, revealing new tips, tricks, and systems in MetaStock. Mr. Nelson will also teach you how to build your own custom indicator

For information on the experts, the event, hotel information and the schedule visit MetaStock.ca

The Case for Investing in Gold Today

IF YOU’RE LOOKING to store wealth in something both rare and secure today, you will find nothing to match gold.

Gold always tends to reward cautious savers in times of financial stress, because it is both hard to destroy and tightly supplied.

In short, it is the very opposite of debt.

Gold doesn’t corrode or tarnish, and it’s relatively useless to industry. That’s why almost all of the entire stock of gold mined over the last 4,000 years remains unused today. It exists as either
jewellery or bullion, both of which act to store wealth and value.

The world’s total store of gold now stands near 160,000 tonnes. But the metal is so dense that, if formed into a single a cube, it would have an edge barely 22 yards in length.

That wouldn’t even cover a tennis court!

Gold vs. Paper-Money Inflation

New gold is being found and mined today at the rate of some 2,600 tonnes per annum.

That’s a modest increase of 1.6% per year to the above-ground supply. And critically for the value of gold, this annual growth-rate lies beyond the power of politicians or investment banks to increase.

The supply of Euros, in contrast — the most hawkishly-managed major world currency right now — is currently expanding by 11.5% per year.

Thanks to this tight supply, gold grew its purchasing power more than nine times over during the 1970s — the last worldwide surge in inflation. In terms of business assets, it rose 23 times over by the start of 1980 as measured against the Dow Jones Industrial Average.

During the financial collapse of the 1930s — but this time amid a deflation caused by half of all banks in the United States failing — gold bought 17 times as many financial assets as it did before the Great Crash of 1929.

Now debt defaults and inflation are working together today, forcing a fresh crisis in the value of money.  Gold has already risen three-fold against the New York stock market since early 2000. It’s recently turned higher in terms of residential and commercial real estate, too.

Time to Buy Gold?

Gold doesn’t care whether a financial collapse destroys the value of money (inflation) or the value of debt (deflation). Its unique characteristics — indestructibility and tight supply — mean its owners can thrive amid either.

But that doesn’t make gold a "forever" investment.  Gold will always lose value during stable periods of strong economic growth.

Over the twenty years to 2000, for example, gold lost 95% of its value in terms of US real estate. So it’s no surprise that, as a proportion of world investment portfolios, gold fell from around 2% to effectively zero.

The trend in gold prices finally turned higher at the start of this decade, just as Gordon Brown — now the British prime minister — sold half the UK’s national gold reserves at less than $300 an ounce.

Since then gold has trebled and more. But this gain remains small in the context of previous gold trends. It’s also been limited by Western governments persuading their citizens that "core" inflation in the cost of living is running at just 2% per year or below.

These official CPI figures, of course, exclude the cost of housing, mortgages, taxes, fuel and saving for retirement. But this trick cannot go un-noticed forever.

New Investment in Gold

New gold investment will continue to grow if the world’s major currencies — gold’s main competition as a store of value — plunge into the inflationary spiral that many economists fear.

Until there’s a dramatic change in monetary policy, the over-supply of Dollars, Euros and Yen look set to keep pushing gold prices higher. And it took a dramatic change in central-bank policy to finally kill gold’s last inflation-led surge.

At the start of the 1980s, the Federal Reserve pushed US interest rates up to 18% and above, restoring the world’s confidence in its currency and kick-starting the "long boom" of the next 20 years.

Could America survive such strong medicine now? Would Ben Bernanke even dare risk it?

If you think the world’s central bankers are about to set interest rates far above the real rate of inflation, you should steer well clear of gold.

But if you fear for your savings — and you want to start investing in gold — you can start today, for free, at BullionVault.

Please [popup url="http://www.fundsoft.com/bullionvault/bullion-disclosure.htm"]read our disclosure[/popup] to you.

We’re very excited about the arrival of the new MetaStock v11! As most investors know, MetaStock has always been the premier software designed specifically for traders who do analysis after markets close, as well as those who do Real-Time analysis. The new versions include:

• MetaStock End-of-Day is the perfect EOD charting and analysis tool whether you’re an experienced, active trader or just beginning to trade the markets.
• MetaStock Pro For professional traders requiring real-time analysis.
• MetaStock Pro-fx Specifically for foreign exchange (FOREX) traders and powered with QuoteCenter data, MetaStock Pro FX provides real-time analysis of the currency market.
• MetaStock Addons & Plugins Developed by the makers of MetaStock, plugins enhance the functionality of MetaStock.

