What is need for Trading Software?

Trading is one of the most popular activities in which people are doing these days to earn money, start a new career or even just supplement their income. Some even consider trading and investing a passive source of income – which of course requires some knowledge of the market. For someone who has already been trading and trying their luck, it can still be better to keep pushing forward without help. But for someone new to the trading market or the struggling trader, that person surely needs additional help to trade the right way.

Finally, there is a software to assist. A tool like a Build Alpha can help them facilitate trading ideas and better understand the financial outcomes, such as risk and reward, drawdown, position-sizing, etc. It can also be used on any market type such as futures, stocks, currencies, bonds and even crypto currencies. Dealing in all these markets as a primary market or secondary market is made easier with the help of software. Comparing the same with the other options like taking the help of gurus or trading ‘experts’ leads to massive misinformation, account loss, and brokerage cost. These firms and ‘educators’ present their buyers with buying ideas that have not been tested or on the behalf of other clients that want to take the other side.

BuildAlpha

Software like Build Alpha that helps in trading is quite accessible as it can be easily downloaded and launched from a desktop or portable device. There is no skill required to operate it as the software can take any user input and return satisfactory results for trading and investing decision making.

So Why are these trading tools Vital

Let’s see the following essential points of these trading tools:

Trading software helps in facilitating buying and examination of financial outcomes.

It helps the traders that are trading alone, which is the self-directed trader. They require to employ and discover how to efficiently manage their trading software in enhancement to learning how to buy or invest.

Many other General characteristics of these trading tools incorporate order arrangement, technical review, structural analysis, electronic trading, and journal trading. So there is a lot on your plate that is served with this single tool.

Comprehension of This Trading Tool

These trading tools like BuildAlpha are giving the right set of insight to the traders to deal in the security market. Many of the traders and investors these days have shifted towards making at least some of the trading and interpretation utilizing the self-directed trading accounts. This is the main reason that there is an increase in the demand for such software that will provide the right trading capabilities — also giving a thorough analysis and knowledge resources within the software.

This software can give users the right pricing information for assets, fundamental data, graphs, functional analysis, vital statistics, some basic chat rooms, and many other features that are vital from the investment point of view. You will get the best application programming interfaces, that help service the trading software management. So now you can run independently on their network.

Originally Posted: https://www.allperfectstories.com/trading-software/

Improving Strategies

A crazy cool way to use Build Alpha. I have to admit that I did not come up with this idea, but it was suggested to me by a potential Build Alpha user.

He was wondering if Build Alpha could help come up with some rules of when he should avoid trading his existing strategy or even when to fade his existing strategy. Heck any improvement is a plus, right?

**Please note Build Alpha now accepts data in this format:  mm/dd/yyyy, hh:mm, open, high, low, close, volume, OI. Please refer to buildalpha.com/demo page for adding own data instructions**

*I say we found one strategy but we actually found tons that would be an improvement to his original strategy. Him and I only spoke specifically about one so that’s why in the video I slip and say we found one strategy. Did not feel like making a new video to clarify this minor point.*

He had a day trading system and compiled profit and loss results for that system in the following (Build Alpha accepted) format. Date, time, open, high, low, close, volume.  (*note BuildAlpha now accepts the time column as intraday capabilities are becoming fully operational*).

Below is his sample file. We purposely left the open (high and low) columns as all 0’s. The close column contains the end of day p&l from his original strategy.

We then set Build Alpha to have a maximum one bar holding period and to ONLY enter on the next bar’s open and to the ONLY exit on the next bar’s close. I will explain why this is in a minute.

We then chose the underlying symbol the original strategy was built on as market2. So for example, his original strategy trades ES (S&P500 Emini futures) so we only select Build Alpha signals calculated on Market2 which is set for ES.

So now if Build Alpha calculates a rule on ES-like close[0] <= square root(high[0] * low[0]) then we would “buy” the next bar’s open of market1 (again his results – which are 0) and “sell” the next bar’s close of his results which is the original strategy’s p&l for that day. This would essentially say that if this rule is true then go ahead with a green light to trade the original strategy the next day. If the rules are not true, then don’t trade the original strategy the next day. Ideally, we can find rules that increase risk-adjusted returns for the original strategy (which we did).

Now, what is even cooler is if we set Build Alpha to find short strategies we would essentially be “fading” his original strategy or finding rules of when to go opposite his original strategy.

Build Alpha found some good short/ “fade” rules to use as well. Here is an example that did quite well fading his original strategy (even out of sample – highlighted section).

DTFadeExample

After emailing him the results here is what he had to say in his email response:

“There are 2028 negative periods in my data with a gross loss of -1,217,880.26. That’s the theoretical maximum a short rule can achieve, if it were to find all losses. Your graph seems to show 380,000 short rule profits. That’s already 31% of all losses. If I don’t trade on these days, my net profit would go up by 380,000, a 46% increase.”

