Which Algorithm Builder framework for you?
Trading smart vs trading dumb
✋✋ We included all of our knowledge/experience in our frameworks.
They're all listed in the link just above
After years in the making, we asked to a few beginners traders ("newbies") to try them out for a few months.
They cannot go back to their previous unefficient trading style:
🔸 checking the social medias and news constantly.
🔸 looking for narratives/reasons to explain every price movement.
🔸 visually check for all sub-signals of their system.
Imagine you must wait for a convergence of 3 different indicators before making any trading decision.
Those generally set 3+ alerts per opportunity, and ends up being exhausted physically and mentally before the end of the day.
Now imagine the same scenario with 6 indicators per opportunity.
A human can't possibly monitor many assets and many things at once.
🔸 Subjectivity. Oh boy... this one is a real b*tch...
Traders lose because they identify a pattern/not correctly assess their risk and supports-resistances.
Basically they analyze the opportunity only and ignored where they could go wrong.
When someone doesn't know he/she doesn't know - the outcome can be predicted with 100% accuracy.
🙋♂️ New trader: "YES but I made 10000% in 2 months".
We reply this "easy earnt, easy go". Money earnt too fast is often given back because the lucky traders don't know how to keep it.
Let's think about the crypto temporary millionaires from 2017. They got filthy rich and ended up losing most of their gains because of terrible trading habits.
Let's think about all rappers/sport athletes earning hundreds of millions - years later becoming literally poors.
✋ And cumulated fatigue leads to poor trading decisions.
We're Algorithm trading fanatics because we are humans too. We experience during every trading day emotions/fatigue/boredom/FOMO/Fear - every day is a challenge but, it DOES NOT need to be a TOTAL PAIN everytime we trade.
We make our trading easier with:
🔸 less decisions
🔸 less things to check
🔸 removing the news/twitter => your charts are your only friend you need (and us of course)
🔸 LESS FATIGUE.
Each decision activates our brain.
Cumulating the decisions is exhausting and causes brain/physique fatigue.
🔸 clear entries/exits.
You have access to the same charts than us guys.
The entries are those triangles and the exits could be either the BIG timeframes supports/resistances or the hard exits.
Our trading really improved when we understood that human brains aren't made to quantify risk effectively.
Risk is a subjective notion - Two traders can take the same trade but see a different Risk.
The hard exit is our customary trailing stop-loss and has immense advantages:
🔸 not losing too much if invalidated (which is different from being stopped out)
🔸 it's very rare to get stopped out. We get invalidated before (the slap in the face)
🔸 allow to take many opportunities giving a sense of "security" to the users.
My mentors used to say "New traders are obsessed with profit. Experienced traders are obsessed with risk".
We are quantitative trading geeks constantly looking to reduce our risks when trading but using algoritmic methods. (So geek that our founder Daveatt is writing this article on December 31st...)
✋ They're included in our frameworks so that our subscribers can only focus on the trading and learning our trading method.
We didn't make trading "easy" but easier than anything we've/you've seen offered elsewhere.
Those features are included in all of our BEST Algo Builder frameworks.
Leverage isn't safe whatever the trading strategy.
Leverage increases disproportionally the risk compared to the available opportunity.
Leverage 2 does increase the risk by 2 but the opportunity won't be multiplied by 2. Mostly because the risk-reward is subjective and often wrongly calculated by new traders.
It would be in case the analysis is good in the first place. Assuming those analysis are made by experienced traders, then leverage make sense.
Social media want to make us believe that leveraging X25/X50/X100 is normal.
Telling you right the hell now... don't do it to such extent.
✋New traders are encouraged to stay away from high leverage (or even leverage at all), we're not aware of traders winning using leverage across all markets.
It's extremely bad practice - you'll get a few lucky trades... then you'll give it all back as you'll get used to increase your position sizing/leverage after each win.
And what follows isn't pretty and unfortunately predictable.
🙋♂️ New trader: "YES Dave but you're saying this because probably you lost with using leverage".
Answer: YES and that's totally true!. That's why I keep my leverage low as it has a terrible impact on my stress management.
Every traders going above 2-4X leverage get liquidated in a few weeks/months. Maybe we're the only ones saying that ... and we might come out as "crazy" but deep down you know:
🔸 You stress like crazy even with leverage 2-3
🔸 You commit more mistakes and they're usually really dumb
🔸 You lost a tons of money because leverage made you take decisions you wouldn't taken otherwise.
🔸 Our mind isn't made to handle that stress caused by leverage.
No human can prevent "monkey" trade decisions when the stakes are too high (relatively to one's capital and trading experience).
Are all markets manipulated?
Hell YES they are and only fools think they aren't !!!. We have to be aware of that when trading.
Crypto isn't the only manipulated market.
That's why we cannot automate 100% blindly our trades as anything can happen at any moment.
