Process Based Trading

In a recent webinar, I shared that day trading is a very specialized form of trading. Many traders don't really understand how trading is specialized and how the skills required to excel in one form of specialization are different from other forms.  AlphaReveal, our flagship tape reading software, was designed especially for Process Based trading. Process based trading is a form of trading that isn't based on pre-set rules nor even trying to identify specific setups. Instead, it is based on a series of processes that a trader performs in order to understand the market at an intimate level and from that processing is able to weigh where the market is going "next" at a higher probability then chance. Process based trading is all about the performance. It is very involved and those who reach the top levels will prefer to do it as much for the experience as the money.

Another form of trading that works well with our software is Systematic Trading. Systematic trading involves some pre-determined rules or conditions for entry. These rules may even be fully programmed into a trading system. The trader combines the knowledge of these historic probabilities with an active engagement with the market. The trader is primarily looking to weigh whether he sees any evidence that the historical pattern is actually playing out in real time using his real-time read of the market.

We find that a mixed program of process based and systematic trading work very well together. Systematic trading is generally "less involved" and requires less energy then process based trading. Strong systematic strategies will often trade at a slower frequency and be very selective. Strong process based traders will be able to capitalize on a wider variety of markets and can trade more frequently. In general, combining high performance trading methods with lower performance demanding trading methods work well to complement each other.

Many traders will find our platform invaluable whether they are involved in either process or systematic trading -- or both.

Wednesday, February 27, 2013 6:40:00 PM Categories: education


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Risk Disclosure:

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure:

Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.