A Ton of New Features

To see much more about what’s new, visit the MetaStock Store and there are videos, tutorials and datasheets as well.

• 5 new name brand systems
  • Stochastic Pops Expert Advisor – combining a weekly Stochastics Oscillator for trend with a daily Stochastics for signals, this system avoids many of the whipsaw trades common to systems using just daily Stochastics.
  • Conners RSI Expert Advisor – based on formulas presented by Larry Conners and Ashton Dorkins, a 2-period RSI at extreme highs or lows is used for long and short entry signals.
  • Darvas Box – using extreme high and low conditions to form dynamic support and resistance levels, which are captured in the form of a “box,” this system is great for uptrend breakout trading.
  • Turtle Trader (Hybrid) – based on the well-known and widely published Turtle System, this system generates buy signals when the price moves above the highest high of the last 20 days. Short signals are generated when the price moves below the lowest low of the last 20 days. Positions are closed when prices reach the extremes of the previous 10 days.
  • SPYDER Carpe Diem – designed to forecast a single days movement of the S&P’s 500 Depository Receipts (SPYDER), this system is based on a four-bar pattern that has shown predictive ability.
• 43 new adaptive indicators
  • Standard indicators use a fixed look-back period, which makes them less responsive to prevailing market conditions. MetaStock 11 incorporates 43 NEW Adaptive Indicators with dynamic look-back functionality based on volatility, cycle, or a combination of both. This method provides the most responsive and accurate results.
• 6 new RMO alerts
  • The Rahul Mohindar Oscillator (RMO) released with MetaStock 10 has become one of the most popular features of MetaStock. MetaStock 11 offers 6 NEW alerts for the RMO, including: buy above high, sell below low, new blue bar, new red bar, entering bullish zone, and entering bearish zone.
• 2 new stops – The best trading systems will fall short without a good exit strategy. MetaStock 11 provides 2 NEW stops to help your system know when it’s time to get out of the trade:
  • Intellistops – these self-adjusting trailing stops do away with the old static stop systems, which are set at a fixed percentage from price. Intellistops are adaptive and adjust dynamically based on the current price activity of the security. Intellistops adjust according to cycles, volatility, and other conditions.
  • Chandelier Stops – As the name indicates, Chandelier stops “hang” the sell stop from the extreme high reached over a predetermined period. When used properly, in tandem with other trading systems, Chandelier stops have been shown to produce profits even with randomly selected entries on a diversified group of futures.
• 17 new indicators – MetaStock has always incorporated a very robust list of built-in indicators in excess of 150 and counting. The reason why we have so many is to cater to any type of trader. The 17 NEW indicators include the following:
  • Coppock Curve
  • Darvas Box High
  • Darvas Box Lowv
  • Denvelopes
  • Donchian Channels
  • Elder Ray
  • Fisher Transformation
  • Gann Swing Bands
  • Inverse Fisher Transformation of RSI
  • Natenberg’s Volatility
  • Polarized Fractal Efficiency
  • Pring KST (short, intermediate, and long-term)
  • Stochastic RSI
  • Force Index
  • Turtle Trader Bands.
• 4 new FOREX currency pair systems – MetaStock employed the “3-V” approach (Velocity, Verticality, and Volatility) and the notion that balance between different types of indicators offer superior performance to develop the FOREX Currency Pair Systems. The four new systems are specific for the following pairs:
  • EUR/USD
  • GBP/USD
  • USD/CHF
  • USD/JPY
• new features designed for FX trading

Basic Charting with MetaStock

Setting the Standard with Charting

MetaStock creates charts that quickly and easily map a clear profit strategy! You can create charts so revealing, they’ll give you an unfair advantage in the marketplace.