I thought this was a really unique way to use BuildAlpha and I wanted to share. I think the same analysis can be done on strategies with longer holding periods too. I would just import daily marked to market results of the original strategy and Build Alpha would essentially find rules of when to hedge your strategy or fade it for a day or two. I think this is certainly a unique approach to add some alpha to performance.

Anyways, thanks for reading as always and keep a lookout for some MAJOR upgrades coming to Build Alpha very soon!

Originally Posted: http://buildalpha.us/improving-strategies/

Escaping randomness, and turning to data for an edge

BuildAlpha: On this episode, I’m joined by a quant trader who works at a high frequency trading firm—though you might be surprised to hear, he started out on the same path that many retail traders do—his name is; Dave Bergstrom.

The thing that makes Dave unique from most traders who’ve been on this podcast previously, is how he uses data-mining techniques to develop trading strategies. Though data-mining, in trading, often has a negative connotation attached to it, Dave believes this stems from bad practices and poor evaluation of methods.

Build Alpha: In addition to the above and ways to reduce curve-fitting, we talk about escaping randomness, learning to write code, Dave’s three laws for strategy development, setting expectations and plenty more.

Q+A: Got a question for Dave? Write in the comments area at the bottom of this page.

Topics of discussion:

  • Dave explains why he couldn’t “escape randomness” in the beginning, how he landed a position in a HFT firm, and why he became more data-driven as a trader.
  • The reasons why Dave learned how to program (in multiple languages) and how it’s comparable to having “superpowers”, plus a few tips for learning the basics.
  • Should data-mining be avoided? Dave shares a high-level overview for how he finds an edge by mining data and the measures he takes to reduce curve fitting.
  • Dave’s “three trading laws” for strategy development, the benefits of variance testing, and how Monte Carlo analysis can help to set realistic expectations.

Originally Posted: https://chatwithtraders.com/ep-103-dave-bergstrom/

Perks Of Using Trading Software

Stock trading has become a significant market segment. Every third person is dealing with the same trend. This segment of the market serves a great set of the potential to make a lot of money. There are instances where you will observe some of the wealthiest persons in society have made their estates in stock markets and investments; they have earned tremendously from this asset class.

However, most do not have a financial background or business degrees. It is not just their own expertise that has led them to such success in the market, but it is the assistance of trading and investment software. Software like Build Alpha can help guide traders and investors through tricky markets and identify the biggest trends that lead to wealth accumulation and a better understanding of the market.

Trading Software

This software, Build Alpha, helps them gain an entire overview. Beginners will be guided on the underlying trend of the market as well as advanced traders and investors who can find specific trends for stocks of interest. There are several thousands of people who are contemplating to make money in the stock market by analyzing a mixture of approaches. There are also, unfortunately, many business organizations that create lies, false narratives and sell misinformed ‘courses’ to naïve investors. Build Alpha software allows the investor to research the data himself and only trust the numbers, not some lie a business is selling.

This is the primary cause that stock trading software has become so popular with investors as the software can allow investors to execute their trading strategy quickly, based on facts and systematically. There are several goods of utilizing an automated trading system or stock investing software to make money in the stock exchange.

Let us investigate additional benefits of the stock trading tool.

One of the most significant benefits of using these systems for stock consideration is that it reduces the tremors of humans; it solely depends on the market trends in the trading process. It has often been observed that this software comes into the scene when most people spend money on the stock exchange when they give into their sentiments when they shouldn’t have. Traders have a much more comfortable time adhering to their investment plan when they control their emotions, passions, and the automated trading system helps in managing their emotions and taking a data first approach.

Many traders are helpless when they want to place the trade automatically, but now it can happen with the software. This execution by the software is quite exceptional and produces very reliable code.  Following a defined trading system based on data can help those who are nervous about investing and can also help those who are too eager to invest at every perceived opportunity. Automated trading systems created by powerful software like BuildAlpha can help both types of investors only act when data tells them.

Stock trading software like Build Alpha also allows traders to backtest their trading strategies. This automatic trading system is free from interpretation, and all the rules need to be met to perform the business, which expects traders can examine their buying procedures on actual data.

Imagine looking at your investment portfolio and knowing that each stock has been found using powerful software and has data to back up the decision. This would make for one relieved and happy investor.

Originally Posted: http://buildalpha.us/perks-of-using-trading-software/

Market Regime Switching Models

Happy Friday!

For this Free Friday edition I want to talk about market regimes or market filters. I have a very simple intermarket filter or regime monitor to share.

The idea with market regimes or filters is to identify a condition or set of conditions that alters the market’s characteristics or risk profile. Ideally, you could find a bull and bear regime that would enable you to go long when in the bull regime and get into cash or go short when in the bear regime.

