In Chapter 4, I describe what the various entries on the form mean. For now it is sufficient to note that there are four main sections to be completed. These are:

      By the time all sections of the form are filled in, the information entered constitutes a fully specified plan, capable of being traded automatically by my computer.

      Simulation

      To be an effective day trader, it is a good idea to think of your business activity as two distinct processes. There is the planning process, and there is the trading process.

      For me, the trading process is a mechanical activity during which I attempt to implement my trading plan flawlessly. As already mentioned, my ability to do this has been greatly enhanced by the development of the TradeOnAUTO software, which enables me to leave the computer to automatically implement strategies based on my preferred trading style.

      But how do we answer the questions thrown up during the analysis of strategies? That is to say, how can we determine how well our proposed strategies have performed in the past, before we convert them into a trading plans and actually trade them?

      For too long, I didn’t have adequate tools to help me answer these questions. However, I recently built simulation software, which has revolutionised my planning sessions.

      What the simulator does is allow me to set up a specific strategy, based on my general trading style, and then apply that strategy across several years’ history. It answers the question: “What would have been the outcome of running this strategy over the last two or three years?”

      Before I had a simulator, answering the question would have taken literally days of work. The only way I could do it was by manually analysing hundreds of charts, a time-consuming and error-prone task. With the simulator, it takes just a few seconds to cycle through the database. Each simulation produces a detailed list of trades taken during the trial period, together with a concise set of statistics that can be used to compare the effectiveness of different strategies.

      A simulator is not a simple thing for an amateur trader to develop. It is a complex programming task and requires large volumes of detailed intraday session data.

      The TradeOnAUTO simulator is the ideal tool for evaluating strategies based on the trading style discussed in this book. It is available from the TradeOnAUTO website (www.tradeonauto.com).