Design and Chart Your Indicators

WHERE TO GET IDEAS
Where do you get ideas for strategies? There are numerous sources, including
seminars, books, newsletters, friends, and strategy purchases. I've found that most
good trading ideas are counter-intuitive. The techniques that usually make money
seem to go against basic human nature, just like managing a strategy forces you to
keep trading against your usual judgement and human nature to be successful. The
reason for this is that most people look for ideas that feel good and make sense. If
the ideas that made sense and felt good to trade worked, everyone would make
money, and we know they don’t. It is finding unique ideas and using common
techniques in different and creative ways that will make you a successful trader.

BOOKS AND MAGAZINES
Trading books are a good source of ideas। There are always books available that
describe a bunch of new or improved indicators and show how to use them. I am
always skeptical about the “how to” part of the book, but it is a great place to
start. I like to use indicators in my own way, but I usually chart the indicator and
test it as the author has suggested. This inevitably gives me a starting point for a
whole slew of ideas from which to do my own research.
Magazines are another great place to find ideas. There are several good magazines
for commodity traders and some for stock traders.

THE इन्तेरने
There is a lot of information about trading both stocks and futures on the
Internet. If you are not hooked up to the Internet, you should be. If it isn’t
already, the Internet will soon be the most extensive resource for trading
information.
PURCHASE A STRATEGY
Yes, you also can purchase a strategy. They are always available. You can find
them in the magazine classifieds, and if you have been trading for any length of
time, get pitches for strategies in direct mail. And of course there are the Omega
Research Solution Providers, who provide strategies and indicators specifically for
TradeStation। So how do we sort through these?

Strategy purchases are a valid way to get ideas, if, and only if, the strategy code
itself is disclosed. If the code is not disclosed, you really are at the mercy of the
strategy designer.
The important thing to remember about purchasing another person’s strategy is
that you are also buying all of that person’s personal decisions about risk. You are
buying a strategy designed to take into account all of another person’s
psychological quirks and decisions about how trades should be made. They have
made decisions as to how many losers in a row are acceptable, how big a
drawdown is reasonable, what percentage profitable trades are acceptable to him,
not you. You are buying his strategy type and his decisions about what is the best
way to trade it.
Unless you are positive that your psychological make-up is very similar to that of
the individual who designed the strategy, you are bound to have a problem trading
that strategy. I have talked to many traders who have purchased profitable
strategies but have been unable to trade them.
I purchase strategies for ideas. If the strategy itself is a black box, that is the
strategy and its code is not disclosed, I simply refuse to buy it unless the developer
can give me enough information so that I can be sure it meets my criteria. For
instance, is it possible that this strategy could miss a big move? I also insist on
seeing a historical track record in TradeStation format before I will consider
buying a strategy. I want to make sure the Performance Summary reflects
something that I will be able to trade. I will not trade anything that I do not
completely, totally and thoroughly understand.

SEMINAR
Going to seminars given by individuals or even to the mega-seminars with a whole
group of gurus is always fun. One or two good ideas are worth the price of
admission. Seminars are also fun because you get to meet other traders and
bounce ideas around with them. Many traders I know go to seminars more for the
camaraderie and discussions with other traders than for the seminar itself.
One of my favorite places to get ideas is a Larry Williams4 seminar. They are
loaded with TradeStation code and strategy ideas. The idea per dollar ratio is the
highest that I have found anywhere.