Day Trading: How I Manage My Trades
I often get asked about how I manage my day trading. In a recent Members-Only webinar, “Where Nick Radge is Putting His Money in 2020”, I outlined the various strategies I trade and how I intended to optimise those in the coming year.
I received a lot of queries about how to implement such as strategy, especially when trading an overnight market. I have no interest in watching prices roll across the screen, so using some basic technology the strategy is able to operate hands-free.
Here is a basic video showing what I use and how the trading process operates…
Nick Radge walks you through how he manages day trading. Nick uses several platforms or programs to manage his short term trading. We’ve provided a list of links in the text below the video player.
Software and trading products Nick refers to in the video include:
We had quite a few people emailing and asking questions regarding the webinar I did a few weeks ago where I talked about all of the different systems that I trade including the day trade systems.
Some of the questions related to, “How long does it actually take to run all those systems?” Especially the day trade ones which have to run each and every day.
In this video, I’m just going to give you an overview on how that actually happens. What I do on a daily basis. And it’s relatively simple, we’ve automated a lot of it and I certainly don’t have to sit there through the night and watch markets live or anything like that.
As you’ll see, we’ll use a couple little pieces of software which put it all together nicely, and it’s all very, very robust.
What you can see on your screen at the moment, this is AmiBroker, this is just off the shelf software that anyone can purchase, it’s not expensive. It’s about US$300, a one-off purchase, and that’s fed with Norgate Data which is end of day data. We don’t use live data, and what we’ve got here is a parameters box which we use each day to generate. AmiBroker will do everything. It’ll generate the signals which you’re about to see but it also does all the back testing and all that kind of stuff as well.
All we have to do is put our account balance in. This has been programmed to output a report which will go into Interactive Brokers TWS platform.
Let’s assume that we’re going to trade today with $100,000. We’re going to allocated 10% of our equity to each one of these signals. Now that may seem a lot, but two things here.
First of all, this is a day trade system, very low exposure. In other words, when we run it without any leverage or anything like that, the draw downs are only about 4% and 5%, so what that allows us to do is actually gear it up to a more acceptable, well, not acceptable, but a higher draw down which we can handle and that allows us to then get a much higher return.
Because this is a day trade system, what we actually can use the Interactive Brokers day trade margin which is 25%. We can actually control $400,000 with our $100,000, so as long as those positions are closed out by the end of the day which is what we do.
In this particular strategy we run 40 positions, we allocate 10% of our cash total to each position. Essentially if we would have been fully loaded on any given day, we would be controlling $400,000 worth of stock, but that very, very rarely happens. Assume $100,000, 10%, and very simply we then choose a universe.
Here we’ve got the Russell 1,000. I trade this system on both the Russell 1,000 and on the Russell 2,000, I trade them independently. It’s the exact same system, exact same parameters for both of them, so all we have to do on a daily basis, after the market closes, is we run an exploration and this is now generating the output which is going to go into the Interactive Brokers platform.
These are the signals. All we have to do now is just simply select them all, copy them, and what we’re going to do is move them across to a VPS.
The VPS I use is called Speedy Trading Service. This sits in New Jersey. I don’t really need it to sit in New Jersey for speed. That’s really not an issue with the kind of strategy that I’m using here but it is a dedicated trading server which means it is always up during trading hours. There’s nothing worse than having your server reset during trading hours because that would be disastrous. So, this is a trading specific server company. That’s all they do, and in fact it comes with Trader’s Workstation and Trade Station on there, that’s the IB platform.
The next step is transferring those trades that I have saved across to the VPS here and what we’ve got is four blank spreadsheets. These are CSV files and these are the four day trade systems that I am using each day, so this one will be the DT Russell 1,000 day trade Russell 1,000.
I open this blank spreadsheet and paste those orders in there. Now we only want to trade 40 orders so you could see there’s quite a few more orders here that have been generated, so we go down to line 42 and we delete everything below there, on 42 and below, just delete all those orders if we don’t wanna send them through.
The way the system has tested it take the first 40 orders. We have ranked these orders. We only wanna take the first 40 and send them through to TWS because they are the ones that will be sent through in the back test report. So, we simply closed that down. That is now saved and over here we have our APIs.
Now an API simply allows two pieces of software to talk to each other. These are a custom API that I had built personally for my own trading, and these are the ones that all our trading system mentor course students use as well. So, what I want to do now is go into the Interactive Brokers platform and what we’ll see on here is some panels at the top, some pages, and what’s going to happen is when we transfer the orders in there’s going to be a new tab on there which will say API and that’s when all the orders come through. Keep an eye on that, we’ll revisit this very shortly, but you can see there for the moment that that’s not there.
Now we’ll open the API, so we wanted DT Russell 1,000. We’ll open this up and that is now connected, you can see we’ve got a little green light up here and all we simply do is import the orders. So, there’s our sheet, so we want the DT-R1000. That’s all our orders right there and I simply hit Alt + S, and there’s those orders being sent through.
Now this is into the IB platform. You can see up here on the left hand side now that we do have that IB API platform sitting right there, API tab, so those orders are now placed and ready to go. The API stays connected through the night. It doesn’t matter if my Internet closes down locally here. I can actually close my computer down completely which is what I do every single night and then what’ll happen is these orders will be sent to the market.
You can see there’s currently error messages down here. What that means is that the market is currently closed when the market opens, those orders will be sent through and placed in the market live and then they will be managed, and when I mean managed, what that actually means is obviously those orders have been sent through to the market but because it’s a day trade system, it needs to exit those positions when it’s told to do that and that’s what the API actually does.
I can instruct the API to do all sorts of different things and this particular strategy closes the orders market on close. Now market on close orders in the U.S. must be placed no later than 15 minutes before the close of business. Now we’re gonna have some pending orders there during the day that don’t get filled, but I don’t want them to be filled in the last 15 minutes. So, with about 15 or 16 minutes to go, the API will automatically cancel any pending orders that haven’t been filled on the day so we don’t get filled in that last 15 minutes. If we get filled in the last 15 minutes we can’t use market on close orders. So, the API will cancel those for us.
Then the next thing is when we do get a fill you can see these will be placed as limit orders below the market. If we do get a feel of the API, we’ll automatically place that market on close order for us and then when the market does close that’ll be executed and I’ll wake up in the morning and hopefully I don’t have any positions, which I don’t, so we’ll have x amount of buy trades with x amount of sold trades to go with them.
Last night, for example there was 58 trades executed across my two day trade strategies and you come home completely square, and then we’re using that, a little bit of software to upload those into our Share Trade Tracker portfolio monitoring platform, and again, it’s very simple, very easy, and it takes less than two or three minutes a day to do this, so very effective, very useful, and especially if you have a trading system with a very slight edge which is exactly what these day trade systems are doing, very slight edge and all we need is trade frequency to make it quite profitable. So, if you have any questions, let me know and that’s as easy as it is each day.