How long did it take you to develop your first profitable trading system where you had complete confidence in your trading approach?
When I first started, I was desperate for a day trading solution!
If you are like me it was a lengthy process that took me about five years before I finally developed a trading system that gave me the confidence I needed to profitably trade the markets.
One of the secrets to being a profitable trader is having historical research and information developed over time. Currently, I am fortunate enough to have developed day trading systems for the last 15 years and can use that experience to see what is working in the markets.
Not many have the patience to spend the next 4 or 5 years researching strategies and then tracking them into the future to see what works.
Where can we find a five year old day trade system that hasn’t been modified and see how it has done? In February 2006, I submitted an article to Active Trader magazine for the May 2006 edition titled, “Using the TICK To Indentify the Intraday Trend”.
The strategy was designed for the E-mini S&P futures (but works on other stock indexes, stocks and ETFs) has five short entry rules and three long entry rules. A secret to trading the stock market and stock index futures is looking at the market internals such as TICK, ADVANCING ISSUES (ADV), DECLINING ISSUES (DECL).
This article reveals how strength in price action and the TICK in the first fifteen minutes of the trading day can be used to day trade on the long side and how weakness in the price and TICK in the first fifteen minutes of the trading day can be used to day trade on the short side for the day.
This strategy was developed in the Tradestation platform. I made the mistake of not trading this strategy over the last few years (studying other strategies). The other day, I re-visited this strategy and discovered how profitable it had been. I missed out on some new equity peaks but now have a walk forward test that is working on its fifth year.
The best long entry rule from that strategy is:
- If after the first 15 minutes of trading the TICK is above 500 and it hasn’t traded below -350 then get long
The best short entry rule from that strategy is:
- If after the first 15 minutes of trading the price is less than the day’s Open minus the average range of the last day’s worth of 15 minute bars and the TICK has not traded above 750, then go short.
The best exit is:
- Exit on the close or use a range based stop loss.
Be sure to test this strategy out and enjoy the process of studying the markets. Finding experienced traders that provide good information can also short cut the process.