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Trade Ideas

The Story of a Struggling Trader Becoming a Profitable One

I step aside here to feature, with thanks, a guest contributor, Michael Nauss for this excellent article. Please visit his YouTube page (http://www.youtube.com/bonpara) to see more ways Michael uses Trade Ideas in his routine.

Introduction

I have been using Trade Ideas since 2006 where when in university I took a trainee trading position. Back then, when the specialists ruled the market we used it to hunt large buy and sell orders sitting out there on stocks and traded around them. Also, it was great for taking advantage of the uptick rule at the time. Now that the market is a little faster and I’m a little older, I find myself constantly evolving. Thankfully, Trade Ideas has been evolving with me.
In 2014, I found myself struggling with yet another market change and I needed to change with it. I had heard about the OddsMaker, a tool that allowed anyone, including us with no programming experience, to back test any trading concept to see if it had a statistical edge. I decided to try this approach and my trading changed entirely and for the better.
It is impossible to put into words the sense of relief that I felt knowing that I had the option for every trade I take to be back tested and knowing that the odds were with me. After getting success using the OddsMaker I took the next logical progression in my mind.
After one sunny day of just watching my Trade Ideas and doing what it told me based on my back tests I thought to myself “I wish I could have a robot do this for me and go to the beach”. Well it turns out that there is a feature in Trade Ideas called ‘Brokerage Plus’ as well as from the websitewww.stocktickr.com (soon to be rereleased as an integrated Trade Ideas product:www.tradeideasjournal.com) that does just that.
In a few quick months with Trade Ideas I went from a struggling trader to a profitable one. I put the odds on my side with an algorithmic program that uses Trade Ideas to put my ideas into action each day in the market—all while I sit back and supervise.

How does it work?

Idea Generation: Summoning Ideas vs. Chasing Them

With the OddsMaker you can build your strategy analyzing any criteria into long or short term action. That being said, the vision is still human generated. I like to get my ideas from everywhere I can get my hands on; I am on YouTube, reading books, in chat rooms, and just watching the market each and every day.
The difference between looking for ideas with the OddsMaker and looking at them without is the excitement I get when the muse strikes. Before the OddsMaker, when an idea hit I would have to watch the market for weeks looking for examples that fit the mold. Even then, there are two issues that come up. The first being confirmation bias where your mind will filter out things that don't support your idea and add things in that do. The second is that without absolute confidence in your idea after a losing streak you're very likely to bail on it.

Optimization: How to Sharpen the Idea

This is the feature that I think really separates Trade Ideas from the rest. After some of my daily research, I had an idea of a continuation play where after a really bad day for a stock if the next day that stock broke support it would make sense to continue because traders are still feeling the fear from the prior day.
After the light bulb moment, I walk over to my computer and plug just that into Trade Ideas. It’s very easy to ask the program for this with built in alerts like “support break” and built in filters like “previous day change”. When running it, you get something like the equity curve below.

You can see that the image is not of an ideal strategy but with the OddsMaker you can dive in much deeper. I can then ask the system what time of day does this work best? What exactly should the overall market be doing at the time? What’s a good amount of time to hold this? What size stop loss. and so on for about 100+ filters until you find the best of what your initial idea was looking for. After all that you get an equity curve something like this.

Conclusion

I think the best part about the OddsMaker is that I can roll up my sleeves and input an idea, combine it with some hard work and come out with a profitable trading setup. Nothing replaces the trading fundamentals of hard work and disciple but regardless of if you are a discretionary trader looking to up your edge or a trader looking to build a bot to trade your ideas for you I think the OddsMaker is a much needed tool.

- David Aferiat 

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