Tim Plummer

One of the most important things I learned when creating algorithms is you need to learn to fail fast and optimise. There are a number of different platforms out there, and I am sure there is strong debate on what is best ,but for a new starter wanting to get into this space and try out some ideas before investing a significant amount of money I would look to ProRealTime.com. The platform is connected to some major brokers and has a very clean and clear platform design where you can get a huge amount of metrics from your backtests on code that is quite easy (compared to other platforms) to write. They even have a low/no code feature where you can try some basic strategies, optimise and visualise the backtest results.

Technical analysis for equities can be very different compared to how it would be applied FX and indices. One of the most important points is that Equity traders will derive an incredible amount of value from correlation analysis. An example of this would be looking at the correlation of stocks that are constituents of a certain industry segment of an index (such as the Dow Jones) and use this information to exploit market inefficiences from Dividend news and other special events.

A quote learned when on a trading floor that will always remain true; The 3 most important aspects of trading are as follows; 1. Risk Management 2. Risk Management 3. Risk Management When trading you always have to understand your ROI on every trade and have strict conditions and criteria to enter and exit trades. Combined with this knowing when and why to trade is all about your trading strategy and unless you are using algorithms to manage risk then the psychology of trading becomes equally if not more important. Trading when you are ‘in the zone’ or inversely having a bad day can have huge impact on your performance. Some fantastic books out there that can help understand this topic such as ‘The Trading Athlete’

One of the greatest issues with backtesting is it misses out on one major element; Slippage. Slippage is where you either open or close a trade, but the price you click isnt the price you get. When there is some major news being released or a significant price level has been breached then you are likely to observe slippage. This means if you are not using a tick by tick timeframe then it is likely your backtest is going to be showing a very optimistic view.

There are typically 5 indicators that are used by 80-90% of traders. This has been the same across multiple brokers I have worked at. - Simple Moving Averages (SMA’s) - MACD - Stochastics - RSI - Bollinger Bands A special mention needs to be made for Pivot points and Fibonacci retracements, as they are seen as indicators but classed by many brokers and platforms as drawing tools. There are however well over 100 other indicators out there. Some people go as far as building their own but my advice is always to start with the basics and make sure you are using the right indicator for the type of market you are trading and the type of trader you are. You don’t even need to use indicators, some traders don’t even use charts!

When setting yourself up for a trade, either as a one off or if you are a full time trader, it is always important to get what is referred to as ‘multi timeframe perspective’. Start by looking at the longer term timeframes and then increase the granularity. You are likely to discover different timeframes contradict each other. If you see what looks like a short term buy opportunity on say the 5 minute timeframe, but a sell on say the 1 week timeframe, then you may want to reduce your price targets. When looking at choosing what timeframe you will focus most your analysis on my experience has shown it should be how long you plan to hold the trade for. A scalper (very short term trader) will typically use a very small timeframe to match.