Strategy Profiling
Conceptualize, Analyze, CapitalizeTM
The concept behind our strategy profiling is to find high win percentage trading opportunities using a combination of location, timing and conditional components. Then once we find them, maintain our ability to substitute, supplement, and calibrate any component within the mix to keep our edge.
With ProTradingTools, you are not locked into parameters specific to some system or strategy. You are empowered to find, leverage, improve, and challenge countless methodologies. As your trading knowledge expands from books you read and seminars you attend, you will always have a way to stress-test new scenarios for yourself. This is truly adaptation that you can never outgrow, and is what we mean when we say "Written by Traders, for Traders".
Providing tools that encourage you to gain confidence from your own intuition is our main goal. In the following paragraphs, we will enlighten you with just some of the versatility that you, as a non-programmer, can have toward developing a custom-tailored trading system for yourself.
Conceptualize
The first step is to determine what studies or indicators are readily available and the type and depth of information they can tell us. Once we know that, we can categorize them as either being a location component or a timing component. We consider conditional components to be a subset of timing. There may be more exact categories for some of them but remember that our focus is on what we can do to find the best timing and the best locations for us to engage the market.
The table on the left shows some examples that should be familiar to many traders and how they each contribute toward our agenda of time and location. Things that can tell us location can be expressed as horizontal lines, zones, cross points, and windows. Things that can tell us timing can be expressed as signals to buy, sell, or exit. They can also express caution or optimism of things to follow. Things that tell us conditions can be expressed as slope, divergence, and indicator levels.
The idea is to keep things organized and methodical for the next step. We want to be careful not to prematurely mix components across categories until we first find and optimize candidates within them. There is little reason to take 50% winning combinations when we know we can get 75% consistently.
Analyze
Second is the analytical phase, which is the fun part! This is where we integrate components within their respective class to discover combinations that optimize bias. One plan is to accumulate 5 or more optimized timing profiles on both the buy and sell side to match with optimized location areas.
Let’s begin with the idea that we are looking for timing signals, and we want to optimize a particular candlestick pattern we already feel has a high pivot tendency. We could quickly build its physical parameters in the bar profiler and immediately see where all those instances have occurred. Now we can determine from a quick scan if it really does have any bias on its own. If so, we can look at a number of factors that might improve the situation. We can experiment with staging environmental filters such as "does this profile work best out of a channel, or after a sudden move?" We can add volume to the mix to see if this or the previous bar levels make a difference. We may find that it does, but only if it is the highest volume bar within the last three bars and we have been rising on decreasing volume. It could be that this profile works best following another profile with a completely different criteria set. What is really exciting is that we could have just as easily and quickly discovered an equally optimized profile had we approached everything in reverse until we narrowed it down.
These are just some of the basic timing profiles our bar profiler can create for you in minutes. The possibilities are endless and are as unique as your time frame, chart type and combinations thereof. Best of all, you are not going to miss important information anymore and you are freed up to concentrate, focus, and plan ahead with far fewer distractions.
Capitalize
Finally, we get to the capitalization phase, which is simply gearing together our optimized timing profiles with our optimized location areas. If you did the homework correctly, the bar profile used should dictate what offset of the bar’s parameters (high, low, open or close) is best for your entry and stop. If you require tighter stops, consider profiling for smaller range bars. The important concept to remember is that winning over time is always more about defense than offense, and you must know the difference.
Simplicity is the key to longer-lasting strategies. Best practice is to lightly refine core concepts that already work most of the time. Generally, the less optimizing you have to do, the better, and the less risk you will have of curve-fitting your strategies.
ProTradingTools allows you to convey comprehensive scenarios with just a couple text characters. Experience will teach you that less is actually more and to not create signals for every event just because you can. It’s really all about the timeliness, quality, and efficient delivery of that information that keeps you ahead and focused.
