My main trading system


7/12/2017 - Category: trading, research, strategy, coding,

I use this system to capture the most obvious and explosive stock moves at the opening of the US markets on a daily basis (stocks between $30 to $200 are my sweet spot). This is a semi automated trading system, the candidates are discretionary selected before the open.

I coded this system using Multicharts and EasyLanguage (this programming language was actually created by 2 cuban musicians! How ironic knowing that cuban music is one of my strongest specialty!).

What are the most obvious and explosive moves at the opening of the market?

  • Gap exhaustion. See the chart above, $ONCE, way over sold on the daily chart and capitulating pre market giving hints of a high probability strong bounce at the open.

  • Key change in fundamentals (mostly negative such as full year guidance down, 1st setup taught to new traders by elite trading firm SMB Capital). I do use my robot in this situation if technical analysis is in my favor as well (extended daily chart).

$RH on the 6/2/17 after a terrible earnings report


I automated this setup for these reasons:

  • High probability winning rate + great risk/reward with a high chance to trend all day and finish at the highest/lowest of the day; in my data it is much more interesting on the short side than on the long side though,

  • I want to avoid spending hours in front of the computer which is extremely unhealthy,

  • Things are moving faster and faster at the open; technology allows us to capture these setups in a more efficient way; it also allows me to focus on other potential setups,

  • 40% of daily activity used to happen at the open, it is now 60%,

  • If you have great trading mentors, they will push you to become bionic and/or fully automated.

All executions are completely automated.

  • The white line is the buying/short selling level,

  • The red line is the hard stop transforming into a trailing stop after a certain time (I delayed the trailing stop to allow for some juggling time),

  • The green line is the minimum target level with this condition: if the trailing stop/hard stop didn't get hit and if the momentum slows down above/below that level, profits are taken,

  • The cyan line is the previous close,

  • All these levels are based on ATR (daily average true range).

Features

  • The entry is based on multiple conditions (candle stick patterns, time of the day…)

  • A true edge: for a long, the robot is waiting on the best bid to get hit unless it moves too far away from the 1st time it bided (reverse the idea for a short),

  • If the positions are still open 5 minutes before the close, the robot closes them,

  • I set it up so that it is sending me text messages with the details of what it is doing in case I’m not home,

  • The robot talks each time it is doing something with a female voice (I called 'it' Eva since 'it' sounds like the 'Ex-Machina' movie’s main character. By the way I spent a whole week where that movie got shot in Norway! ).


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