By the way, most of this 100% automation/backtest non-sense is coming from the education provided by brokers.
Should make you think what kind of knowledge those wanting you to lose quick will share with you.
Your safebelts is your risk management and consistency in following simple but strict rules.
✋Those blaming the casino for their losses chose the path of blaming someone else then themselves
✋✋✋ Trading is about figuring out risk management rules to move with the whales and get out with them.
How many Stop Loss per day per asset class?
Not all trades and even days are winners.
Even if the hard exits are protecting us, anything can happen and there are days that shouldn't be traded at all.
Unfortunately, we cannot know in advance when it's going to be a day of boring range or giant stop-loss chasing through hundreds of pips scam wicks.
We are logical chosing when to trade obviously but even supposedly "good" trading days aren't always "good".
My personal sweet spot is around 3 stop losses per trading session per asset class.
A session is for me morning or afternoon.
If stopped out 3 times on Indices for example, I allow myself to continue on another market if my psychology is still not yet completely destroyed 😃.
🔸 This is the best tool we ever made.
This framework is precious to us and we're sharing it because it's just too great to not be shared 😃
🔸 If you're unsure which asset class to trade. The answer is INDICES.
🔸 If you commit too many mistakes (due to lack of attention, lack of risk and trade management, lack of experience) => GO INDICES.
🔸 The Indices framework gives the fundations to learn a wonderful trading method and improving youself as a trader.
🔸 Even the experimented traders will enjoy it as everyone is looking for such a algorithmic "noise removal" system.
We explained on our forum why we think Indices is for everyone (access available for logged-in users only).
Regardless of the time/capital you can dedicate per trading session, the indices/indexes offer an almost constant flow of volatility and opportunities.
When do you really suggest someone should use it?
Those profiles are really encouraged to go with the Indices first and foremost:
🔸 traders with low capital
🔸 traders with low risk appetite
🔸 traders with not much time per day (because of family/work/life/...)
🔸 traders who are losing trading and need a system cutting out the "crap" out there.
🔸 traders looking for more comfort in their trading
🔸 traders looking for a steady way to reach about 200/400 pips (also called points) profit per day (assuming our trading method shared with our trial and paid subscribers is religiously respected).
🔸 traders who aren't making the few hundreds pips per day with Indices are encouraged to stick with it for their Intraday trading (assuming one can monitor/manage those trades obviously)
It can be complemented with our SWING frameworks (i.e Stocks Options trading)
We made it as simple as possible so don't worry - even the beginners can master it.
We are commited to make you enjoying the ride with us.
We're active in the forums + LIVE coaching to answer your questions.
However, it requires some practice, interacting with us, and reading the content reserved to our subscribers
🔸 What makes an Indices/Index? Answer: Stocks options being company shares.
Stocks are quite correlated to our favorite asset class then.
Although, they're not as volatile than the indices and more subject to fundamental news.
🔸 Stating again that we absolutely don't care about fundamental analysis or whatever news could come our way.
They're mostly spread out by the SMART MONEY for us to get liquidated.
In case, the signal is wrong... well... we're invalidated with a small loss that any capital/trader can stomach.
🔸 Our Best Algorithm Builder for Stocks trading is made for international stocks, options, futures.
Stocks across countries shared the same price action characteristics - hence our system design for this price action is made for most of the tradable stocks.
🔸 This framework has to be used with an hourly timeframe.
Shouldn't give more than 2-3 signals per month per stock. This is a great SWING system we use in parallel of:
- our intraday trading (on Indices ^^)
- a side activity (job, family, life) as each signal let enough time to prepare.
- an intraday model like our Algorithm Builder Indices framework
Which stocks? Which countries?
All stocks shared the same price action. In the USA, we agreed it's impossible to monitor 7000+ US stocks (at the time of this guide has been written on December 31st).
We go where it's hot/we see some hype and those past few months were mostly about:
- Tech stocks (APPL, GOOGL, TSLA, ..)
- Cannabis stocks (TLRY, GNRF, ..)
- Alcohol stocks (SBES, ..)
- US Penny stocks (stocks worth less than 5 USD.
The Penny stocks market is extremely inefficient. As such, the opportunities to be made are extremely rewarding - of course, big reward means bigger risk.
🔸 Our Stocks framework is compatible with all the above.
🔸 When checking social media, we mean looking at the most popular stocks, those very hyped, using specific screeners.
For US stocks, we use that one Gambiste Stocks rating.
TradingView offers a cool screener for Stocks also.
There are plenty other screeners out there for all asset classes. A trader must know which filters to set and what to look for.
In the social media era, guys with a lot of followers are moving the markets.
🔸 Penny Stocks: our strategy is very similar with crypto altcoins here.
We follow a few penny stocks/US stocks gurus, when they share their trades on Twitter, then we check our Algo framework if a signal is already there and if we can get in.