The simple regime filter I want to share was found using Build Alpha’s Intermarket signals. It only uses one rule and creates a clear bullish and bearish regime.

The rule says that if the Close of Emini S&P500 divided by the Close of the US 10 Yr Notes is less than or equal to the 10 days simple moving average of the Emini S&P500 divided by the 10 days simple moving average of the US 10 Yr Notes then we are in the bull regime.

Here it is in pseudo-code assuming eMini S&p500 is market 1 and US 10 Yr Note is market 2.

Bull = Close1/Close2 <= SMA(Market1,10) / SMA(Market2,10)
Bear=Close1/Close2 > SMA(Market1,10) / SMA(Market2,10)

Let’s verify with some numbers that we have a discernible difference in market activity before I start flashing some charts at you.

Here are the S&P500’s descriptive statistics when in the bull regime:

  • Average Daily Return: 1.20
  • Std Dev Daily Return: 17.49
  • Annualized Information Rate:

     1.09

Here are the S&P500’s descriptive statistics when in the bear regime:

  • Average Daily Return: -0.34
  • Std Dev Daily Return: 12.11
  • Annualized Information Rate:

      -0.44

This would definitely qualify as something of interest. Let’s take a look at the equity curve going long when ES, the eMini S&P500 futures, enter into the bull regime.

Regime

It actually performed quite well with no other rules or adjustments only trading 1 contract since early 2002. It even looks to have started to go parabolic in the out of sample data (last 30% highlighted).

BuildAlpha now offers another check for validity -> The ability to test strategy rules across other markets. This is very important when determining how well a rule generalizes to new (and different) data. The user can select whatever markets to compare against, but in the example below I chose the other US equity index futures contracts. You can see Nasdaq futures in gold, Russell Futures in green, and Dow Jones futures in red.

Regimea

Now back to our Free Friday regime filter… Wouldn’t it be cool if the US 10 Yr Note performed well while Emini S&P500 was in the bear regime? That way instead of divesting from the S&P500 and going into cash we could invest in US 10 Yr Notes until our bull regime returned.

Well, guess what… the US 10 Yr Note Futures do perform better in the bear regime we’ve identified.

The best part is… Build Alpha now lets you test market regime switching strategies.

That is, invest in one market when the regime is good and invest in another market when the regime changes. This ability smoothed our overall equity curve and increased the profit by about 50%! Below is an equity curve going long Emini S&P500 in the bull regime and going long US 10 Yr Note Futures when the regime turns bearish.

Regime2

Some major new additions coming to Build Alpha and I’ll be announcing them soon. As always thanks for taking the time to read these.

Originally Posted: https://www.buildalpha.com/free-friday-16-market-regime-switching-models/

Evaluation of Investment with Best Investing Tool

Investing is the activity of getting your money to Investment with The Best Investing Toolork for you to create a second (or third or fourth) income stream. This kind of activity is called passive income and can lead to massive wealth. Passive income just needs the right thought and no active participation. Seeing the rising trend of a certain industry many people have started investing to capture a social movement or global trend. However, choosing the right tool to identify trends and where and when to invest can be a difficult task for most.

Successful investors must locate a successful investing tool! BuildAlpha is great at allowing investors to find profitable trends and areas of investment based on historical data, market factors and various other tools. Build Alpha provides investors with some level of expertise and understanding in their investments.

Build Alpha works as the executive support system. It has the expertise of experts to notify you out of difficult situations. There are many times if you are new to the industry and investing you get stuck with the technical terms and many more things. But this expert software provides you with all the technicalities that you need to know about the industry.

It will provide you with all the right shortcuts for calculating the profits of the net amounts and payoffs, potential risks, and more. All the initial margin, maintenance margin and even full code so you can automate your investments and hopefully generate passive income. Also, it will help you to understand how long it will take for an investment to double if its growth compounds, on what shares you should invest and at what prices you should invest.

The Stock Market is quite complex, and Build Alpha will help make it easier for you. The most popular investment is in stock index funds or mutual funds. Build Alpha will show you how you can create your own investments that have out earned stock index funds over the past decade or more. The tool will give you the expertise of an expert. It will help you with the right investments in any asset class: Investment Bonds, Mutual Funds, Cryptocurrencies and Physical Commodities.

How the Software Evaluates an Investment Portfolio

  • Step 1: Upload Your Portfolio to Build Alpha or to create your own! After you have a portfolio in the software, it will process your portfolio with its analysis techniques.
  • Step 2: You can run your portfolio of investment strategies through complex statistical tests to test your portfolios robustness in potential turbulent AND healthy markets.

  • Step 3: Generate automated code for each of your investment strategies so a computer can change your portfolio when necessary, so you do not have to bother. Follow the investment system!
  • Step 4: Enjoy your free time and hopeful passive income.

