Posted by: Babu Suresh | April 1, 2012

My Day Trading Systems, A Comparison

Hope the weekend is going well.

I am presenting here various trading systems I have used in the past and compare them with my “Hull Moving Average (HMA) Bollinger Bands Day Trading System”.

My first trading system:

EMAs and RSI Trend Trading System

EMA Trading System

My coach, one of the top traders in my city, spent just 10 minutes over the phone and another 10 minutes in person to teach me this simple but powerful trend trading system way back in 2005 to trade MCX Gold Futures. To his utter disbelief, I tripled my capital in under 100 days and the same I lost in less than 30 days.

To recall, out of the total number of trades traded during those 100 days, I had lost only my first 2 trades and rest were all winners; most of them were position trades. The total wipe out was primarily due to over confidence but not due to the system. That was the first lesson I learned as a trader.

The only drawback of this system that I know of is drawdown, other than it is one of the best trend trading systems. I have mentioned in the chart itself the EMA parameters.

My second trading system

When I stumbled on Ninjatrader, I started learning coding of indicators from my close friend from Mumbai and also from Ninjatrader forums. I developed my own indicator for 4 MA Crossing with changing background and bar colors to help me get better visual effects, but at that time I didn’t have live access to Indian stocks and the whole exercise was meant for forex futures and mini-russell 2000 index futures.

4 MA Crossing Day Trading System

MA Crossing Trading System

The main drawbacks of this system, the usual drawdown issues and most importantly can not be replicated in charting software available in India, at least to my knowledge. I have used IRIS from Spider software since 2006 –  the worst in service; used Falcon from Reliable –  the best in service and the price but slightly cumbersome software. Both have no features to create custom indicators because both are more or less same software with same features.

My third trading system

Finally, when I got the live feed of NSE subjects for Ninjatrader, after couple of months of trading I decided it’s  high time I had developed a system which would help me overcome my major drawdown problem and at the same time, the system should be simple, use known indicators, remove whipsaws and should be replicable to other charting software such as Amibroker in the event of losing Ninjatrader feed.

Although I had used Hull Moving Average (HMA) in MT4, I had not spent much time to understand the nuances of it and same was the case with Bollinger bands. After testing various combinations of numbers, I narrowed down to 26 for HMA and the most unusual and unheard of combination, to my knowledge, for Bollinger Bands – 14 MA and Standard Deviation – 0.26. During the entire period of experimentation, I had to face and accept several losing trades because I don’t believe in testing a system in demo account. It did take some time to establish the connection between me and my system but ultimately it was worth it.

Hull Moving Average (HMA) – Bollinger Bands Day Trading System

HMA BB Trading System

HMA Bollinger Bands Trading System is very much a trend and discretionary trading system similar to my other trading systems but my main issue of drawdown has largely been overcome.

As far as the drawbacks of this system, it may not be suitable for all the time frames, best suited for any time frame below 30 minutes. Another notable drawback will be, not all the charting software and live online streaming charts will have Hull Moving Average (HMA) and will allow Bollinger Bands Standard Deviation to be configured below 1.

That’s it for now.

Healthy And Wealthy Weekend

Healthy And Wealthy Trading

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