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Trading Strategy

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In trading, decisions are very important and can easily be influenced by emotion; building a trading strategy can not only reduce emotional aspect of trading, it can also give you more confidence in your decisions and at the same time lead to wiser and better investment decisions. Whether you are a short term (day trading) or long term trader, use technical analysis or fundamental analysis, creating trading strategies is an important step toward becoming a successful trader.

The central part of a trading strategy or trading system is what is called the trading rules. These rules are of different types: buy, sell, short and cover rules. For example, buy rules tell the trader whether to buy a stock or security.

Another very important benefit of developing a trading strategy is the fact that it can be easily backtested on historical data and thus the trader knows whether this trading strategy had been profitable in the past or not; in the former case, this also gives the trader more confidence in his strategy. Even though profitable backtesting result is no guarantee of future performance, the fact that a trading strategy has worked in the past is very important.


How to create trading strategies:

The process of creating a trading strategy varies largely from a trader to another. QuantShare Trading Software provides you with all the tools and plug-ins to create from scratch simple and advanced trading strategies.

trading strategy

As we already said, the main component of a trading system is its set of trading rules.

The Rules Analyzer is the perfect tool to begin with. It allows you to create, analyze and backtest simple and combinations of trading rules (using masks tool) and see how varying one parameter impacts the trading strategy performance.

The rules can be created from custom databases data or from +300 already available indicators (Much more are available in the sharing server, technical analysis and fundamental analysis rules) .
With the Genetic Algorithm plug-in, you can add hundreds and thousands of trading rules and let the artificial intelligence tool picks and chooses the best set of rules.

Once a combination of rules has been selected, you can add these to a trading strategy using the simulator tool. The next step would be to update your trading strategy's settings such as the number of maximum positions, the stop rules, the money management rules...

After backtesting your trading strategy, the simulation report show you exactly how this strategy would have behaved in the past. More than 50 metrics are displayed and of course you can create your own trading metrics.

We are not done yet; the Genetic Algorithm or PBIL algorithm can also be applied to a trading strategy to optimize rules' parameters, capital settings, money management variables...

Still not done, there are also the composite/index builder, the ranking system tool, the neural network prediction tool (You can easily add neural network indicators as rules in your trading strategies), the pivot table tool...

trading strategy


Objects: Trading Strategy
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RSI3 Box v001b 2014-02-14
by Dave W., uploaded several months ago

...Trading Strategy Development</a>...
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 Trading System 
Basic
Turn of the Month in Equity Indexes
by Brian Brown, uploaded several months ago

The turn of the month effect on stock indexes states that stock prices performs better on the first three days and the last four days of each month. The idea is based on several academic papers such as the Equity Returns at the Turn of the Month, Further Evidence on...
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Rate an item Rate an item Rate an item Rate an item Rate an item Write a review no reviews Number of downloads 40 downloads Notes Report an item
 Trading System 
Basic
Conditional Trailing Stop Exit 2013-10-18
by Dave W., uploaded several months ago

...trading strategy AFTER a condition is met. For example, the script will allow you to set a 2% trailing stop after RSI(2) > 70.

The script accepts two inputs from the user: the condition to evaluate, and the percentage trailing stop to implement once the condition is met.

Note: ...

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 Money Manag. 
Basic
RSI(3) Ranking System
by Dave W., uploaded several months ago

This ranking system based on RSI(3). The value of RSI(3) is subtracted from 100 so that lower RSI(3) values are given a higher ranking.

Larry Connors' has published some good, quantitative work showing short-term RSI() values (e.g., RSI 2, 3, 4) are good predictors of a stocks performance over the following...

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Rate an item Rate an item Rate an item Rate an item Rate an item Write a review no reviews Number of downloads 119 downloads Notes Report an item
 Ranking System 
Basic
Price Channel Trading Rules
by QuantShare, uploaded several months ago

...trading strategy into a very profitable one
How to choose which technical indicators to use in your trading system
How to Select the Best Market Indicator for your Trading System
Create Profitable Trading Strategies with Exchange Traded Funds (ETFs)
...

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 Rules 
Basic
Short Cover Simulation Indicator
by clonex, uploaded several months ago

...trading strategy that shorts a stock given the short rules you have specified and covers it given your cover rules.

The short cover simulation indicator will calculate for each bar, the average performance of trades that meet your buy/sell criteria within a specific number of past bars. For each bar, you...

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 Indicator 
Basic
Dow Jones U.S. Technology Sector Index Fund survivorship bias-free database downloader
by clonex, uploaded several months ago

...trading strategy backtesting results. You will end up buying stocks that are currently included in your reference index but are not part of that index at the time the stock was purchased. Creating a survivorship bias free database for the indices you are trading should be a very important step...
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Rate an item Rate an item Rate an item Rate an item Rate an item Write a review no reviews Number of downloads 16 downloads Notes Report an item
 Downloader 
Basic
Survivorship bias-free S&P 500 database downloader
by clonex, uploaded several months ago

...trading strategy backtesting results. You will end up buying stocks that are currently included in your reference index but are not part of that index at the time the stock was purchased. Creating a survivorship bias free database for the indices you are trading should be a very important step...
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 Downloader 
Basic
Volatility-based Position Sizing Method with Adjustable Parameters
by clonex, uploaded several months ago

...trading strategy:

First, the ratio of the historical volatility to the current trading volatility is calculated.

...

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 Money Manag. 
Basic
Stock Grade - Fundamental Analysis
by Brian Brown, uploaded several months ago

...trading strategy that buys a stock when its grade increases by more than 5%:

a = GetData('stockgrade', 'grade', LastData);
buy = perf(a, 1) > 5;
...

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 Downloader 
Basic
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Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.