Originally Posted: http://buildalpha.us/investment-with-best-investing-tool/

E-Ratio

 

Edge Ratio or E-Ratio measures how much a trade goes in your favor vs. how much a trade goes against you. The x-axis is the number of bars since the trading signal. A higher y-value signifies more “edge” at that step in time.

BuildAlpha: Measurements are normalized for volatility; this allows us to use e-ratio across all markets and regimes. Once normalized for volatility, 1 signifies that we have equal amounts of favorable movement compared to adverse movement.

In other words, the y-axis is an expression of how many units of volatility more or against you your trade gets. A measure of 1.2 would indicate .2 units more of favorable volatility and a measure of 0.8 would indicate .2 units more of adverse movement.

Build Alpha: The blue line is for the selected strategy’s signal and the red line is for a “random” strategy for the same market. The red line is to serve as a baseline to beat. Ideally, you’ll want to see a blue line above 1 and above the random line.

You may find many “good” strategies, but they may have an E-Ratio less than the red baseline or less than one. This would make us less confident that our signal will withstand the test of time.

Additionally, if E-Ratio falls off a cliff at bar 6… then it probably does not make sense to hold for 15 bars!

Another tool to make sure Build Alpha + Trader = Success.

How to calculate:

  1. Record Maximum Adverse Excursion and Maximum Favorable Excursion at each time step since signal.
  2. Normalize MAE and MFE for volatility. To compare across markets we need a common denominator. Let’s use ATR or a unit of volatility.
  3. Average all MFE and MAE values. Now you should have average MFE and average MAE at 1 bar since signal. Average MFE and average MAE at 2 bars since signal…
  4. Divide Average MFE by Average MAE at each time step.

Originally Posted: https://www.buildalpha.com/e-ratio/

Features of Good Stock Market Investing Tools

Investment is putting money into some plan which an investor believes will generate more money or a nice return on his/her investment. There are different investment instruments also known as financing instruments used for getting loan by pledging them for e.g. share certificate or a promissory note. Various tools which helps you to achieve your financial goals like investing in the equity market or in different bank products are termed as investing tools.

There are different types of trading apps and tools that are available online which helps the investors in getting good result in the market. One such tool is Build Alpha which is helping the industry expert as well as the people who are new to the idea of investing. Build Alpha allows the investor to search for investing strategies across any asset class, analyze risk and reward historically and make estimates of what to expect going forward with advanced (but easy to use) statistical methods.

Alphabuild

What to Look for in a Trading Software?

There are many big and small things that you need to look for in trading software before buying it. Few of the essential features you need to look for when you decide as to which stock analysis tools you want to use. BuildAlpha has all the under mentioned qualities you need to get in your trading software to achieve success in life.

Accurate Test Results

The most essential feature that a trader and investor should look for in software is the accurate analysis of investment and trading strategies. This enables the investor to make the best possible decisions on the most reliable data before risking any hard-earned money in the live markets.

Customizable tools

Another is the need for software which you can customize according to your need. Every trader is different and therefore have different needs and trading patterns. As trading plans vary so drastically, it’s probable to interview different traders and get completely contradictory answers when examined what makes a good research tool. So here is where Build Alpha comes into the scene and help traders who operate on all time horizons, asset classes and markets across the world.

An easy format of the tool

Traders and investors can be most productive if they can easily use the tool. Build Alpha has an intuitive design and layout that offers the most productivity to the investor. The best research tool is worthless if it’s too difficult to work and use. Aim for maximum productivity to ideally achieve maximum returns!

Originally Posted: http://buildalpha.org/features-good-stock-market-investing-tools/

Wall Street Cliche Or Trading Edge?

BuildAlpha: What is Turnaround Tuesday? Is it a Wall Street cliché, media company selling headline, or verifiable trading edge? Maybe all of the above, depending on its usage.

But it has also been a simple trading edge over at least the past 15 plus years or so. Below you will see how the equity indexes perform on Tuesdays.

Turnaround Tuesday

Build Alpha: The idea is that the market tends to reverse a Monday selloff or down day with a strong rally on Tuesday hence the name “Turnaround Tuesday”. If this is the case then we can test this idea and add a simple edge to our arsenal.

Tranding Edge

First, let’s define our “Turnaround”. If Monday’s Close is below Monday’s open then Tuesday should – based on our theory – show positive performance across the stock indexes. On the other hand, Tuesdays following a neutral or positive Monday (close > open) should fare only about randomly or without a strong trading edge.

BuildAlpha: In the charts below, you can see equity curves for Tuesday trading across the major stock indexes. The first chart follows an up Monday, while the second chart follows a down Monday – or our “Turnaround Tuesday” performance. The blue line represents the S&P 500 futures since 2002.

Originally Posted: https://www.seeitmarket.com/turnaround-tuesday-wall-street-cliche-media-fiction-17013/