PMKing Trading LLC
Trading Blog August 2006
***** OMG *****
 A (Usually at Least Weekly) Trading Blog August 2006
Click here for the RSS feed of this Blog or add it to your Yahoo using Add
                                       PMKing Trading Blog to My Yahoo!

If you find this Blog useful and informative then please make a donation so I know I should continue to publish it.
(I might even send you an eBook or Article ;-)

Use the Contact Us section of this site if you want to receive this Blog as an email every time it is published, or if you simply enjoy reading it and want to encourage me to continue to write it.

_______________________________________________________________________________________

 

 

blog, noun, an online journal, diary, or collection of thoughts; shortened form of web log.

 

_______________________________________________________________________________________

 

Trading System Simulation

Paul King, August 25th 2006 

Once you have a complete, positive-expectancy, robust, and tradable system, one key decision is still yet to be made, and that is how to position-size each trade to meet your objectives.  Given your parameters for desired reward and tolerable risk, how do you choose a good position-sizing level that matches your requirements?

In the latest SmartTraderTM mini-eBook I cover aspects of how simulation of the variability of results of a trading system can be used to position-size effectively, and also understand when your system is operating within "normal" parameters. 

Topics discussed include:

  • When exepectancy isn't useful
  • What to simulate
  • What results are important
  • How to match position-sizing to your objectives
  • How to check for serial dependency between trades
  • What are the other caveats of simulation

Using sample data from one of our actual trading systems, this mini-eBook takes you through all the steps necessary to simulate the variability of results and then interpret the simulation results effectively.  If you are not using simulation in your trading toolkit you are missing out on an important edge and this mini-eBook is a step-by-step guide to using simulation effectively.

Click here for more details about this latest SmartTrader eBook.

_______________________________________________________________________________________

 

Practical Position Sizing

Paul King, August 21st 2006 

Whereas exits determine the overall performance characteristics of a trading system, what kind of position-sizing strategies you choose to apply to any particular trading system determine how much cash you actually make, and whether you stay within your tolerance for risk.  Choosing the wrong position-sizing can actually turn a winning system into a losing one.  Position-sizing tells you "how big" to make a position for the entire life of a trade from start to end.

In the latest SmartTraderTM mini-eBook I cover the main types of position-sizing strategies in detail:

  • Fixed Size
  • Martingale
  • Fixed Dollar
  • Averaging Down
  • Scaling In
  • Other Factors

Using sample trading systems with identical entry and exit criteria, I demonstrate how each of the types of position-sizing strategy completely changes the performance characteristics of the trading system.  Full TradeStation EasyLanguage system code (as text at the end of eBook and as a zipped EasyLanguage  and WorskSpace archive) is included so you can see exactly how I changed the position-sizing for each system.

Overall this eBook really demonstrates which position-sizing techniques work and which don't.

Click here for more details about this latest SmartTrader eBook.

_______________________________________________________________________________________

 

Exits Are Where the Money Is

Paul King, August 18th 2006 

One "trading trap" that many traders fall into is the misconception that it is the setup and entry for a trading system or method that determine your trading performance.  In fact, the setup and entry mainly determine trade frequency, and the overall performance of the trading method depends mostly on your exit strategies.

In the latest SmartTraderTM mini-eBook I cover the four main types of exit strategies in detail:

  • Discretionary
  • Inactivity
  • Risk Management
  • Profit Protection

Using sample trading systems with identical entry criteria, I demonstrate how each of the types of exit completely changes the performance characteristics of the trading system.  Full TradeStation EasyLanguage system code (as text at the end of eBook and as a zipped EasyLanguage  and WorskSpace archive) is included so you can see exactly how I changed the exits for each system.

Overall this eBook really demonstrates what "good" exits looks like and includes some example of common techniques to avoid.  If you have been working away at finding the latest, greatest entry for successful trading, or simply want some information on what you should include in your exit strategies, this eBook should answer your questions.

Click here for more details about this latest SmartTrader eBook.

p.s. Subscribers to our 100% opt-in no-SPAM mailing list generally find out about all the new information and developments at PMKing Trading before anyone else (and may even get some special discounts on new products if I'm feeling generous :-).  If you're not subscribed to this FREE mailing list yet then what are you waiting for?  Click here.  You can always easily unsubscribe later if you don't find it useful!

_______________________________________________________________________________________

 

What Comes First, the System or the Self?

Paul King, August 14th 2006 

There is sometimes a debate about whether psychology and knowing oneself is more or less important than your trading system or method.  For me the answer is "both" but there is also third factor which is critical as well.

There are actually 3 ingredients to a successful trading recipe:

  1. A good understanding of yourself as a person and a trader.
  2. A sound knowledge of what a complete trading method looks like.
  3. The ability to match 1 with 2 to create a complete trading system that meets your objectives.

If we consider the main reasons for trading failure it can normally be attributable to the absence of one or more of the above factors.

If 1,2, and 3 are missing you have neither an objective, a good idea of how you can trade, nor a complete and consistent set of rules to guide your decision making.  Failure is almost assured (over the long-run - anyone can all be lucky over the short-run).