MetaStock gives you nine of the most commonly-used price charting styles to choose from:

Bars	Line	Candlesticks
Point & Figure	Kagi	Renko
Three-Line Break	Equivolume	Candlevolume

Templates, Layouts, and Toolbars

• Templates
  A Template lets you apply the same set of indicators and studies to different securities. Once a chart is saved as a template it retains all the settings of your chart excluding the base security. This allows you to quickly rotate through securities while keeping the same indicators and line studies on the screen and will save you hours of work.
• Layouts
  Layouts are a convenient way to manage groups of charts. You can combine your favorite stocks into one easily managed group. Or combine your favorite security with the Dow and several of your favorite indicators. You can save all your on-screen charts together like pages in a book.
• Built-in toolbars
  These let you easily refresh data, change periodicity, rescale the Y Axis, zoom in and out, choose “previous” or “next security” in the open folder, and choose a security to open.
• Object-Oriented Interface
  MetaStock is the only technical analysis program with a complete Object Oriented Interface. That means you can click on the object you’re working with to get an instant menu for that item.

Technical Analysis Tools

The Explorer^TM

Finding profitable trading opportunities starts with scanning the markets for securities that meet your criteria. With how vast the markets are, this is an overwhelming and next to impossible task on your own. However, MetaStock’s built-in search tool, The Explorer, makes it quick and simple.

Tell The Explorer what you’re looking for—say you want stocks that have just crossed above their 200 day moving average. The Explorer searches thousands of securities to instantly find those that match this description. You could then run The Explorer again to drill down further in this list and find securities that match whatever specific criteria you’re looking for.

You can also use The Explorer to generate a list of potential money-makers, find the biggest gainers, the most active stocks, or generate daily buy and sell signals.

The Explorer does the tedious, time-consuming work for you so that you can make informed decisions quickly and with little effort.

The Expert Advisor^TM

The Expert Advisor is an educational tool that helps you interpret technical analysis signals. This compilation of trading styles and rules from experts such as Martin Pring, Gilbert Raff, and Bill Williams offers commentaries and suggestions as to when to buy or sell a security. This tool gives you 60 “experts” to apply to your trading.

The Expert Advisor brings you advice from a team of experts so that you can find out what they would do in your specific trading situation.

The Enhanced System Tester^TM

With The Enhanced System Tester, you can create, back-test, compare, and perfect your strategies before you risk any of your money in the markets. System testing helps answer the question, “If I had traded this security using these trading rules, how much money would I have made or lost?” The surest way to increase your confidence in a trading system is to test it historically. The Enhanced System Tester lets you take a group of stocks and compare them to a group of trading systems to find the best scenario.

Designed to simulate real trading scenarios, the Enhanced System Tester allows you to change the variables such as entry, exit, order sizes, commissions, and more. This tool gives you incredible customization, comprehensive results, and detailed reports so that you can find the most historically successful trading scenario.

The Enhanced System Tester will give you the power to take vast amounts of past data and use it to analyze and predict what trading systems will be the most profitable.

Internet Capability

MetaStock lets you pull up an online, direct-access broker page where MetaStock automatically fills in your stock information for quick and easy trading. With its seamless Internet integration, MetaStock allows you to:

• Collect data from an online data vendor using DataOnDemand™
• Research fundamental information from Thomson Reuters including P/E ratios, Insider Trading, and Financial Statements for the active chart
• Read current company news for the active chart
• Request a real-time quote for the active chart
• Display option chains for the active chart
• Save the active chart as an HTML document
• Email a bitmap graphic of a chart directly from MetaStock
• Get help from Equis technical support

MetaStock’s Indicators

Analyze the market with the insight of the most respected traders in history with MetaStock’s comprehensive collection of indicators and line studies—over 150 are included.

MetaStock’s built-in indicator interpretations even help you understand how to trade each indicator. For advanced users, The Indicator Builder lets you write your own indicators. Here is a list of the indicators.

The Performance Systems

Trade at a higher level of confidence and expertise than you ever thought possible with the 26 trading systems included in MetaStock. Chosen after countless hours of intensive testing and rigorous research, these systems have a highly successful track record of profitable results.

We added state-of-the-art exploration tools to 10 of these systems. These explorations perform system testing – on not just one security – but over an entire database of securities. Plus, you’ll get buy/hold vs. buy/sell comparisons, and buy/sell alerts to further assure your trade has the highest probability of success.

