TMT’s Algorithm Trading Strategies
TMT’s AlgorithmTrading Strategies
It is just another way of forecasting price direction and the dynamics to get there, full stop.
A trading strategy is a set of rules. Normally composed of a set up followed by an entry-level for a long or short position. Once the market takes the strategy into the trade, it is looking for price-based triggers that tell it is right or wrong where it will exit the position.
The strategy can use a money wrapper, a set of money exits to stop loss, and to take profits. A typical strategy is not a traditional type of forecast because it does not try to predict how high or how low the market is going, and it does not predict how long it will take to get to a profit or loss. Rather a strategy tells the user that, if the strategy gets long or gets short there is a historical rate of accuracy, there is an average trade profit expectation, so that over the long term all of these average trades will add up to an overall profit.
The term System is loosely used as a synonym for a strategy, but it is not the same thing. A system is an all-encompassing set of rules, like a trading plan. However, most traders think of a strategy as if it were a system, whereas a system is closed. Like the car you buy, it only needs an oil change occasionally. So, unless you are going to convert your car into a Hot-Rod, a car is a closed system.
The grandiose idea of a market trading strategy that only needs an oil change from time to time should be replaced with a trading plan which includes various types of strategies, a hard and fast set of rules for the engagement of each for better risk control and opportunity management.
Contrary Thinker goal, since 1989, is to simply offer the finest trading systems across the widest range of markets possible and to provide these systems in the most user-friendly manner as the technology permits. In 2011 we formed a team of traders and developers to collaborate in order to produce institutional quality systems; and we have.
Contrary Thinker methods are 100% price based including volatility data. It assumes that a study of the markets themselves can provide an objective quantifiable basis for anticipating future prices and market dynamics.
When using a technical approach to trading / investing there is no reason to “speculate” or “forecast” on what a news event will be or how the market will react to the news event over any time span. Rather, you just let the strategy take you into the trade.
The market does not care about your opinion or your resultant profit or loss; and the market is always right.
Many traders prefer using a system because of the rigorous testing involved in their development. They also appreciate the fact that a system may help to eliminate some of the negative impacts associated with human error and emotions.
Furthermore, traders may prefer automated trading for its convenience and increased freedom over time, the ability to multi-task, and trade more markets. You personally may find that you prefer the system’s trading with automation for these same reasons.
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Technology-enabled collaboration, the collective mind makes traders smarter.
Jack F. Cahn, CMT