How our trading methodology works
Our algo methodology
Our goal is to exploit opportunities and to avoid risks for the securities we trade.
The Traderama principle is to enter a position only if there is real chance. Our algorithms seek and find these opportunities.
We avoid risks by not being invested if it is not worthwhile. If we are invested, we avoid risk in a way that we exit positions after a couple of days. Third, we avoid risks with our three fold exit management of target based exit, time based exit and stop based exit.
Our methodology can be described as a carving out slices from the chart of a security over a short period of time.
To summarize – our algo methodology focusses on three objectives:
- trade frequently
- achieve high hit ratio
- get out quickly from a trade
To trade stocks on the stock market, you need a brokerage account first. You can get this from a bank or a broker. So you do have to open an account if you have none. If you already have a brokerage account, you can move on to the next step.
You can buy shares directly at the exchange using your brokerage account. You can also trade the trading signals using CFDs or other financial instruments of the underlying. Typically, Traderama trades either the stock directly or CFDs based on the corresponding stocks. In this step-by-step guide, we assume that only the pure shares are traded.
Selection of the trading signal strategy on the website www.traderama.com
- We assume that you now have a brokerage account.
- Strategy Selection: If you are an active trader who trades stocks daily, then the Traderama MAX strategy suits you better as it provides significantly more signals than the SELECT strategy.
- But if you have less time or you maybe just start trading, then the SELECT strategy may be more appropriate for you.
- Share Package Selection: We offer stock packages from different countries and with a different number of stocks in the package. The more shares there are in the package, the more signals you receive per month. We only analyze stocks that have a high daily trading volume. Please choose a stock package along with your strategy.
- We have a summary available online for all trading signal packages in the signal section
- Decide now whether you would like to conclude a 3 or 12 months subscription.
- Order your trading signal package online. You can pay by credit card or debit card.
- Ready – You have a brokerage account for your trading and Traderama for the signals – Perfect.
Preparing for your first trade:
Now comes the question, how much capital should you use per trade. Here we can only say that depends entirely on you, how much you want to use and can. In the case of the Traderama principle, however, we always use the same amount of money per position in trading (for example, 10,000 Euros or 10,000 $). We call this a portion. The portion are the same size.
Since several signals can occur on a trading day, it is advisable to divide your trading capital into several equal portions. For Traderama SELECT you should have about 2-3 portions available. For Traderama MAX there are about 5-10 portions. As mentioned, each portion is the same size (for example, 10,000 euros).
Your first trade:
- If our algo systems generate a signal for a share, you will receive this information by e-mail from us. Please make sure that Traderama emails do not end up in your spam.
- For shares in the US, you will receive the message with the trading signals until approximately 9:30 am CET on the respective trading day, as the main trading time in North America is from 3:30 pm CET to 10:00 pm CET.
- For European shares, you will receive the information the evening before the next trading day until approximately 7.30 pm CET or in the morning of the respective trading day until 8 am CET as the main trading time period is e.g. in Germany for the Germany 30 share package from 9:00 am CET to 5:30 pm CET.
Place your order to buy:
- If you receive a buy signal for a share via email, you can use it to place a limit buy order with the corresponding number of shares using your brokerage account for the given trading day. The calculation of the number of shares results from the amount of your portion divided by the limit buy price of the share.
- Orders are always limit orders and only valid on the trading day in the main trading hours of the respective main exchange and are placed before the opening of the markets. The main trading times can be seen in your e-mail. We always trade at the main stock exchanges. Of course, you can also choose another exchange. But then pay attention to the trading hours.
- Please make sure that you place the order correctly. If you have further questions, please contact our support.
Buy order execution:
- When the buy order is executed, you have a position in your account.
- If the buy order is not executed, then this order expires at the end of the trading day and we wait again for a new signal
- Important. Orders are only valid on the respective trading day. The order validity must be set accordingly to “daily” or similar designations.
Management of Position – Place sell orders:
If you are in the position, you will receive a signal to sell the position at the next trading day. To do this, you simply have to place a sell limit order with the corresponding sell price.
If the sell limit price is not reached by the security during the trading day, you will receive a new sell signal for the next day. You just have to adjust the price of the sell order to the new selling price.
Exit of a position:
- If the sell order is executed in the main trading period, the position is closed and we wait for the next buy signal.
Important note about the limit orders.
- We give you a limit price for the buy or sell order. This means that the system recommends buying at the specified price or below. In the sell order, a limit order means that the system recommends selling for that price or above. It is up to you to decide on buying and selling points. You can work exactly with the signal parameters or deviate from them. Please consider that then the performance may differ from the indicated performance.
Implementation of signals with CFDs.
- The trading signals can also be implemented using CFDs.
What do the key figures mean?
What do the key figures in the performance statistics of the trading-oriented trading packages mean?
Each of our trading packages consists of a trading strategy/algo and a stock package. In our performance calcualtions, we do not take into account any costs (i.e. transaction costs) as those vary from broker to broker. Therefore, we keep it neutral!
Our key figures are:
- Trading Profit (%) / trade:
- This is the percentage profit earned per trade over a give period of analysis. I.e., a value of 1.20 means that a profit of 1,20% was generated in this trading package per trade. Example: with a portion of 10,000 Euro in each trade, one would have achieved a profit per trade of 120 Euro.
- Number of trades/year:
- These are the number of trades carried out on average per year in a trading package.
- Cumulative (cum.) trading profit (%)/year:
- This is the cumulative percentage profit per year in relation to the invested capital in a trade. For example, in the case of a cumulative trade profit (%)/year of 49%, this means that when using 10,000 euro per trade in each trade this year, a total profit of 4,900 euros was generated in this trading package.
- Hit Rate (%):
- This is the percentage of profitable trades against the total number of trades
- Profit factor:
- The profit factor is a standard key figure in trading and is calculated from the ratio of gross profit divided by gross loss over a defined period. If, for example, the sum of the profits is 100,000 Euros in a trading package over a given period of time and the sum of the losses is 50,000 euro, the profit factor is 2.
- Duration (days)/trade:
- This is the time in the market of a trade and indicates how many days the position was held until the trade was terminated
- cum. trading profit (%) (over all trades): This is the cumulative percentage profit measured by the capital invested per trade. If a profit of 300% was earned over a defined period of time in a trading package, this means that if a portion of e.g. 10,000 Euro was used in each trade, a profit of 30,000 euro was generated in this period. This key figure can be found in our performance charts.
- Number of Trades:
- These are the number of trades that are made in a trading package over a defined period of time.