Delivering Education via Models
To help educate traders I make available a number of my models.
If you’re here looking for the latest, shiniest and cleverest new trading idea then I’m sorry to disappoint you because I don’t have one.
If you’re here looking for a perfect and painless trading model then I’m also sorry to disappoint you because I don’t have one of those either!
And if you think success lies in complexity then I know I will definitely disappoint you as my models, once you get to know them, stem from the essence of simplicity.
However, if you’re not looking for the next “magic” bullet indicator system and have a preference for simple pattern based positive expectancy methodologies that offer a non-emotional, systematic approach to trading, then I have a few here for you to consider.
Or if you’re simply just looking to save time by securing an already developed model, then you’re at the right place.
If one takes your interest and if you have any questions please do not hesitate to ask me (bpenfold@tpg.com.au).
Below are the simple mechanical models I make available off my site;
Which Model?
Which model or models catch your eye will depend upon a number of your preferences;
- Timeframe – How long do you prefer to hold winning trades?
- Immediate-term (1-3 days)
- Short-term (5-7 days)
- Medium-term (20-30 days)
- Technique – How do you prefer to trade?
- IndexTrader – Breakout and mean-reversion trading?
- Idx24 – Breakout and mean-reversion trading?
- Key Level – Retracement trend trading?
- Key Breakout – Breakout trend trading?
- Key Swing – Mean-reversion trend trading?
- Key Exhaustion – Top and bottom picking? or
- Universal Bandit – Trend and mean-reversion trading?
- Markets – Which markets do you prefer to trade?
- Indices only?
- Currencies/Forex only?
- All markets?
Which Timeframe?
If you’re indifferent to timeframe then your consideration should be on profitability.
Profitability is a function of trend and time.
How profitable you’ll be in trading will depend on how successful you are in trading with the trend and for how long you can stay in a trade.
These are the two greatest “methodology” drivers of profitability: TREND and TIME.
Trends move markets and are the basis of all profit. You really do need to trade with the trend.
Time allows you to accumulate gains. The less time you’re in a trade the less potential to earn profits. The more time, the more gains you’ll make.
So if your consideration is profitability then you should focus more on my medium-term trade plan strategies.
Models
Please do not be confused with my use of the term “models”.
You see trading “education” and trading “models” are two of the same thing.
“Model” is just one way to describe a complete approach to trading, from identifying times where it’s appropriate to trade (the set-up), to where a trader should buy and sell (the entry), to where they should exit if they’re wrong (the stop) to where they should the leave the market with their profit (the exit).
Other terms used include “methodologies”, “strategies”, “techniques”, “systematic”, “mechanical”, “algorithmic”, “quantitative” and “robots” etc.
They’re all just referring to the same thing as “model” – a complete approach to trading from set-up, to entry, to stop, to exit.
They’re just an alternative label to describe;
– trading education, or
– trading knowledge, or
– trading methodology or simply
– “how to”.
100% Accountability
Delivering my trading education enclosed within a “model” provides a singularly powerful benefit to traders –100% accountability.
Accountability because a “model” implies absolute certainty in rule disclosure where there is no subjective discretion allowed.
Whereas a “theory” provides little accountability and allows too much wiggle room for discretion to play a too big a role in its application.
Whereas it’s difficult to hard code a “theory”, like Elliot Wave for example, it’s implied with a “model”.
Models allowed traders the opportunity to accurately run the “trading rules” over a portfolio of markets and calculate the necessary measures like expectancy and ROR. Not so with “theories”.
Market Structure
Each model attempts to capture a particular part of market structure.
IndexTrader
IndexTrader was released in 2001 and is a breakout and mean-reversion trading model. IndexTrader has only one immediate-term trade plan.
Idx24
Idx24 was released in 2015 and trades a collection of models including IndexTrader. Idx24 is a breakout and mean-reversion trading model. It has only one immediate-term trade plan.
Key Level
Key Level was released in 2008 and is a medium-term trend trading methodology that looks to enter the market following a retracement. It looks to capture meaningful retracements. Key Level has only one medium-term trade plan.
