The Benefits of Systematic Trading
Dario will focus on e-mini index trading as he covers the psychology of trading, what to expect from systematic trading, trading through drawdowns, the pitfalls of system “jumping,” and more.
Dario Grear system trader and Scott Winthrop system developer have been close friends for over 20 years. So naturally when Scott became interested in the Stock Market he shared his enthusiasm with Dario. Dario also became excited and has since worked with Scott in teaching and trading the futures markets.
Ever since High School, Scott wanted to start his own business. With money he had saved, he bought a franchise in the car rental industry. He started with 3 cars and built it up to a fleet of 50 cars with 2 locations. Unsettled, he wanted to try something different. In the summer of 1999 he began hearing about opportunities in the stock market and decided to take his first trading course. The course prompted him to open his first trading account for buying penny stocks with some friends. “When I started watching charts I experienced a kind of love at first sight,” Scott reflects.
Soon after, he saw an ad about a course that taught how to make money trading the S&P 500 E-minis. He was intrigued. The more he found out about the futures market, the more he wanted to get involved. In October1999, he made his first trade in the S&P E-Mini market. He made a whopping 37 dollars that day and was hooked!
“Right around this time, I read The Disciplined Trader: Developing Winning Attitudes by Mark Douglas. I realized that it was going to take some time to hone my skills but I was in it for the long haul. As a new trader I learned a lot about technical analysis, market indicators, and the fundamentals of trading. Another big lesson was learning to respect the markets. Over the years I have continually observed price movement and psychological impact on the market. This has given me the insight to improve my personal trading skills and put my own style into play,” Scott says.
“I’ve traded several of the other E-mini markets with moderate success but I prefer the S&P 500 E-mini due to its liquidity, limited slippage, and ease of execution. Each market has its own personality and I fit in well with the S&P.”
“I feel a person needs to have a relatively fixed strategy that allows for modification. The market reveals a little of itself each day. It’s a never ending story so a trader needs to be adaptable.”
“The only thing a trader can control is his risk. Gains are arbitrary. So the majority of my systems revolve around risk management. I also focus on fundamental and technical market data which I translate into a completely mechanical system that identifies high probability turning points in the market,” says Scott. “I look for consistency in my systems and take the trades as they come home runs or base hits. That’s why I trade with 2 positions, one for base hits and the other for potential home runs.”
“If I had to point out the biggest lessons I have learned along the way, they are simple. Discipline, Patience, and Risk Management. Follow your rules and let the trade come to you!”