My Upcoming Trading System

[Merlin]

If I haven't been asked about updates on my trading system by at least by 5 different members here , I haven't been asked at all.

So for all of you who asked me on the board itself, by PM or emails (or even in person), this thread is for you. I will post here any updates that I have so you can follow its development.

For those who don't have a clue what I'm talking about, one of my goal was to create a trading system that would automatically trade itself on my computer and bring me between $5,000 and $10,000 each month.

Sounds crazy right? But I know many people who are doing just that and I'm A LOT CLOSER to realizing it than you might think of.

I have 2 options in front of me...

1- Keep it to myself and make this nice amount each month.

2- Lease it $1,000/month to anyone willing to use it.

Right now, most of the people who don't know about the Stock Market or Forex don't really care much about it but when you will see the profits that the system will make on a monthly basis, you will find it VERY selfish on my part to make all this money and not let anyone else have a little taste of it too.

Needless to say, pretty much every family member and friends who see my stock charts at home are fascinated about this stuff and cannot believe that their computer can pay more than their regular job so most of them contact me once and a while to get an update on this automated trading system.

IT IS NOT DONE YET.

It's a work in progress. Here are the 5 phases involved in making this goal a reality...

Phase 1- Mental conception (Thinking of ideas that could make all this monthly profit).

Phase 2- Programming (Putting this concept that looks promising into code)

Phase 3- Backtesting (Testing the system on past months and years to see if the system is solid and profitable or not. If not, I go back to phase 1).

Phase 4- Forward testing (Testing the system on the next weeks and months to confirm that it wasn't just profitable in the past but in today's market conditions too.)

Phase 5- Leasing (Letting people download and use it on a free trial basis).

So for those interested, come back here once in a while as I will keep you informed as to which phase the system is or will be soon.

Cheers,

Merlin

[Merlin]

These days the Forex (EURUSD) market is moving a lot making nice profitable trades.

I haven't totally programmed or backtested my system yet but just looking at the line and indicators I have placed on my chart and know where I would have entered and exited each trades, I can tell you that it would have brought at least $2,000 last week and today it was a good first day of the week with a nice $800 profit.

These good days and good week are not the norm but it's still nice to know that a very simple system could make such nice profit with the minimal amount of trades because this is where it could get ugly and make us lose all our gains and turn this system into a losing one.

I believe that Phase 1 (The Mental conception of the system) is now complete and unless something even more profitable comes along very shortly, I will start Phase 2 which is the programming part of it and that could take about a few days.

If things go well, I should be able to backtest the system and try to fix any flaws before the end of the month. I will post here all the performance report so that you can see how much the system would have made (or lost because we can't win all the time in trading) during the last few weeks and months.

As planned, April was going to be the conception, programming and backtesting phases of my system to see how much it pad in the past and May will be the forward testing part where we will see how much it pays in future weeks.

If May pays as much as the average months of the past then it will mean that the system is fairly stable and will be available to lease on a free trial period somewhere in June.

Making between $5,000 and $10,000 a month starting in June would be a nice way to start the Summer.

Cheers,

Merlin

[AgentSmith]

Which indicators do you rely on for your system these days, Merlin? If you are able to tell, of course, now that you are planning on leasing the system. I am just curious, because I used to trade in the past. I understand if you mind sharing such information.

[Merlin]

Which indicators do you rely on for your system these days, Merlin?

Hehe, nice try.

My system is so simple, if I start talking about it, everyone will figure it out.

Merlin

[xcfastdude]

Keep up the good work Merlin! I'm all for a simple system hehe.

[Merlin]

I'm all for a simple system hehe.

Yeah I know, from what I've heard from other Trading System Programmers, they are the only ones that work on the long run. Super complex system seems to bend the rules to fit the current market so they do good in the short term but when the market changes they start losing money and you have to switch to another system.

So yeah, sticking with the basic "follow the current trend and try not to lose it all back when the trend is over and is going flat ("consolidating" in trading lingo)".

Speaking of consolidations, here's a tip for you guys. I will not tell you the indicators that I use because I always take the code of these and modify them a bit for my own taste so even if I would tell you to go with MACD for example, you wouldn't recognize the MACD that I am using on my chart.

However this is THE most important tip that I found across my 10+ years of fascination about the Stock Market. It's called KASE Bars.

You see, most traders use Daily or Minute bars which mean that if you use the smallest minute bar which is the 1 Minute, the price can go up or down A LOT during this 1 single minute and this can cost you a ton of $$.

