“Trading Recipes far and away offers the best flexibility for money management (or bet sizing) in the trading software world. Trading Recipes offers a great support community with a fanatically loyal user base.”
The following interview is between TurtleTrader and Trading Recipes software.
Q: Can you elaborate on money management capabilities of Trading Recipes?
A: Money management capabilities are what sets Trading Recipes (TR) apart from other software. We believe that TR offers the most flexible money management tools available. The program’s goal is to help you develop a successful, usable trading system by letting you compare a wide variety of trading, position sizing, money management, and portfolio strategies before risking real money in the market. Smart traders manage risk, and that’s what TR lets you do. It allows you to teach yourself how to manage risk so that you can reach your goals quickly and safely. By letting you quantify and manage your risk, it allows you to develop trading systems that fit your own appetite for risk and reward.
Q: Is TR a tool for professional traders only, or can new traders use it as well?
A: TR is not specifically geared toward the professional trader, although quite a few well-known traders and professional money managers use it. It is also a tool for those who want to become professionals and for those who want to learn how to use trading to become more self-sufficient.
Q: How does Trading Recipes work?
A: TR is a language-driven software tool for developing, testing, and trading rule-based mechanical trading systems. It features a modular design that encourages you to break down your trading rules into small, manageable programming tasks. For example, TR has separate areas for defining your indicators and values, for defining how you will enter a trade, for defining how to manage and exit an open trade, and for defining your money management rules. TR’s programming language cuts development time as users build their systems. For example, to capture (in Column 1) a simple moving average of the past 20 closing prices, a TR user would simply write:
COL1 = SMA[CLOSE, 20]
To go long if yesterday’s close was greater than the value in Column 3 yesterday, a TR user would write:
IF CLOSE > COL3 THEN BUYOPEN Other TR features include reports, a spreadsheet-like display of values used in your trading systems, numerous pre-packaged indicators, and the ability to handle many different trading data formats.
Q: Can you tell me more about its money management capabilities?
A: Not only can a well-designed money management strategy save you from financial ruin, but it can also turbocharge the performance of your system. TR allows you to perform extensive what-if analysis to help achieve both of these goals. Say that a particular sector (stocks or futures) gets hot and that your system suddenly wants to start adding lots of positions across that sector. As your system adds more and more positions in that sector, your portfolio becomes overbalanced with sector risk. You could conceivably end up with a highly correlated portfolio consisting of, for instance, too many grain commodities or biotech stocks. If that sector turns against you, the drawdown could be severe. So you need some kind of protective mechanism against that type of risk. How does TR implement such a control? With one keyword: GROUPRISK. When a trade is presented to TR for possible entry, TR determines to which stock or commodity sector the trade belongs. Via GROUPRISK, TR can return the total amount by which equity would be reduced if all open positions in that sector were stopped out. So even as you are trading multiple markets across multiple systems, TR is constantly monitoring how much risk you have accumulated in various sectors. GROUPRISK is one example of many money management keywords and concepts available in TR. The program allows you to manage risk and capital based on any combination of:
Equity available at the time each new trade comes up.
Amount of risk and number of positions across the portfolio.
Amount of risk and number of positions across a system.
Amount of risk and number of positions within a sector.
Amount of risk and number of positions for a particular stock or future.
Amount of risk and number of positions for long trades.
Amount of risk and number of positions for short trades.
Amount of risk and other metrics for a trade under consideration.
Start-up capital and starting date.
Current market volatility.
Q: Where can I get more information about Trading Recipes?
A: Thanks for the opportunity to talk about TR! You can find our web site at www.tradingrecipes.com.
All clients of TurtleTrader are entitled to 10% off the new purchase price of Trading Recipes. This applies to only new purchases of Trading Recipes software starting today March 5, 2003. Please contact TR directly for this offer.
** Keep in mind that while Trading Recipes is a great software tool, you still need a trading system and plan to fully capitalize on it. That’s our role.
Trend Following Products
Review trend following systems and training:
More info here.