If you have 1, but not 2 or 3 then you may have a clear understanding of what type of trading may suit you, but not have clear objectives for risk and reward, and have inconsistent or incomplete rules to guide your decision making.  Again, failure is probable.

If you have 1 and 2, but not 3 then there is a mismatch between who you are as a trader, what you want to achieve, and how your trading system or method operates.  This is the main reason purchasing an "off the shelf black box" trading system rarely succeeds - there is no guarantee (and it is in fact unlikely) that the system will be able to suit your personality and objectives even if it is complete.  Unless the system is adaptable to your specific circumstances you will not have the confidence to trade it through the inevitable losing periods.

Individually each of the 3 factors can sometimes be tricky to come across, so finding them in mutual combination is relatively rare and that is why many traders fail.  If you can find a good mentor or educational program that can deal with 1 and 2, then you have a much better chance of achieving 3 before you run out of time, cash, and motivation.

So in conclusion knowing yourself, what a complete trading method looks like, and matching it to your objectives are all essential ingredients for successful trading.

_______________________________________________________________________________________

 

Product Review: HP iPAQ rx1955 Pocket PC

Paul King, August 10th 2006 

So my trusty Compaq iPAQ 3870 finally stopped working (the power button fell off some time ago and the non-replaceable battery holds charge for about 5 minutes now - but it is relatively ancient for pocket PC technology).  After checking around and consulting Consumer Reports I narrowed my search to the new version of my iPAQ (now by Hewlett Packard) and Dell's offering.

Since the only category that was superior on Consumer Reports for the Dell machine was 'Ease of Use' and I was familiar with iPAQ's already, I chose the iPAQ.

The (now replaceable) battery was fully charged out of the box so I didn't have much time to ponder how neat and light the new iPAQ was compared to my old model.  Wireless network connected immediately and pocket Internet Explorer and Outlook were running with no problems.

Skype instant messenger worked well and I even made a VoIP call to their test line which kind of worked but I wouldn't plan on replacing your cell phone with it.

The first problem I encountered was with the GotoMyPC viewer application - not enough memory to run it. "No problem I'll adjust the program memory" I thought. Unfortunately this feature has been removed in Microsoft Mobile 5.0.  If you plan on running any applications that require more than about 8MB, consider getting the upgraded iPAQ hx2495. Most other pocket PC apps should run fine.

The only other area I had was in the ever-challenging synchronization using ActiveSync 4.2.  Ignoring the fact that Microsoft have chosen to remove the wireless network synchronization function (don't ask me why, doh) synching eventually worked via USB and infra-red after a couple of reboots (iPAQ and PC). By version 4.2 you would think some of the main bugs would be gone.

Everything else about the iPAQ was very pleasing - the wireless network detection and range is good and battery usage is great compared to my old model (even when it was new).  If you must run RAM-hungry apps, or biometric security is a "must-have" then consider the hx2795, otherwise this entry-level iPAQ does everything it needs to do for a very reasonable $250.  A cheap and convenient "second backup" trading computer for when your main trading computer (and your backup trading computer) suddenly and unexpectedly die and you need to close all positions.

Click here to visit Amazon for your HP iPAQ rx1955.

_______________________________________________________________________________________

 

FinanceSpotlightTM, a new series of personal finance articles

Paul King, August 4th 2006 
 
Due to several requests from various people I've decided to write a series of personal finance articles that deal with the aspects of personal finance I get asked about the most.

The first one is free (with registration) and can be downloaded from the finance page here This introductory article deals with finance management basics including the following topics:

  • Financial Freedom
  • Passive Income
  • Getting Paid Multiple Times (for the same piece of work)
  • Scalable Income
  • What you can do with a spare dollar
  • Return On Investment
  • Expectancy

The first paragraph is shown below:

"The first step to successful financial management is having a tangible, well-defined objective for what you are trying to achieve.  Although your more specific objectives and goals will be more personal to you, I have found that having the objective stated below, and always working towards it, is one of the more useful steps anyone can take in getting control of their financial life."

If you read the first article and have some ideas about topics that you would like to see covered, please send me an email (or use the Contact page).

Wishing you success with your personal finances.

_______________________________________________________________________________________

 

If you find this Blog useful and informative then please make a donation so I know I should continue to publish it.
(I might even send you an eBook or Article ;-)

Click here for the RSS feed of this Blog or add it to your Yahoo using Add
                                       PMKing Trading Blog to My Yahoo!
 
Advertisements
 

 
Information and thoughts contained in this blog should not be construed as financial advice or a recommendation to enter into any type of securities, futures, or foreign exchange transaction.
 
TradeStation and EasyLanguage are registered trademarks of TradeStation Technologies, Inc.
 
Neither TradeStation Technologies nor any of its affiliates has reviewed, certified, endorsed, approved, disapproved or recommended, and neither does or will review, certify, endorse, approve, disapprove or recommend, any trading software tool that is designed to be compatible with the TradeStation Open Platform.
 
© PMKing Trading LLC 2002-2015.  Disclaimer & Other Legal Stuff.