Because you see, trading systems always wait for the last bar to close in order to decide what to do next so if the last 3 Min bar is not closed yet and it keeps going down and down and down, when that long bar ends up closing, your system can take you out but you end up with a big loss.

Here's a 3 Min chart where you can clearly see the 2 big moves of the day are coming from only 2 individual 3 Min bars.

What Kase bars do is CUT all the bars into smaller ones like so...

As you can see, it's the same chart of the EURUSD but in this chart, the long bars have been cut so your trading system has many bars to decide when to get in or out.

Let's zoom in a bit further.

The day started smooth, the market was consolidating so nothing much to do but wait and then BANG you see this loooooooong 3 Min white bar that makes a huge up move but again, your system must wait the end of the 3 minute to see this bar close and start a new bar but when it does, it's too late, you missed the plane (more like a rocket on this case hehe). You couldn't profit from this nice 43 pips ($430 move).

But if you use Kase bars like on the chart below, you see this on your chart instead....

You (and your automated trading system) can now see all these little white bars of about 2 pips each so your trading system may miss the first few ones but it quickly recognizes that we have a big up move here and can get you in fairly quickly making a few $100 on the way.

So THIS my friends is HOW we cut our losses and make more money because you get into more long bars much earlier and also get out earlier too when it goes against you.

Kinda cool huh.

Now most charting softwares do not have these KASE bars and charts. They usually have only minute bars and even the lowest one at 1 Minute can give you ugly big moves like that so even a 1 minute chart is sometimes too big to use because as you saw, those big moves are often explosive and they happen within just a few minutes or even seconds so if you don't have the right charting software and charts, you won't make it big in this trading business or you will at least leave A LOT of profits on the table.

This is why TradeStation's Charting software is the Ferrari or the Rolls Royce of all Charting softwares on the planet.

Merlin

[frontiermarine]

the thread that i've been waiting for

merlin have you had issues withdrawing money from tradestation.com before? i had sent them a couple of questions and they dont reply, and their facebook page have similar complaints regarding their customer support,

does http://www.fxcm.com/" onclick="window.open(this.href);return false; provide the same services or software where your system can be installled?

[Merlin]

merlin have you had issues withdrawing money from tradestation.com before?

I never traded with TradeStation before. I moved to them AFTER I lost money trading eMini Futures and found TradeStation as THE solution to not repeat that mistake again by programming my trading system(s) and backtest it to see if it is good now but also good in the past too.

This is usually the path that most Traders take....

-They watch a few videos on youtube or ordered some trading courses on DVDs.

- They then start thinking of a system (when to buy/sell, etc...)

- They test with a demo account and they lose money. Then they know their system didn't work so they start all over again.

- They test a new system with a demo account and now they make money so they think their system works and ALWAYS worked... hehe BIG MISTAKE. They get in with real money and lose it.

Because what is working TODAY may not work tomorrow so the more days you can find in the past where your system was profitable, the more chances you have of having a solid system that will make money in the future.

- Once they see that their system worked last month but not 1 or 2 months later, they realize that they needed to backtest their system in longer periods and this is where they turn to TradeStation because they are the best in this field. This is where I am right now.

My initial goal was to find my system, deposit the minimum which is about $3,000 and trade it but lately I found out that it would make more sense for me to lease it to others. This way I could make some $$ too and it would help others profit from it too.

In other words, I don't know if I will have a trading account with TradeStation. I may just least my system $1,000/month per client and live from this.

You can do like I did and go on trading forums and ask around but TradeStation is very solid. In the business since 2001 and part of the elite. I don't think they would get these awards by not paying others. They are not some illegal caribbean casinos that steal your money. They have big offices in Florida.

does http://www.fxcm.com/" onclick="window.open(this.href);return false; provide the same services or software where your system can be installled?

No they don't.

Most new or low level brokerage firm use MT4 or MT5 trading platform which is an open code trading software that people use to trade with those smaller firms like FXCM, OANDA, Alpari just to name a few. MT4 or even MT5 don't have the KASE bar charts like I explained above so my system will not work with them.

This year, TradeStation even added a SECONDS CHART meaning that if you don't like KASE charts and prefer time chart like 5 Minutes or 1 Minute charts, then you can now go with a 30 seconds chart or a 5 seconds chart which can give you a faster warning of an explosion in price but again you will need to open an account with TradeStation to see those advanced charts. If you are not using TradeStation the minimum chart you can use is the 1 Minute chart and as I explained above, you can miss big moves with those types of bars.

