Most trading advisory services offer traders content or the opinions of
'the experts'. Others offer this in addition to alerts based on some widely
recognized patterns such as candlestick charts, bollinger bands, or moving
averages. The problem is that you have no idea whether or not trading those
strategies on those stocks has been profitable in the years past.
Trading Mechanics offers it's subscribers alerts based on robust 100% mechanical
trading systems, which have been back-tested on each and every stock in
our universe. We only include alerts on a basket of stocks, which have proven
to generate consistent profits over the most recent several years of historical
intra-day data. The advantages to this approach are obvious, Trading Mechanics
does not offer strategies, which have not proven to profitable historically.
Trading Mechanics also stresses the use of strict money management techniques,
which are as instrumental as the strategies themselves. Included with the
Alert Expert are tools, which will assist you in managing the size of your
positions. This will allow you to maximize your returns while reducing drawdown.
All of the systems offered on Trading Mechanics are rigorously backtested
properly. By properly I mean that we always keep a large portion of 'out
of sample' data to make sure that we have not curve fitted out strategy
to the market data. First we test the strategy without optimizing any
of the inputs, then we backtest it on the middle third of the historical
data, and make sure that the results are nothing less than outstanding.
Only then do we test the strategies on the out of sample data periods
or the first and last third of data. This way we have the added security
of knowing that we did not curve fit our system to the data. For more
information on backtesting click here. (include reference articles from
Trading 102 by Sunny Harris and Trading Systems and Methods.)
Trading Mechanics is not for everyone. We offer a turnkey solution to
trading profitably and include tools on our website that no one else offers.
All of this will help in increasing both your profitability, and confidence
in the mechanical trading approach to the markets.
Our services are targeted at a select group of serious, experienced traders
with adequate capital, discipline and dedication to trading as a profession.
Trading Mechanics will not try to be everything to everybody. By keeping
the community small and providing services only to a select group of high-end
members, our staff at Trading Mechanic's can give members the individualized
attention they need.
At
Trading Mechanics we offer systems which operate exclusively over the swing
trading time frame. (typically 1 to 5 days) All of my backtesting has
shown that this is the most profitable time frame to trade in. It is
too short for large institutional concerns to take advantage of and, at
the same time, too lengthy for active day traders to be comfortable with.
This leaves us a relatively unexploited niche in which to operate in.
Swing trading offers the perfect opportunity for independent traders to
bypass much of the competition that comes from these two large groups. Trading
Mechanics gives traders signals, which will allow them to exploit this
time frame. <
Overnight risk certainly does exist when trading the swing trading time
frame. The key is to minimize it through diversification and proper money
management. Our money management strategies will keep you from placing
too much capital on any one trade. In addition, traders who follow the
Trading Mechanics' systems will have positions, which are diversified
across a range of industry groups and sectors. This way, when an adverse
event occurs, it only effects a small portion of your overall portfolio.
Trading is a risk reward game. Traders often hesitate to trade a strategy
which requires them to take positions home overnight. I have found that
this occasional risk associated with assuming overnight positions is justified
by the difference in returns generated from swing trading versus day trading.
The Alert Expert will provide you with all of the signals generated by
our strategies in real time. You will not be required to download any
software. The Alert Expert is a web based tool to assist you in your trading
and money management.
Once you have decided what to trade, figuring out how much to trade is
a crucial decision to the final outcome. The strategy included in the
Alert Expert is known as Fixed Fractional. The Fixed Fractional money
management technique allows you to spread your buying power evenly across
your positions. This way, each position receive an equal amount of capital
which will spread your risk out evenly amongst all of your positions.
Secondly, it allows for the constant reinvestment of returns. This, in
turn, results in a steeper equity growth curve.
For now, Trading Mechanics strategies are only offered on stocks. What
we have found is that is that trend following strategies work best on
medium sized companies with a high enough beta and average true range
to warrant trading them. After, a system is only as good as what it is
traded on. The bottom line is that some securities offer more tradable
opportunities than others do. The more mature companies with enormous
market capitalization do not provide swing traders with ample opportunities
to catch substantial moves as much as their smaller counterparts.
Making sure that a given system or method is compatible with your personality
and style is extremely important. The systems which I have developed are
a direct reflection of my needs, expectations and abilities. My own reasons
for creating the systems that I have developed will be the same for many
other traders, but not necessarily for everyone. If a trader has decided
to follow a system which is compatible with his or her goals, personality
and style, then the trader is more likely to stick with the system and
not go against it. (for more information on system compatibility, refer
to this article by Jake Bernstein).
Trading Mechanics offers a robust trading system complete with money management
techniques to assist our members in increasing their profitability in
the markets. Following the signals offered by our systems is enough to
accomplish this task without overloading our users with information. It
is a common occurrence that traders make mistakes as a result of getting
too much information. As Jake Bernstein wrote in his article on information
overload. "Consider the following donwside with respect to too much
market-related information.
1) The more information you have about the markets, the more confused
you will be, particularly if the information is contradictory.
2) The more information a trader has, the more likely it is that the
trader will use it to justify an already established opinion or position
3) The more information a trader has, the more inclined the trader
will be to get caught up in the emotional tornado of trading. Too many
traders are incapable of dealing with the tick-by-tick response of prices.
Just watching the prices come across the ticker machine is enough to
force them into action: action, which may be totally contrary to their
trading systems or methods.
Appreciate the value of ignorance in the markets.
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