Key Breakout
Key Breakout was released in 2009 and is a breakout trend trading methodology that looks to enter the market following a strong move, either to the upside or downside. It looks to capture meaningful breakouts. Key Breakout comes with three trade plans, immediate-term, short-term and medium-term.
Key Swing
Key Swing was released in 2010 and is a mean-reversion trend trading methodology that looks to enter the market following an over extended move against the underlying trend. It looks to capture meaningful reversions back to the mean. Key Swing comes with three trade plans, immediate-term, short-term and medium-term. In 2020 I added a long-term mean-reversion swing pattern.
Key Exhaustion
Key Exhaustion was released in 2010 and is a trend termination strategy that attempts to pick tops and bottoms. It looks for a reversion to the mean as it trades against the immediate trend. Key Exhaustion comes with only one immediate-term trade plan.
Universal Trader
Universal Trader represents a collection of my strategies being run over three timeframes, immediate, short and medium-term. Trading diverse but complimentary strategies helps smooth out individual equity curves, dampening drawdowns and boosting risk/reward payoffs.
Universal Trader can be applied over three timeframes;
- Universal Trader Immediate-term
- Key Breakout
- Key Swing
- Key Exhaustion
- Universal Trader Short-term
- Key Breakout
- Key Swing
- Key Exhaustion
- Universal Medium-term
- Key Level
- Key Breakout
- Key Swing (includes one additional long-term swing pattern)
- Key Exhaustion
Universal Bandit
Universal Bandit was released in 2021 is available through my advance video course Strategy Building.
Universal Bandit is a short-term 100% mechanical strategy that can trade all markets under all market conditions.
Universal Bandit uses a combination of daily and weekly bars to find setups. Trades are triggered off daily bars. Orders are placed outside market hours on a “set and forget” basis. There is no need for traders to give up their day job. The model consists of two patterns. One looks for trend trades while the other looks for mean reversion opportunities. Universal Bandit utilizes a number of traditional tools such as swing charts and the Average True Range (ATR) indicator. The strategy has 2 variables that have the same value across all markets and across both buy and sell setups under all market conditions. Universal Bandit is a simple strategy.
Benefits of Mechanical Models
Regardless of whether your preference is to be;
- A systemic/mechanical trader (like me),
- A discretionary trader, or
- A mechanical discretionary trader (like Larry Williams)
there are many benefits to following a mechanical model including;
Accountability
Mechanical models imply that all the rules are known and fully disclosed, allowing a trader to measure a methodology’s expectancy and ROR.
Whichever methodology you’d like to trade, your number one priority is to calculate it’s ROR. If it isn’t at 0% then you have no business trading it. If you do then you deserve the results you get.
A mechanical model, unlike theories such as WD Gann and Elliott Wave, makes it easy for a trader to calculate and measure the necessary metrics.
Evidence Based Trading
Measuring metrics is not the only benefit of mechanical models. Having the ability to measure allows traders to gather evidence of a model’s profitability. Rather then relying on an interesting theory to make money mechanical models allow traders to have confidence in historical performances. They allow traders to follow an evidence based methodology. Having evidence is more tangible then relying on an interesting idea. Interesting ideas may stimulate the mind however they do nothing to boast confidence when the inevitable drawdowns occur!
Structure
Mechanical models will introduce structure to your trading. Clear and precise rules allows you to know exactly when you should be trading (the set-up), where you should be buying or selling (the entry), where you should get out when you’re wrong (the stop) and when you should take your profits (the exit).
There is no wallowing, indecision, head scratching, dry washing of hands or any guesstimating.
With mechanical models everything is well laid out like a good recipe.
For new traders mechanical models makes the introduction to trading a more straight forward process as they amount to no more then a step-by-step list of instructions on how to trade.
For experienced traders mechanical models, with their clear and precise rules, are a way to get back to the basics of trading and are a reminder to keep it simple.
Simplifies
A great appeal of mechanical trading is that it simplifies the trading process. There are no decisions to make except to follow the rules. A mechanical model removes the psychological stress of having to make decisions each day. Your only job is to follow the rules of your mechanical strategy. Following a mechanical strategy makes trading simple.
Discipline
Structure breeds discipline. Discipline dampens impulses. Fewer impulses mean less revenge trades. Less revenge trades mean more profit.