FXCM or OANDA are the 2 I would recommend to start with in Forex since unlike TradeStation which work with top traders by charging a minimum of $2,000 to open a Forex account, those 2 can let you open a Mini or Micro lot for as low as $50 but remember that with a Mini Lot, you make 10% of the usual Standard Lot that I work with using my system so as I write this this $600 profit would be just $60 on a Mini Lot account or just $6 on a Micro account.

My system will always be targeted at Traders who have the money to open a "real" trading account (aka Standard Lot) using at least $3,000 (I would recommend $10,000 if you can) and not have to scratch the bottom of their pockets to find the $50 to open a Forex account with FXCM or Oanda.

I know that many people are on this forum to become rich and they don't have the $10,000 or even the minimum $2,000 amount that TradeStation are asking for but remember that even if I post updates my system on this forum, I am not designing it for forum members but for traders who have money to risk (because you can still hit bad days and lose some money even with a good trading system) and are looking for a fairly good system to make more $$.

I guess that if you are on this forum and would like to lease my trading system one day, you will first need to do a NAP on attracting that initial trading investment to buy a Standard Lot (which is around $2,600 at tradestation) because my system will not be profitable for you if you trade Mini or Micro account because instead of making between $5,000 and $10,000 and give me $1,000 each month you will make only between $500 and $1000 with a Mini account or between $50 and $100 per month with a Micro account so how will you be able to pay the $1,000 monthly fee?

I know it sucks when you don't have the money for it (if that is your case that is) but I have made my choice and will stay with the elite software and elite traders and will not go to the bottom of the Forex barrel with those Mini and Micro account that makes no profit not just for me but for the trader too.

The way I see it, if you don't have at least $2,600 to risk then maybe you shouldn't be in the trading business.

If you really want to start with $50 and those Micro accounts, then go ahead and open an account with FXCM but good luck at trying to makes 100s of $$ here because at $0.10 per pip, you won't get rich quick.

Once again, a Standard Lot pays $10 per pip (that's the level I work at), a Mini Lot pays $1 per pip and a Micro Lot pays $0.10 per pip.

Serious traders and investors only work with Standard Lots. Broke people work with Mini and Micro Lots. It's not a judgment, it's a fact. Nothing wrong with testing your trading skills on a Micro or Mini account because they lose a lot less but they pay a lot less too.

Good luck

Merlin

[MonsterLord]

Is there going to be a cost for being able to use your system Merlin?

[Merlin]

I used to have TradeStation...

I've never traded Forex...

I won't auto-trade...

I use no indicators

So you don't use TradeStation, don't trade Forex, don't use indicators or trading systems and don't have an automated strategy.

Okay...

Moving on...

Is there going to be a cost for being able to use your system Merlin?

If I can make the system pay as planned which is between $5,000 and $10,000 each month then I will lease it through TradeStation at about $1,000/month which I think is the kick ass bargain of the century.

Since I work exclusively with TradeStation, you will need to open an account with them. They ask for a minimum of $2,000 but to trade my system, you will need what is called a "Standard Lot" and thee margin they ask to trade this is around $2,600 so I would recommend a minimum of $3,000 ($10,000 if you can) to begin with.

Then at the end of the month I believe, TradeStation takes directly from the trading account of all the members who are using my trading system, the monthly fee and sends me a check. The goal of course will be that before TradeStation takes that $1,000 monthly fee from your account, that my system have worked at adding between $5 and $10K in it.

Remember, I didn't plan this for the forum members but for traders at TradeStation who usually have 10s if not 100s of 1000s of $$ in their trading account so for them, paying $1,000/month is nothing and opening up an account with a minimum of $10,000 is usually what they will do.

So if gathering this $2,600 or $3,000 minimum and that initial $1,000/month fee for my system is wayyyyy too much for you then this trading system option is NOT for you.

I know it sucks but that's the way it goes. With all this LOA research I did, if there is one thing that I learned from all this is that poor people will stay poor people until they TOTALLY reprogram their beliefs on money so that money opportunities flow. Those who will need to scrape the bottom of their bank account, load their credit cards and sell a few empty bottles to gather that $2,6000 initial deposit will usually attract a losing day or week as soon as they start and lose it all back and of course, the second they close their trading account, the market will explode with a nice move that could have made them 1000s of profit that week.

So my advice to all of you here who may not have the funds for this Elite Game of Trading would be to start a NAP to find the initial starting fund or some other money opportunities that will make you store a few 1000s of $ so that if you want to use my system one day, it won't be that hard to find the money for it.

Merlin