“Systematic trading has dramatically improved my returns and drawdowns. I’m easily beating the indexes and not taking an inordinate amount of risk. Prior to MetaStock I tried one trading concept after another, and was essentially break-even – not without many gut wrenching moments though. Trading is now objective and simple for me. I just follow the signals, and through extensive back-testing, I have confidence that my system will be highly profitable in the future.”
Kevin Campbell

Michael Kassner the Manager of IT for Getinge LaCalhene and a well certified IT Professional recently ran into a piece of malware with a twist. Called Tigger/Syzor it appeared on the PC of a friend of Michael’s who is a day trader and deals with companies like E-Trade, ING Direct, Vanguard, Options Xpress, TD Ameritrade and Scottrade.

Guess what? Tigger/Syzor likes the same friends as it is a safe mode rootkit password stealing Trojan that targets day traders. Michael was able to use tools like Malware Bytes Anti-Malware (MBAM) to find and remove some files that were identified as malware but ultimately he went with a full clean re-install of the operating system and all applications just to be sure.

The day trader does keep his computer up to date with patches and program updates so what else could he have done? How about running in a virtual environment? With tools like VMWare Server being offered for free and giving you the ability to run an isolated second complete copy of the operating system and programs he could have run the tools that are critical to his job in one and done his research (web browsing) in a second. This isolates the whole system so that if one aspect of his system get’s infested he can just roll back to a previous version or snapshot without the infection and continue running with only a few minutes downtime and not a whole panic filled weekend.

He would even be able to turn off the day trading virtual system after the markets close and let his kids (I don’t know if he has any – just speculating) use a separate dedicated kids only virtual machine that was locked down and set to clear all changes when it was rebooted. This may require that a few additional licenses of Windows be purchased and a little discipline to not get lazy and browse from his critical virtual machine but as they say an ounce of prevention is worth a pound of cure. The day trading tools that he uses also have to be able to run in a virtualized environment and be supported by the vendor when running in such a way.

A second thing this day trader should do is run his home network like a corporate network with similar hardware (http://www.firewallshop.com) and protective measures in place. I’d hazard a guess that he is running a consumer level firewall (with unprotected wireless on too I’d bet) that acts as a one way valve using Network Address Translation (NAT) and very little else.

He makes his living by day trading so treat this network like the office it is and install a corporate level firewall like a FortiGate that does layer 7 anti-virus scanning at the edge. With the recent introduction of the FortiGate 30B Bundle the price of a very capable corporate level firewall has dropped to the $500.00 range with one year of updates and basic support. When your living depends on your trading thousands of dollars daily doesn’t it make sense to protect your investment and passwords with an enterprise level firewall?

Tigger.A: Sophisticated trojan that likes stockbrokers
http://blogs.techrepublic.com.com/security/wp-trackback.php?p=960

Michael Kassner
http://techrepublic.com.com/5213-6257-0.html?id=4730583

FortiGate 30B
http://www.firewallshop.com/detail.aspx?ID=257

Tigger image Copyright by Disney, A.A. Milne and H. Shepard, or Trusties of Pooh Property.

Day trading stock online is real seat of the pants stuff for all participants, but none more so than for the novice trader. The casualty rate is high enough amongst experienced professionals, but for the raw beginner it can be an absolute minefield if basic day trading principals aren’t rigorously adhered to.

Just because you’ve made a few successful mid to long term trades in your time doesn’t ensure that you’ll be the next talk of Wall Street when you try your hand at day trading stock online. Far from it!

Not surprisingly, day trading irrespective of the asset class involved has been likened to extreme sports, with the only difference being that the thrills and spills are confined to the minute by minute fluctuations of your trading account. Perhaps the only saving grace for those who fail to plan their trades in advance is the fact that no positions are held open, i.e. carried forward, to the next day. If nothing else, this limitation helps prevent further erosion of capital when a trade turns sour.

So what motivates investors to become involved in day trading stock online?

A primary motivation of day trading stock online is understandably the lure of quick money. Another motivating factor is that it isn’t necessarily any riskier than other forms of trading activity. However, unless thoroughly tested and proven trading strategies are put in place with each trade, the risk of incurring substantial losses within a frighteningly short period of time is all too real.

Basic Strategies:

There are six basic strategies day traders use to make a profit:

1. Spread covering
2. Technical trading
3. Scalping
4. Range trading
5. Playing news events
6. Trend following.

Spread covering refers to buying at the BID price and then selling at the ASK price. The spread is the difference between these two prices.

