1. DEFINE A MARKET & ECONOMIC CALENDAR
If you do not define time management rules, your trading system would open too many entries and take a series of losses. You will need to define exactly when our bot can operate the market or stay inactive.
It is important to set the period by the hour and day while your trader bot could find an opportunity on the market.
You will learn how to manage the temporality of an automated trading system.
2. IMPLEMENT MONEY MANAGEMENT
An automated trading system with a bad configuration could open a succession of entries until a fall in a margin call. It is imperative to implement safety features into your bot to decrease financial risks defining the position sizing.
You will learn how to set the number of entries that your trading system will open.
3. MEASURE THE MARKET TREND
The market trend can be bullish or bearish regarding a period and a timeframe. For example, 100 periods with a 1 minutes timeframe or 20 periods with a daily timeframe.
The without trend market is difficult to describe cause there is often a succession of small bull and bear markets.
You will compare moving averages with linear regressions to discover the best way to determine the market trend.
4. MARKET VOLATILITY PERCEPTION
The volatility is the parameter that best expresses the risk of an asset at a given moment. The measure of the volatility is straightforward, thanks to the standard deviation. The high volatile markets are often difficult to trade. Thus it is preferable to avoid them.
You will learn how to measure market volatility to avoid too volatile markets.
5. STOP LOSS AND TARGET POSITIONING
The stop loss and target setting are a major part of my trading style. The tactical approach focuses on profits and losses management.
Each closed entry would give profits strictly greater than losses, and their success rate would be greater than 50%.
You will learn how to determine the best stop loss and target position.
6. PROFITS SECURING
For the sake of robustness, a strategy must be equipped with a profit securing mechanism. This mechanism’s purpose is automatically placing a sell stop order when the latent profits are greater than a certain level.
In this way, if the price is felt before reaching the initial target, the opened position will stay a winner. (except if there is a gap or a flash crash)
You will learn the way to secure your latent profits using a profit securing mechanism.
7. TARGET OVERWRITING
When the market touches a ‘resistance’ as a price ending by 100 or a monthly pivot, we often see reflux. This reflux is sometimes deep, and at times, the market trend goes in a reversal direction.
If your target is placed a little above a major price level, you eventually should replace it with this major price in the goal to close your entry before the reversal.
You will learn how to replace a target with resistance.
I created this free guide to help you to develop your automated trading system working on Prorealtime.