What Do You Recommend to Start With?
I often get asked for a recommended starter model and what an appropriate account size should be.
These questions are difficult for me to answer as it relates to “personal” advice which I’m not licensed to give.
However I can offer some high level observations that I hope will help you.
But a note of caution.
You need to understand and remember what I share here does not take into account your own particular needs, financial situation and investment objectives.
If you like what I share below you will need to determine with, or without the assistant of a person licensed to give personal advice, whether my observations I share here are appropriate for you given your particular needs, financial situation and investment objectives.
Having said that let me share my thoughts on this matter.
The Ultimate Objective
Firstly, in time, once you survive ruin and grow your account sufficiently in size, your objective should ultimately be to trade a diversified and complimentary portfolio of multiple timeframe strategies over a portfolio of diversified and liquid markets.
Ultimately.
But not straight away.
A Journey Begins, or Recommences
If you’re starting out, or if you’re looking to re-enter the markets, it’s my suggestion you start small and trade small, preferably with immediate to short-term strategies. As you survive ruin and build your account you should look to trade strategies with longer holding periods. Longer holding periods allows TIME to work to your advantage as it’s the ultimate driver of profit in trading. Someone holding a position for 3 days will make more profit then someone holding a position for 3 minutes or 3 hours.
Firstly, what models and markets an individual trader chooses will be influenced by a number of factors including, but not limited to;
A General Observation
It’s been my reliable experience that traders generally have difficulty in holding onto winning trades. Not only are traders bad losers, trading without stops or continually moving stops, they’re also bad winners. They can’t seem to hang onto winning positions. They’re so anxious to bank a rare profit that they’ll exit profitable positions on the smallest of excuses.
So if you’re starting out, or looking to re-enter the markets, it’s my suggestion you consider immeditate to short-term strategies as opposed to medium to long-term ones. Yes, my medium-term strategies look more appealing as they’re made more money, but they do that from essentially staying in trades for a longer period. Please don’t be seduced by their implied profitability if you’re starting out or attempting to get re-established. Stay with immediate to short-term strategies, regardless of whether they are mine or someone else’s, as you’ll find it easier to stick to the trade plan and exit according to the rules.
TIME POOR
If you’re too busy to find time each day to collect data, review the markets, manage open positions, identify new set-ups, prepare and execute orders then you have two options;
- Subscribe to a newsletter (like IndexALERT), or
- Purchase a model, learn and understand the methodology and meticulously scrutinise its Daily Study Guide.
Newsletter – IndexALERT
With my newsletter you can just copy, paste and email orders to your broker. Alternatively you can organise your subscription to be sent directly to your broker who can execute the recommendations based on your authority/instructions.
The only downside to my newsletter is that it doesn’t explain the reasons behind the buy and sell recommendations.
My newsletter does not disclose the patterns/setups behind the trade signals.
Flexible Portfolio
IndexALERT trades global indices where there is enough flexibility for new traders to start small, trading 1, 2 or 3 markets as they begin. As their account grows they’ll then be able to add additional indices to trade.
By the way I should note it’s worth taking up my 21-day free trial to see whether or not IndexALERT is suitable for you. Please visit my SHOP and purchase a free trial ($0.00)
Purchase a Model and Subscribe to its Daily Study Guide
Purchasing a model will give the trader awareness of how signals are generated.
It gives traders piece of mind there is structure, rhyme and reason behind the signals.
Each of my models comes with a complimentary 30-day subscription to its own Daily Study Guide. The Daily Study Guides are designed to reinforce traders’ knowledge of the model’s methodology as they watch me trade the model in question in real time in real markets with real money. The model’s e-manual fully explains the theory while the Daily Study Guide provides a practical real-time demonstration of how it works. After the 30-day period owners can choose to subscribe to the Daily Study Guide for as long or for as short as they like, depending on their preference.
If traders determine they’re too time poor to collect the data, review markets, manage open positions, identify new setups, prepare and execute orders then they can choose to subscribe to the Daily Study Guide for as long as they like. It can become their constant trading companion where it does all the work. They need only to copy, paste and email their orders to their broker. Nice ‘n easy.
TIME RICH
If you have time to devote to the markets and wish to become independent then I suggest you consider an immediate to short-term strategy as opposed to a medium-term model. Or choose a model with flexible trade plans and commence with the immediate to short-term trade instructions.
For an immediate to short-term Starter’s Model traders could consider anyone of the following strategies;
- IndexTrader
- Idx24
Intermediate Course – Pathway to Sustainable Trading’s 4 models;
Strategy 1 – Short-term Pattern 1
Strategy 2 – Short-term Pattern 2
Strategy 3 – Medium-term Pattern 1
Strategy 4 – Long-term Pattern 1
- Advance Course – Strategy Building’s model;
Strategy – Universal Bandit
- Key Breakout,
- Key Swing and
- Key Exhaustion.
Out of the above I’d encourage traders to consider IndexTrader.
Starter Model: IndexTrader
Advantages
Although IndexTrader is the most expensive strategy I offer it does have the following attractive features;
- Longest out-of-sample performance since it was released in 2001 (and hence why it’s the most expensive).
- Easiest to trade due to;
- Simplest setups. Bar patterns are
- Easy to validate, and
- Easy to find.
- Shortest average trade period (1 day).
- Reasonable historical drawdown.
- Simplest setups. Bar patterns are
Disadvantages
- Most expensive model.
- Lack of market diversification. Concentrates on indices.
- Funding margins for index contracts are generally higher then other futures contracts.
Starter Portfolio for IndexTrader
Please refer to my Starter – Portfolio page where various portfolio combinations are shown.
Intermediate Course – Pathway to Sustainable Trading’s 4 Models
Alternatively, if you would prefer to trade a diversified portfolio of markets you could consider taking my Intermediate Course – Pathway to Sustainable Trading where you’ll learn 4 fully disclosed 100% mechanical trading methodologies over 3 time-frames; Short-term (x2), medium and long-term. This course is the best value for money as students acquire 4 models for the price of one.
Advantages
- Inexpensive when compared to IndexTrader.
- Trades a diversified portfolio.
- Margins are generally lower compared to indices.
- Value for money as you acquire 4 models for the price of one.
- The Short-term Pattern 2 model is easy to validate as it’s essentially a pattern (bar) based model that does not require a swing chart.
- The Short-term Pattern 2 model is my personal recommendation as the first model to validate and consider trading for those starting out or looking to re-enter the market.
- Provides additional models (Short-term, medium and long-term) for both strategy and portfolio diversification as your account grows.
Disadvantages
- Has less out-of-sample performance compared to IndexTrader and Key Breakout (below).
Starter Portfolio for PST Short-term Pattern 2
Please refer to my Starter – Portfolio page where various portfolio combinations are shown.
Starter Model: Key Breakout
Another lternative, if you would prefer to trade a diversified portfolio of markets you could consider Key Breakout. Out of the four general market strategies I have it not only has both an immediate and short-term trade plan, but it also performs the best and is the backbone to Universal Trader’s collection of strategies.
Advantages
- Inexpensive when compared to IndexTrader.
- It has plenty of positive out-of-sample performance since its release in 2009.
- Historically has been the most profitable strategy.
- Trades a diversified portfolio.
- Margins are generally lower compared to indices.
Disadvantages
- Takes more effort to trade as it requires swing charts while IndexTrader doesn’t.
Starter Portfolio for Key Breakout
Please refer to my Starter – Portfolio page where various portfolio combinations are shown.