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Since I have long realized that the best way to learn something is to teach what one already knows. I will be delivering a series of lectures that explains how to build a business around securities trading. The lectures will start at a beginners level, introducing basic concepts about the workings of the financial markets. I will then continue to technical analysis of price action. This will be followed by examples of complete trading systems. The emphasis of the lectures will be on implementing computer algorithms for the material learned. The lectures will continue and evolve until a system has been designed, implemented, and tested. Graduation will consist of going live and perform real trades with the program. I am willing to take the risk, information about the results will be shared with the group.

When trading any kind of security, be it stocks, currency, or futures, one must decide if the price action is in one of three states, going up, going down, or staying relatively unchanged. These decisions are facilitated by the use of technical indicators, which analyze the previous price action and attempt to forecast what the future action is going to be.

More than an accurate price forecast is necessary before attempting to enter the financial markets. A trading system should have a clearly defined exit criteria, and also, allocate the appropriate amount of capital to the trade. Those are the three most important components of a trading system: a clearly defined entry criteria, a clearly defined exit criteria that will capture gains and limit losses, and a sensible capital allocation system that will allow the average of winning and losing trades to be positive.

People attempting to trade the markets are also faced with perhaps the most difficult task. Having the discipline to trust the system being traded will be profitable over the long run, despite ocassional losses. Tiredness is also a factor, a good system is a boring system, good trading becomes boring trading. Eventually, the trader looses concentration and begins to make mistakes. Another factor is the amount of time people are able to devote to trading. Sometimes, opportunities arise at inconvenient hours.

Automation through a computer program as a way to merge a good trading system with an emotionless trading entity. The resulting program will be able to watch the markets for as long as they are open, objectively analyze the price action, determine high probabilty entry points, allocate the correct amount of capital to each trade, and exit the trade when a limit for a loss has been reached, or the profit potential has been realized.

Developing such a program is done in stages. The first stage is to procure historical data and build a simulator which allows a trading system to be evaluated with old data and simulated capital. Then, trading systems are implemented, refined, and optimized. A profitable system is selected. Lastly, an interface is built to connect the trading system to the quote provider and the order taking systems.

Busineses fail because of: lack of a sound business plan, lack of knowledge, not enough capitalization, and lack of discipline. I will address each one of these points in the lectures so that in the end, a complete and working system is built.

I am thinking of hosting the lectures in a classroom in the Computer Science or Computer Engineering buildings on Fridays, at around 6:00pm. This time should be good for most people, although I need to find out if it actually works for CS/CE students. All I need in the room is a projector so I can hook up a laptop to deliver the content from there. As interested people attend and bring computers of their own, we can have coding sessions later.

The lectures of course will be free, and I will be providing pizza and sodas for the meetings for a hungry audience is not a good one.

I will soon be posting flyers and announcing the lectures through clubs and professors.

Thanks,

-Alejandro Simon (alejandro.simon (at) gmail (dot) com)

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Welcome to 4XLab.NET