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All posts by Kevin Davey

15 Price Action Patterns That Work in 2020

 Most algo traders are always on the lookout for new ideas to test and evaluate. I’m no exception.How about 15 price patterns that might form the basis of a good trading strategy?Without further ado, here they are (along with some general warnings and tips about using them)… Pattern 1 – Directional Bars and Pullback Momentum General DescriptionThis […]

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Algorithmic Trading Tip – Building Risk Protection Into Your Trading

90% of traders out there build strategies the wrong way.  How do I know that?  It shows up in the statistics – most traders lose!When most traders build a strategy, they have one goal in mind – maximizing profits.  That’s not necessarily terrible all by itself – after all, you need profits to make it […]

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Improving Your Algo Trading By Using Monte Carlo Simulation and Probability Cones

Improving Your Algo Trading By Using Monte Carlo Simulation and Probability Cones

Using Statistical Techniques To Better Your Odds Of Trading SuccessMy introduction to the world of applying statistical tools to real world situations was not a good one. I was in charge of Quality Assurance for a medium size aerospace company. Although we extensively used Statistical Process Control (SPC) on the factory floor, we now decided […]

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Dollar Stop Losses Vs. Volatility Stop Losses: Algorithmic Trading Tips

I remember when I first got into trading and algo trading. Everything was a mystery:     What kind of signals should I use for entry?     What kind of stop losses should I use?     What method of position sizing is best?The list went on and on. So much to learn!But for one of those […]

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The Ultimate Guide To Successful Algorithmic Trading

Pretty much everyone who has programmed a computer to doanything beyond outputting “Hello World” has dreamed of having a computer algorithm (algo) working tirelessly to extract money from the financial markets, be it in stocks, bitcoin, soybeans or anything else traded on an exchange.  “Programming genius, market slayer” is a phrase we’d all like to […]

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Going Live With Automation

Going live with an automated strategy is one of the coolest, but also scariest things you can do in trading. Here you are letting a computer trade with your hard earned money. Theoretically, the computer makes ALL the buying and selling decisions except for rollover trades. Many people simply can’t do it – the stress […]

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3 Huge Algo Trading Mistakes To Avoid

For most traders, algo strategy development is merely a means to an end – a necessary evil to be endured on the path to making profits. Just as spending gold is more enjoyable than panning for it, so it is with trading system development; actual trading is usually more fun than developing a trading approach.Unfortunately, […]

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Finding Out What Works, And What Doesn’t Work – Part II

In Part 1 of this series, found here, I ran a simple study of a trading system, in order to look at some of the common components (such as end of day closes, short versus long bar periods) that many system developers add to their trading system. Could some of these strategy building blocks be […]

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Finding Out What Works, And What Doesn’t Work

Many traders who try system trading have previously had difficulty at discretionary or manual trading. Most of these folks eventually recognize the benefit of trading a system with well defined rules – a system that has performed well in the past. It is nice to know a trading approach has historically worked, but as with […]

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Getting Down To Business!

Algo trading

In the previous parts of this 3-part article (see part 1 and part 2), I introduced you to algo trading, and then discussed features of algo trading, along with advantages and disadvantages.Algo trading can definitely help you compete with the “big boys,” but it is not automatically a “supertrader” creator. There is no easy way […]

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