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Strategy Development - Operator Training

Strategy Development - Operator Training

Here is an article I wrote to help you understand the Strategy Development Process

What to Expect During the Strategy Development Process

You're ready to develop a brand new automated strategy; here is what the process looks like.

First, understand that a new strategy idea often does not become a finished trading strategy in one round of development. Generally the first stage of development with a new trading idea is to get the strategy entry and exits programmed to find out if the trading idea is viable or not. Another important thing this accomplishes is allowing you to see the trade entries and exits.

Start by writing down some notes. Include: (1) what symbols your strategy will trade, (2) what chart types your strategy needs to operate on, (3) names of indicator(s) your strategy will use and the default input setting, and (4) any special trading time requirements or other special requirement you might have. All the above details are vitally important parts of your strategy design.

I have found the easiest approach to getting programming done is to meet on a webinar so you can walk me through your strategy entry on your trading chart. TradeStation processes the trading chart in time sequence order from the oldest bar moving forward one bar at a time to the current bar. Time sequence order is the best way for me to get the information I need. Plan to cover a sample trade from several bars before the trade occurs. I want you to cover all the required set-up conditions to have a valid trade entry and then move forward one bar at a time covering any conditions necessary for a valid trade entry to occur, finally ending on the actual bar where your strategy trade entry is executed. I will ask questions to clarify the entry process details that I will need in order to program your strategy. After the trade entry is covered you can cover the exits required which might include a stop loss exit, profit exit, end of day exit, breakeven exit, trailing exit, etc. Basically any exit you want in your strategy.

After the webinar is done I will review the specs and figure out the required time to program your strategy. I will send you an email providing the time required multiplied by $120 per hour to give you a fixed cost to complete Stage 1 in this development process. After you receive the email and decide to move forward you can go to the web site to enter your payment. On the left hand column under "Catalog" select the "Customized Coding" link to access the shopping cart. Enter the required programming time and checkout. As soon as the payment is complete I will schedule the required time to complete your programming. Once completed, I will deliver your unlocked code since you own the intellectual property rights for your strategy code. The email will also include a workspace and trading chart already configured with your strategy and indicators.

Now you can study the trades on your chart and make sure it matches the specs we covered on the webinar. If by chance the strategy does not perform properly to match the original specs we covered during the webinar, please email me a screen shot along with a written description of what is wrong with the example. I will fix any issues at no additional costs. This completes Stage 1 of the development process.

One of the primary purposes of Stage 1 is to decide if your strategy idea is viable and worth continuing to develop. Remember finishing Stage 1 with a new trading idea does not necessarily produce a finished strategy that is ready to trade. The goal for Stage 1 is to produce a trading strategy worth continuing to polish into a tradable trading strategy.

If you overlook providing information about your strategy design and/or want alterations not discussed during the initial webinar, these changes should be saved on your list and can be addressed during a Stage 2 of the development process.

Your next step is to study the trades on your charts to see if any other rules or conditions might improve your strategy entries and/or exits to decrease your trading risk and/or increase your trading profits. After you have your Stage 2 rules listed and you are ready for stage 2 webinar then please email me to schedule the Stage 2 webinar.

I have found from working with alot of clients that Stage 1 must be the trader's own design otherwise questions arise what the trades would be just using their ideas alone. Stage 2 is where I will freely offer ideas (if you want suggestions) as to how to alter the strategy design both in regards to entries and exits, which you can then choose to incorporate into your strategy if you wish. After the stage 2 webinar is concluded, I will review the new specs and figure out the required time to program the changes for Stage 2. I will send you an email providing the time required multiplied by $120 per hour to give the cost to complete Stage 2. From this point the steps may continue to repeat if you find additionally changes are worth doing to the strategy to continue to improve it more.

Once we finish programming your code and email you the ELD file and Workspace files this video covers how to import the ELD file and Workspace files plus what you need to know about how to properly back test and verify your strategy is viable to actually trade with.

The next web page you should study is Strategy Testing - Violating These Steps Will Damage Your Account this article will cover the critically important steps you must follow during your strategy back testing process. If you skip any step it this article you might start trading with a non-viable trading strategy.