Technical trading is simply the action undertaken by a technical analyst. He or she evaluates securities by relying on the assumption that market data, such as price charts, volume, and open interest, can help predict future, usually short term, market trends. Unlike fundamental analysis, the intrinsic value of the security is not considered. Technical analysts believe that they can accurately predict the future price of a stock by looking at its historical prices and other trading variables. Many technical analysts are also market timers, who believe that technical analysis can be applied just as easily to the market as a whole as to an individual stock.

Scalping refers to an extremely quick trade for a small profit. For example, if you bought 20,000 shares in XXX Inc. @ $1 per share, i.e. $20,000 invested, then sold them 45 minutes later for $1.03 per share, $20,600 gross return, you would end up pocketing a cool $600 less brokerage.

NB: Remember that when you are day trading stock online, the round turn brokerage fees are minimal.

Range trading is a little harder and inherently more risky, but the returns can be proportionately greater, too! If you are canny enough to be able to pick the intra day market swings and either BUY at or near a low, then SELL at or near a high you can often make substantial profits using this method. But you do have to be wary, because if you buy into what you think is an intra day low point, only to discover that the market sentiment has changed and that a severe sell off is in progress, you could get badly burnt!

Playing news is the realm of the adrenaline seeking day trader. The technique refers to buying a stock which has just announced, for example, a short sell on bad news, the contrarian traders love this sort of play as they will be standing in line to BUY the stock at the end of a short, sharp sell off in the belief that most if not all the bad news is already factored into the market and therefore there wont be any further downward pressure. The sheer volatility offered by unexpected news announcements can provide the diligent day trader with huge potential for quick profits, or losses if they call the market incorrectly.

Trend following assumes that if a stock have been rising steadily it will continue to rise. Admittedly, this technique is better suited to position traders, i.e. where stocks are held for a number of days, weeks or even months, but in strong bull markets some stocks will rise steadily for days on end, making the intra day trend follower a very happy chappy.

Live Coaching

When trading on an intra day basis you need to take into account many factors including: time of day; liquidity; pending announcements such as corporate profit reports, interest rate movements, currency fluctuations; macro and micro trends; market sentiment, in fact, almost anything at all that may have an impact on your trading results.

So, if you want to radically improve your day trading stock online skills, live coaching or even online mentoring with a recognized industry professional can be worth a hundred times the price paid. Coaching can take place in different forms including: in person coaching; online coaching session; or over the phone.

If you’re hell bent on being successful, but you’re still new to the game, you’ll be tossed to the lions unless youve acquired the necessary physical and mental skills to survive and profit from day trading stock online. Do yourself, your pride, your career and your bank manager a big favor by making the commitment to learn as much as humanly possible about this fascinating and potentially very rewarding form of investing, and secure the services of a live coach to see over your trading.

US-CERT is aware of public reports of a fraudulent email scam circulating via messages that falsely appear to be from the U.S. Federal Reserve. These email messages contain information about a phishing scam and links for users to follow to obtain additional information about the scam. If a user follows the links, they will be redirected to a malicious website where a PDF exploit is used to install malicious code on the affected system.

US-CERT encourages users to do the following to help mitigate the risks:

• Do not follow unsolicited links
• Use caution when visiting untrusted websites
• Install antivirus software and keep the virus signatures up to date.
• Refer to the Recognizing and Avoiding Email Scams (pdf) document for more information on avoiding email scams.
• Refer to the Avoiding Social Engineering and Phishing Attacks document for more information on social engineering attacks.

Relevant Url(s):

• http://www.us-cert.gov/cas/tips/ST04-014.html
• http://blog.trendmicro.com/bogus-federal-reserve-sites-deliver-pdf-exploit/
• http://www.us-cert.gov/reading_room/emailscams_0905.pdf

====

This entry is available at:

• http://www.us-cert.gov/current/index.html#u_s_federal_reserve_phishing

Dr. Barry Burns (the author and narrator in the video) discusses:

This stock market has a lot of people pretty scared.

• Is the current bear market unusual?
• Are stocks doing something they’ve never done before?
• How does the current stock market nose dive compare with bear markets of the past?

A little historical stock market research can reveal some very enlightening answers.

