Learn key ideas for designing a profitable automated trading system for futures, stocks, or forex. Make money trading bonds, oil, gold, and the euro while away from the trading screen. Courses available as well as trading signals for lease.

1. HOW DO YOU DESIGN
A WINNING TRADING SYSTEM?
LEARN HOW: INFO@ONLINEFINANCEACADEMY.COM
YOU CAN MAKE MONEY TRADING WHILE DOING YOUR DAY JOB

2. IN THE NEXT SEVERAL SLIDES WE WILL SHOW YOU HOW WE
DEVELOPED OUR WINNING TRADING SYSTEMS
Key Points we will look at:
 1. How to avoid curve fitting
 2. Indicators
 3. Key parameters
 4. Optimal levels for a successful system

3. WHAT SYSTEMS VENDORS ARE RELUCTANT TO TELL YOU.
 1. The majority of trading systems will not work in real time trading
anywhere close to back-tested results.
 Why? Because all systems - to some degree - are ‘curve fit.’ This
means the developer has looked at historical data and created a
system that fits historical patterns. But genuine traders and system
developers avoid curve fitting like the plague.
 There are ways to avoid curve fitting.

4. HOW TO AVOID CURVE FITTING
 1. Don’t use a wide number of indicators with very specific
parameters. This really skews validity and reduces the number of
trades per trade signal.
 Focus on 2 to 3 key parameters and get a large sample of returns,
then whittle it down with minor refinements.
 For example: for a buy signal, filter with a low RSI going back 5 to 12
periods, and a higher RSI on a higher period setting.
 Do not try and capture every single micro trend with a bevy of entry
signals and optimization. Instead, focus on exit parameters.

5. THE SOLUTIONS: THE DATA
 1. Use a very large data set over diverse market scenarios.
 10-12 years worth of data should suffice. (At the 1 hour granularity
this is about 75K to 90K data points/bars).
 Should work in both bull and bear markets.
 Core ideas should work over similar time frames. (Example: test at
30 min. 60 min. 90 min.)

6. THE SOLUTIONS: THE INDICATORS
 1. Create your own indicators.
 The indicators most people are familiar with - or regarded highly -
do not work well. This includes MACD, moving averages,
Bollinger Bands and Stochastics.
 When you design your own indicators you will learn how to trade
better. You will also see that conventional trading wisdom is often
erroneous.

7. KEY PARAMETERS: PROFIT / LOSS RATIO
 1. There are certain limits and expectations to aim for.
 The greatest fundamental traders might have a profit/loss
ratio of around 3:1. A technical system which trades 1-50
times a week might be 1.5:1.
 Unless you are an HFT, or making dozens of trades a day,
don’t accept anything less than 1.2 : 1.

8. KEY PARAMETERS: # OF WINNERS VS LOSERS
 1. A win/loss ratio higher than 60% is rare and suggests too small a
trading sample. Anything less than 40% is highly likely to be a
unprofitable over the long term.
 A 55% winning ratio is a viable target.
 The win/loss ratio is inversely correlated with the % profit per trade.
Focus on the % profit per trade, not the win/loss ratio. This may mean a
higher drawdown, but so what! Focus on the longer term.
 Profit per trade is the most important parameter, not the annual return,
not the win/loss ratio.

9. OPTIMAL LEVELS AND MINIMUM EXPECTATIONS
 In your conditions, ensure your profit targets are about 2 times
the stop out/loss. This will help you achieve the optimal level
 When you test your system, you results should come out to a
profit/loss (profit factor) of above 1.5. Aim for this and nothing
below.
 It is statistically unreasonable to expect more than 2 times unless
you have curve-fit your code or tested too small a sample.

10. RETURNS FROM TRADING SYSTEMS WE CURRENTLY RUN

11. RETURNS FROM TRADING SYSTEMS WE HAVE DESIGNED

12. INTERPRETING THESE RESULTS
 The returns indicated in this presentation are all back-tested. While we have done rigorous back-
testing and ensured a minimum of curve fitting we do not promise that you will achieve
comparable future returns. (*official disclaimer)
 The percentage return is based on capital being full employed and use of 50% leverage. (This is
conservative by CFD/forex standards.) Practically, capital will never be fully employed and this will
lower the % return. Slippage and spread and capital have been considered in these results.
 When developing such systems one should have reasonable expectations. Are you making more
than in your current portfolio? How much effort are you expending in that effort? If you are making
over 40% per year over 10 years, you should be more than satisfied with the returns.

13. HOW YOU CAN PROFIT FROM THIS KNOWLEDGE
 1. Learn how to trade and design trading systems:
 Take a course from us: www.onlinefinanceacademy.com
 and become mentored by one of our highly experienced trader / teachers.
 2. Subscribe for signals to our trading systems
 Contact us by email at: info@onlinefinanceacademy.com
 We are currently running systems live on the following products: gold, crude oil, bonds.
 *Serious inquiries only please.