Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

How to correctly use volume in your trading

First, if you are looking for a nice volume indicator that identifies key turning points in the market, check out the work from cory on the forum.  He has created the "VolumeStop" indicator, and in about one months time his v2 and v3 of the indicator have received about 500 downloads.  It's popular because it works well :)



Download link:
http://forum.bigmiketrading.com/free_downloads/ninjatrader/indicators/147-download.html?view

Second, whether you're looking for hand holding and are just getting started with Volume, or you want a deep insight and analysis of applying volume to your trading, you should check out the thread by cunparis.  Cunparis is trading with a minimal set of indicators, and let me tell you -- that is the best way to trade.  You can learn a lot from this thread, so go check it out and get involved today.

Here are a couple of screen shots from his thread:






Here is the link to the thread.  Get involved today and learn something incredibly useful:
http://forum.bigmiketrading.com/general-discussion/634-how-use-volume-your-trading.html


Mike

Need 5+ years of historical ES tick data?

If you are in the market for over five years of historical tick data for the ES (S&P 500 e-mini), then head over to our VIP section on the forum.  You can download it there for free (if you are a VIP member).

On a side note, if you're wanting to split the cost of some historical tick data for CL (Crude Oil futures), drop me a line on the VIP forum.  We're looking for people to split the cost.  I only have about six months worth and am looking for a few years.

http://forum.bigmiketrading.com/elite-circle/

Mike

Creating a successful automated trading strategy

I have my opinions on how to create a successful automated trading strategy. My experiences form my opinions.

But I'd like to once again invite you to share your opinions and experiences. I say once again, because back on my blog a few months ago there was a lively discussing on this topic, but now that the forum is in-place this is a much better way to share our ideas and theories on the subject.





So here is my list of initial questions. Please share your thoughts. Some of these questions are generalized. Some are specific. I think all are important.

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  1. How many strategies have you created?
  2. Of those, how many would you classify as profitable?
  3. Of the ones you classified as profitable, how do you define profitability? How long of a period did you trade it cash before deciding it was profitable?
  4. How many strategies have you created in which you initially thought they were very profitable, but later discovered they were not (ie: curve fitted).
  5. Do you prefer to trade discretionary, mechanical, or automated?
  6. How many trades do you require in a backtest in order to feel the results are not curve fitted? (ie: 500 trades)
  7. How much historical data do you require in order to feel the results are not curve fitted? (ie: 3 months, or 3 years, etc)
  8. Percentage wise, how much of a draw down is acceptable when compared to total net profit? (ie: if net profit is 1,000 and draw down is 100 that would be 10%)
  9. What other criteria do your strategies need to meet in order for you to feel they are not curve fitted?
  10. Do your strategies rely on traditional indicators such as Moving Averages, Stochastics, CCI, Bollinger Bands, etc?
  11. Do your strategies rely on price action such as higher highs, lower lows, double tops/bottoms, pivots, day highs/lows, opening range breakouts, etc?
  12. Do your strategies have pre-defined stops in targets (ie: 8 ticks)? Or do they use a variable dynamic such as ATR or Standard Deviation? Or do you have no pre-defined limit and you exit a trade solely based on something from item #10 or #11 telling you to do so?
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For my answers to the above, you'll need to read the forum post.  I'd also like to hear from you, so please reply on the forum!

The discussion begins here:
http://forum.bigmiketrading.com/general-discussion/683-creating-successful-automated-trading-strategy.html

Mike