My First Trading System is Ready for Live Trading

May 7, 2014

I had a coaching call with my trading coach while I was in Austin. He asked a lot of questions about my backtest results and tried to find problems with it. He declared that it looks like a good one and I can start trading it. I was surprised and didn’t feel ready. It implements a short-term long strategy. That sounds weird, doesn’t it? By “long,” I mean that I’ll be buying stocks rather than selling (or shorting) them. And by “short-term,” I mean that the positions will only be open for about 5 days.

When my coach told me I could start trading my system, I said that I want to have a short system in place at the same time. This means that I want to borrow stocks from my broker and sell them with the intent to buy them back at a lower price. I feel that the stock market is in a bubble and it inevitably will come crashing down at some point. I don’t know when this will happen, but I want to be positioned to profit when it does happen. I will start working on a short system in the next week or so and trade that at the same time I trade my long system.

This week, I’m using my system to generate possible orders that I could trade. I have set up a spreadsheet to help with the calculations for the number of shares to buy and the stop-loss price. My system tells me the price to get in at. It is a price that is somewhat lower than the price the stock is currently at. Therefore, I don’t know which, if any of my orders would actually get filled until the next day.

Just going through the process of setting up the spreadsheet has been educational.It has made me think about all the additional things I’ll need to do manually after my system hands me the trades. I will need to practice doing this for a couple weeks before I will feel ready to start trading with real money. In addition, I want to practice entering orders to ensure that I don’t make mistakes during that step. I can do this without losing any money by using “paper trading.”

Because this website is not currently generating any revenue and trading will grow my wealth, I will be spending more time on my trading practice in the coming months and may not be writing anymore newsletters for a while. I want the flexibility of not having to work my day job, or just working it on a project basis. I believe that trading is the way I will accomplish this goal.

I wasn’t going to share this because past results do not guarantee future results. However, I found it encouraging and you might, too. I ran backtests of my system over a 10-year period. Once I tested out some of the parameters in the system, I ended up getting an average annual return of around 50%. And the worst drawdown was only 20%. I’m excited about getting started with trading this system while the market is still going up.

Yours in prosperity,

Sophia Hilton (A Savvy Woman)


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