TradeStation Programming - Turn Your Trading Ideas Into Money Making Strategies

Every trader has ideas they would like to develop and turn into money. The TradeStation programming platform is ideal for assisting you in developing your trading ideas whether you're a:

Discretionary trader - needing to develop a set of rules for your own manual trading.

Computer assisted trader - wanting the power of RadarScreen, indicators, and show-me's to identify possible trades.

Automated trader - planning on using an automated strategy to do your entries and exits.

All three of these types of traders need the power and tools that TradeStation can offer. This guide will help you to successfully develop your trading ideas for the TradeStation platform.

For strategy development, always start with your entries. Good entries are an important part of the trading edge, but remember, everything is known at the time of the entry. The current price action, volume, and support and resistance are all available for making your entry decision. Deciding on your entries is the easiest part of building a strategy, however managing your exits is more complex.

Good exit management is critical to your trading success. Exit management is difficult because you have to navigate the unknown price activity that will occur during the trade. Many traders don't explore exit strategies as fully as they should and sometimes exit management is virtually ignored. When programming your TradeStation exit management, here are several things to consider:

1. Risk: The risk side is controlled with an initial stop loss exit. After your trade has moved into a given amount of profit, consider moving the stop loss exit to a breakeven point to eliminate your risk in the trade. At this point in the trade you are trading with the market's money.

2. Profit: The profit side is handled with a variety of profit taking exits. As your strategy develops profits, move your breakeven stop to lock in more profits. A good approach is having three profit exits to take out profits at key areas of support and resistance.

3. Risk-Reward: Another important concept is trading with a risk-reward ratio focus. It doesn't make sense to enter into a trade that risks three times more than the amount of profit you hope to gain. If you trade this way you will need 85% of your trades to be winners in order to make money. This is a recipe for disaster, but I still see traders doing this. Applying proper risk reward is opposite to the mistake these traders are making. Good risk reward means risking no more than 1/3 of the amount of profit you anticipate making from each trade.

4. Position Sizing: Proper risk-reward management is directly tied to proper position sizing. To calculate the correct position sizing, you should first know where your support and resistance areas are for proper placement of your stop loss. Based on your stop loss risk amount, use a very conservative percent of your trading account balance and divide by the stop loss risk amount to come up with your trade quantity. This approach is called fixed risk position sizing, meaning you have a fixed risk that is the same on each trade you make. You are looking to make a profit that is several times the size of your risk per trade.

Good entries and well thought through exits that limit risk, secure profits, and monitor your risk reward ratio, are critical to a good trading strategy. When you bring all of these TradeStation programming elements together in your trading strategies, that's when the TradeStation platform can really help you turn your trading ideas into money.

Manual strategy testing is a laborious process, but with the Strategy Testing Tool it can become very simple as shown in this full screen HD trading video TradeStation Strategies




Mark David Johnson is a full time TradeStation Programmer, trader, and trading coach. He has personally developed over 60 strategies and over 200 indicators for the TradeStation platform. Mark's passion is to match his client's trading style with the best possible trading tools for them.

Mark started his trading career as a licensed commodity trading advisor in the late 1970s. He was offered a full time position in a medium sized futures broker in Chicago, but chose to take another career path while continuing to use the trading information for his own use. From 1990 through 2005 he did extensive amounts of trading using long term trading with the average trade position spanning from months to years long. In 2005, Mark could see the oncoming financial turmoil and liquidated 90% of his portfolio. Mark spent the next year and a half studying day trading full time, and since 2006 he has been full time trading and programming using the TradeStation platform.