Meet the Network Moderator…

Current Core Trading Systems

The system statistics and graphs are based on the same set of data, risk and cost assumptions to keep them consistent and comparable. The same exact system rules and inputs where used for each market in the backtest.

Risk – 2% of equity risked per trade

System Inputs – Same parameters used on all markets

Slippage and commissions – $40

History – 10 years

Portfolio – AUD/USD, Corn, Cotton, EUR/USD, Feeder Cattle, Gold, Lumber, Lean Hogs, Natural Gas, Orange Juice, Palladium, RBOB Gasoline, Soybeans, Sugar, Silver, 10 year Treasury Note, U.S. Treasury Bonds and Wheat.

The Swing Machine measures the recent range of the market and enters trades when the range begins to expand. This approach attempts to keep the system flat during choppy non-directional periods and only enters a new position when the market is on the move. As you can see from the system report, it does a good job of capturing gains and avoiding losses.

Swing Machine Equity Curve

A unique system that combines support and resistance style trading with range expansion. Nothings more frustrating than buying the highs and selling the lows of a move. When trading the big breakouts it happens too often yet the risk/reward remains favorable. To minimize those false breakouts and reduce drawdowns the Hi-Lo Trend system was created. It does a great job of eliminating many of the false breakouts while still allowing the big winners. It performed beautifully during 2008 when the markets made wild swings whipsawing many good systems with losses for the year.

Hi-Lo Equity Curve

Consistently a Futures Truth Top 10 System based on 4 years of real-time performance. The performance is as strong today as ever and the system inputs have never been changed. At the heart of those returns is a trend filter to keep trades in the right direction and an exit that quickly reduces risk.

Update: Futures Truth just named Trend Weaver a Top 10 Most Consistent Trading System

Trend Weaver Equity Curve

Note: All code is fully open. Video explanations walk you through the exact rules for each of these systems while detailing the logic of the rules. Code is provided for the above systems to run with Trade Station, Trading Blox and Traders Studio.

Each of the core systems reports is based on a group of 18 commodities. You can of course trade it with more or less markets to match your account. Each of those systems could be applied to an individual market as well.

The reason I chose to show you a basket of markets is to prove that I’m not playing tricks with the numbers. By using a large sample of diversified markets, applying only one set of inputs per system and a position sizing formula to produce equal weighting for each market, the systems are forced to stand on their own. They either work or they don’t!

The other point I wanted to make is each of these systems ware able to produce huge returns while maintaining a reasonable drawdown. We each have our own tolerance for the amount of pain we can handle during a drawdown. This forces each of us to choose where to set the risk dial before trading a system. For each of the examples above I tried to keep the risk close to 1/3.

Why a Trading Network?

Everything I know about trading and trading systems I learned from others! Sure, I still had to figure out what works and what doesn’t but it’s the trading ideas and approaches to systematic trading that propelled me down the road to profitable trading.

Take Trend Weaver for example, the Futures Truth Top 10 Most Consistent system I showed you the results for, I didn’t come up with that entirely on my own!

The trend identifier for Trend Weaver was something I stumbled on in the mid 90’s while working as a commodity broker. I worked for a small broker in Dallas Texas with four other guys. I was really into TradeStation at that time which was the platform we all used in the office. The other guys only used the software for quotes and charts, I was the only one using it for creating and testing trading systems.

I was a terrible broker, I spent all my time backtesting trading systems and trading my own account. This didn’t go unnoticed by the other brokers – they were always asking me to test an idea for them or one of their clients. After a year or so of testing systems with TradeStation, I could often create the code in a matter of minutes and begin testing.

Although I had tested hundreds and hundreds of systems by this time, I still had not found the kind of systems I was looking for. Some of my systems worked okay but often with larger draw-downs than I wanted and erratic equity curves.

This all changed with a conversation I had with one of the brokers I worked with, Jeff.

Jeff told me about a conversation he had with a guy who had been using a system to trade for over 30 years. He briefly explained to Jeff a really simple trading system that first identified the trend of a market, and then entered trades in the direction of that trend.

Jeff started off by telling me the simple rule to identify the trend. He very clearly explained that to me. The rest of the system, however, he could not recall.

The conversation had taken place a long time ago and Jeff had never given serious thought to automated trading systems. Most people at that time were discretionary traders. The use of charts and a handful of indicators were about the limit of a traders tools.

I told Jeff I would work on his system that evening, I would just have to create some entry and exit rules to complete the system. I started by coding the “trend rule” (which was an aspect of trading systems I had not yet tried) it took a little longer than the typical trading systems I had worked on up to this point because it was a condition for allowing a trade rather than a standard entry or exit rule. Creating conditions to allow trades had just never occurred to me before.

After getting the filter to work I combined it with one of my favorite systems at that time, and boom… the missing piece to my trading systems fell into place – just that fast!

The draw-downs in my systems were reduced and the equity curves flattened out. Volatility-adjusted returns improved across the board – just by adding that simple trend filter!

When I showed Jeff the change in my system as a result of what he told me, he was blown away. He couldn’t believe he had been walking around with that knowledge all that time and had no idea what it was worth.

It of course changed the way I approached trading system design. It’s the basis for one of the most successful trading systems commercially available today – Trend weaver.

Over the years I have tested many different trend filters but none have been more effective than the very first one I learned all those years ago from Jeff, who learned it from an old man in a short phone call.

This sharing of knowledge is why I believe the Trading Systems Network is so important and needed. These little nuggets of gold (information) we collect along the way can either die in our memories or we can come together and share them with each other.

I just happened to be – in the right place at the right time – to learn the missing piece to my trading systems all those years ago. I was lucky.

My motivation for creating this site was not only to share what I have learned about trading over the years, but to create an exchange for information among traders.

There has never been a better time to be a trader. Computers and historical price data are easily obtained. Trading software to facilitate trading and research is easier to use than ever before. Commission costs and spreads are at the lowest they have ever been thanks to electronic trading.

You can open a trading account with a fraction of the cash needed just a few years ago. Micro FOREX lots and odd lot stock positions, combined with small transaction costs, you can literally start trading with a fraction of what it took just 10 years ago.

And now you have access to a network of traders, specific trading systems, money management and research that until now has only been available to professional traders. If you’re serious about taking the business of trading to the next level then join us in the Trading Systems Network today.