EasyLanguage Programming - Turn Your Trading Ideas Into Money
Every trader has ideas they would like to develop and turn into money. The TradeStation programming platform is ideal for assisting you in developing your trading ideas whether you're a:
Discretionary trader - needing to develop a set of rules for your own manual trading.
Computer assisted trader - wanting the power of RadarScreen, indicators, and show-me's to find possible high probability trade set-ups for you. Next you decide which trades to execute. The computer assists with all the positions sizing and most of the exit management for you.
Automated trader - planning on using an automated strategy to do both your entries and exits.
All three of these types of traders need the power and tools that TradeStation can offer. This guide will help you to successfully develop your trading ideas for the TradeStation platform.
For strategy development, always start with your entries. Good entries are an important part of the trading edge, but remember, everything is known at the time of the entry. The current price action, volume, and support and resistance are all available for making your entry decision. Deciding on your entries is the easiest part of building a strategy, however managing your exits is more complex.
Good exit management is critical to your trading success. Exit management is difficult because you have to navigate the unknown price activity that will occur during the trade. Many traders don't explore exit strategies as fully as they should and sometimes exit management is virtually ignored. When programming your TradeStation exit management, here are several things to consider:
1. Risk: The risk side is controlled with an initial stop loss exit. After your trade has moved into a given amount of profit, consider moving the stop loss exit to a breakeven point to eliminate your risk in the trade. At this point in the trade you are trading with the market's money.
2. Profit: The profit side is handled with a variety of profit taking exits. As your strategy develops profits, move your breakeven stop to lock in more profits. A good approach is having three profit exits to take out profits at key areas.
3. Risk-Reward: Another important concept is trading with a risk-reward ratio focus. It doesn't make sense to enter into a trade that risks three times more than the amount of profit you hope to gain. If you trade this way you will need 85% of your trades to be winners in order to make money. This is a recipe for disaster, but I still see traders doing this. Applying proper risk reward is opposite to the mistake these traders are making. Good risk reward means risking no more than 1/3 of the amount of profit you anticipate making from each trade.
4. Position Sizing: Proper risk-reward management is directly tied to proper position sizing. To calculate the correct position sizing, you should first know where your support and resistance areas are for proper placement of your stop loss. Based on your stop loss risk amount, use a very conservative percent of your trading account balance and divide by the stop loss risk amount to come up with your trade quantity. This approach is called fixed risk position sizing, meaning you have a fixed risk that is the same on each trade you make. You are looking to make a profit that is several times the size of your risk per trade.
Good entries and well thought through exits that limit risk, secure profits, and monitoring your risk reward ratio, are critical to a good trading strategy. When you bring all of these EasyLanguage programming elements together in your trading strategies, that's when the TradeStation platform can really help you turn your trading ideas into money.
You want to know if your trading ideas are worth getting programmed? You can do manual strategy back testing but that is a laborious process. I recommend using the Strategy Testing Tool it makes the job of testing any trading idea simple without needing to know any EasyLanguage programming.