In the first part of the trading education show, Charlie Burton, Founder of EzeeTrader talks to Viet Dang, Independent Trader, about his low frequency trading system and why he advises traders not to follow Algo systems blindly.
Key points
Don't follow Algos blindly – Dang rightly points out that following Algos blindly could be risky as the trader needs to adjust position size ahead of the risk events.
Don't average losers – Dang keeps away from averaging the losers. In fact, his program provides an advance hint of a possible losing trade. Dang prefers to square off possible losers and thus has been successful in avoiding a big drawdown in his book.
Good IT set up is indispensable – Dang details how incompatible programs led to a delay in entering trades
Win ratio doesn't need to be high – Dang's win ration stands at 39%. For tyro analysts/traders this may be a horrible number. However, Dan prefers to cut short losses as discussed above, hence his win ration isn't attractive, but works for him.
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