Will it give you comfort or make you more afraid?

Watch the video and decide for yourself, and then feel free to leave your comments below.

After you`ve set your initial stop loss, chosen your method for calculating your trailing stop loss, and implemented all your money management rules, there is one last thing you should do; you should begin back testing your system.

With out back testing you will be headed in the right direction, but you won`t know what to expect from your system. Back testing will also give you the confidence to keep going when you begin to experience the doubt that every trader faces at some time.

Back test your system by applying the rules and conditions of the system to the stock`s historical market data. However, this is only possible if you`re trading a system that is entirely mechanical and does not require any human input to place the trades. How do you know whether or not your system is completely mechanical for back testing? Can you take down your trading plan, the set of rules and guidelines that you follow, and hand that over to someone else, who could then trade the same system and receive the same results as you would if they followed the system carefully?

If you can do this, you have a mechanical system that is ready for back testing. If you can`t, you should look at implementing a completely mechanical system. Perhaps one of the hardest parts in trading any system is to have the confidence to stick with your system. In fact, a mechanical system almost forces you to make decisions that are in direct conflict with what your gut feeling might tell you to do.

Remember, our gut feeling tells us we should hold on to losing stocks until they get to the break even point, and our gut feeling would tell us to sell shares as soon as we`re a little bit in profit. Obviously, a mechanical system goes against these human tendencies, and that is one of the reasons why it`s psychologically difficult to trade. However, back testing a mechanical system, will tell if you it your plan will work or not.

While back testing will not tell you with 100% accuracy what the profitability of your system will be once you start trading it, it will give you a very good sense of what you can expect. All prices are driven by the same two factors, supply and demand, in the present and in the past. So, even though price movements are never going to be exactly the same, in your back testing you will see the patterns, and similar movements that show up over time. With back testing you can discover the how profitable you system is likely to be, and how often you are likely to have a loss rather than a profit.

Back testing your system over different market conditions, it can be reasonable to draw parallels as to the performance of your system historically to its performance trading it in real time. Knowing this, because of back testing, will make it much easier to stick with your system, and the profits you can realistically skyrocket.

If you’re looking for a good piece of technical analysis software to do the back testing for you you should have a look at MetaStock End-of-Day or MetaStock Professional (for day traders).

-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- David Jenyns is recognized as the leading expert when it comes to MetaStock and designing profitable trading systems. His MetaStock website offers a huge free collection of trading related tips and tricks. Gain free access now. Click Here ==> http://www.meta-formula.com/subscribe -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- Article Source: http://EzineArticles.com/?expert=David_Jenyns

]]> http://www.financialmarketplace.com/the-idiots-guide-to-back-testing-trading-systems/feed/ 4 http://www.financialmarketplace.com/wonder-which-charting-software-is-the-most-popular/ http://www.financialmarketplace.com/wonder-which-charting-software-is-the-most-popular/#comments Mon, 03 Nov 2008 16:49:10 +0000 admin http://www.financialmarketplace.com/?p=193 I recently came across the following blog post that ranked (based on an internal survey) the most popular charting software was. Note that the sample size is unknown (although it’s stated that it is in the 100’s) but interesting nonetheless. Nice to see MetaStock in the top 10!

The Most Popular Charting Software is …

Posted by: Barry Burns

Recently I took a survey of my students asking which charting software they use.

This is only a small sample, and therefore not necessarily representative of which software is the most popular in the world, or even the US. It only reflects the responses I received from my students who responded to the survey.

I received hundreds of responses and thought you may be interested in the results. So here they are, rounded to the nearest whole number (you’ll notice that they total more than 100%, and that is because many people use more than one software for charting):

1. Ninja Trader: 42 %
2. Tradestation: 30 %
3. Meta Trader: 27 %
4. Interactive Brokers: 21 %
5. eSignal: 18 %
6. MetaStock: 16 %
7. Think or Swim: 14 %
8. GFT: 13 %
9. Ensign: 12 %
10. Telechart: 12 %
11. FXCM: 12 %
12. TD Ameritrade: 8 %
13. Fidelity: 6 %
14. MultiCharts: 6 %
15. E Trade: 4 %
16. Schwab: 4 %
17. NeoTicker: 2 %
18. QCharts: 2 %
19. Other: <2 %

What charting software do you use?