Otherwise, we set our alerts to capture any upcoming opportunity
✋ Why is it working?
Because, those gurus have very large audience and bidding massively as a community in low volume stocks which may have an influence on the price action short/long term.
This is the market inefficiency we talked about earlier
Don't blame the players, blame the game - Barney Stinson
🔸 Cannabis/Biotech/Super Hyped stock sectors: those are super hyped also. Same process as Penny stocks. Looking at screeners for those tweeted/instagramed/facebooked (making up words here) a lot and then confirming with the algo builder for the entry.
✋ Those hyped sectors may or may not change in the future. No one knows.
Traders only need to look at the right information/screeners/trading method.
🔸 Intraday model based on 5-minutes chart.
🔸 Made for all brokers and all crypto assets with enough volume. (excluding most of the very low caps crypto on silly brokers - those are generally pure scams).
🔸 Our take on this market: it's an obvious scam, even Bitcoin.
Not talking about the technology but about:
- the ways price action behaves and quoting 24/7
- the constant flow of useless information provided by the brokers and gurus (sponsored by the brokers)
- most assets since 2018 range 95% of the time and scam pump at times when everyone is off (nights, weekends, holidays, ...). Please tell me if I'm wrong but I don't think so as we keep monitoring BTC and others every day.
🔸 Due to the scam nature of this market, we have to reduce our risk. That's why we chose a 5-minutes chart and a unique configuration for those specific assets.
We're pretty happy with the signals on the TOP 15 cryptocurrencies (based on market capitalization).
At the time of this article (December 31st), we clealy prefer volatile assets such as Indices/Stocks/Commodities and Forex.
Should we ever trade crypto yet?
Such a tough question... :)
As a reminder, if you're losing currently with your trading and want a system to learn the basics of risk/trade management working for all asset classes, we clearly mentioned that Indices is the way to go.
And better doing that on volatile assets (such as Indices/Index ^^).
With thousands of available crypto assets and dozens new appearing every day, the market is designed to spam us with loads of useless assets/info confusing the non-experienced traders.
Crypto may or may not become like 2017 again... no one knows...but we know that other assets right now (December 31st time of writing) are way more traded/hyped that those assets... and traders looks for volatiliy even if that means throwing away our strong beliefs.
✋ To conclude here. Our Crypto framework works extremely well but our take on any trading system on crypto is the follwing:
🔸 Money is easier made on Indices/Stocks/Forex/Commodies (like way easier).
We're looking for volatility because that's the easier trading.
Though, even if don't like the market, we made the best crypto algorithmic for retail traders..
We didn't see yet any other model controlling the risk so well for the crypto market.
Our trading method really applies here for crypto as it's a riskier market.
✋ Our favorite crypto asset is Bitcoin from a technology and trading perspective.
🔸🔸🔸 Many new traders jumped into trading after the 2017 crypto bull run and are now stucked with their strong beliefs + holding/trading untradable low-caps sh*t coins.
🔸 Most of the crypto twitter influencers are sponsored by brokers and by you (through advertising revenus) to shill and post their trades.
Their audience basically finance their shilling through advertising/ref links/click baits.
The goal is to make you believe this is an "easy" market and you're the only ones not making any money with it.
🔸 Intraday model based on a 5-minutes chart also.
🔸 Can be used on top of the Indices framework.
🔸 Gives 2-4 trades per FX pair per day in average
Which pairs? How to select the right ones?
Any pair involving a Major (EUR - USD - JPY - GBP - AUD - NZD) works best.
They have better daily trading volume and as such.... more volatility.
This isn't rocket science. We go where the the volatility (=money) goes
No trading model would work on non-volatile assets - they're just not tradable. And by the time we'll see a good move, most will be already liquidated.
And they'll stay in the game to catch the next "pump".
The brokers really poorly educated (on purpose) their traders...
Alright let's get into it for real.
The recommendations given for Stocks/Indices apply here also.
If you're not winning with Indices, stay with Indices. (Only a recommendation as this is the fastest way to learn the basics or trading).
FX pairs can be monitored through screener and a lot are tradable. Maybe too much most would say.
You can select a 2-4 pairs that match your timezone (AUD - NZD - JPY for those in ASIA perhaps) and stick to those pairs only.
We all know what are the most volatile Forex pais and why.
EUR/USD, GBP/USD, EUR/JPY, USD/JPY, ... because those involve major currencies with a lot of tradable volume and speculations - which is good for volatility.
🔸 Mostly tested on metals mostly like Gold and Silver
🔸 We use the Algorithm Builder Stocks for SWING trading also for Commodities
🔸 Timeframe used is 1 hour
🔸 Give a few trades per month per asset.
🔸 Requires a bigger Risk/SL appetite due to the high timeframe used.