Why Trade with a System?
Study some of the tried and tested trading systems developed by Leo Q.
What separates the gambler from the casino? The odds of winning are favored to the casino. So over a long period of time, the casino wins more than the gambler. The casino is a business, while the gambler is a hobbyist.
The same core principle applies to trading. What separates the trader from the gambler are favorable odds and probabilities. The trader's edge over the gambler is the favorable statistics of their system. So over a long period of time, true traders arrive at their desired outcome a lot more often than the gambler. Consistency comes from the business approach to trading, instead of gambling.
That's why real successful traders win the game before they even take the position. They always know their statistics and their edge.
Here are some of the back-tested trading systems that I use regularly in my trading. Feel free to download the PDF file to read and study at your own leisure.
RSI Divergence ETF Swing Trading System
Pros: High probability of success ( > 80% win rate). Large percent gains for winning trades (30% or more). Very simple and non-stressful.
Cons: Each trade can take a long time (up to 2 months). Risk : Reward is usually not too impressive (1:1 most of the time)
Important Disclaimer: There is a very small possibility that leveraged ETFs/ETNs (especially 3X) could lose 80% or more in value overnight if the underlying gaps hugely due to a black swan event. These often results in termination of the instrument.
Steps:
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Identify RSI divergence on the daily chart. Must be below 30 RSI and the lower the better.
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Start positions near the low of the divergent low.
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Take three positions with increasing sizes every new divergent low
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Stop loss at 30% of full position.
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Take profit on the bounce as follows:
DRIP/GUSH Day Trading System
*Update: Since the delisting of UWT/DWT, replace UWT with USO or /CL in your intraday analysis
Day trade GUSH/DRIP with this dynamic system!
Strength: Capitalize on strong trending days and amplify profits. It's a dynamic system that allows you to adapt to sudden and unexpected events throughout the day. Option to semi-actively trade with a trailing stop loss. Option to profit both directions by scalping.
Weakness: Expect to have a significant amount of losing days. Sideways market days can often result in losses. Minimize these losses by taking profits early and more often. Trades can often take hours to fully develop.
Back Test Results (02/25/19 - 06/03/19)
Win Rate: 64%
Win/Loss ratio = 2:1
Weighted Reward/Risk ratio = at least 3:1
SPY Trend Following System
Why? Because every trader aspires to “beat the market” in the long run. According to the Dow Theory, trends persist, so it is essential for every trader to have a trend-following system. This system simply assumes the trend to continue, with an attempt to profit during bear markets.
How? The system essentially follows the SPY during bull market, avoids trading during consolidation, and takes a short position during bear markets. Since our objective is to beat the market, we will play aggressive and use leveraged ETF (UPRO) during bull markets.
Strength: When the market is strongly trending. Long bull markets yield the best results. The system uses weekly chart to capture the macro move and reduce daily noise.
Weakness: When the market is consolidating, extremely choppy, or in a transition phase between bull and bear market. The system is bull-biased and may not perform as well as expected during bear markets.
Backtest Results (Finviz)
