Back Office Trader - Rules
The following details are not to be considered recommendations to buy or sell any stocks or shares, they simply enable you to follow my trading activity.
Please read the disclaimer below.
I don’t believe we should over-complicate trading. Years ago when there were a lot fewer traders it was important to develop your own trading style and system, including choosing the right technical indicators to use. That’s all gone. Now that there are hundreds of thousands of traders we simply can’t beat them all, but because they are all looking at the same information and in most cases coming to the same conclusions on which stocks to buy or sell, they then create breakouts and trends. The Back Office Trader system identifies and captures these breakouts and trends and then we simply follow them. We follow the trend until it reverses and then we close the positions. This concept is not new, it’s been known and used since the 1960’s and before. We must accept a lot of small losses and cut them short. We must then let our profits run and run until the trend reverses direction. We won’t be right all the time, but if we are right even 50% of the time and cut our losses short and let our profits run we would make very good net profits. ( Incidentally, many traders actually do the reverse, they cut profits short and let losers run, this is a big mistake ).
A database has been developed to manage the data and provide the triggers for when to open or close a position.
Please do not attempt to use this system without reading the three recommended books at the bottom of this page. It is very important you understand the concept of the Back Office Trader system and trading in leveraged instruments.
Back Office Investor (BOI) versus Back Office Trader (BOT):
Back Office Investor (BOI) is for long term investing and is supported by the information and data contained within the Back Office Investor web-site. All information contained within the Back Office Investor web-site other than this page is for the long term investing system. Only this single page “Back Office Trader” relates to the short term Back Office Trader system.
Back Office Trader (BOT) is a short term trading system. This system utilises leveraged products such as Spread Bets which are deemed to contain much more risk than long term investing. Only experienced traders should use leveraged instruments as you can lose more than your initial investment very quickly, this system enables us to go long or short.
Short term trading requires a very different mindset to long term investing, but if the rules are strictly followed then this can be a profitable way to trade.
Back Office Trader uses a combination of price breakouts, trending analysis, price performance, price changes and trading volumes to generate the open and close signals. The fundamental data that is required for Back Office Investor is not applicable due to the short term nature of the data and signals used in short term trading.
Back Office Trader Rules:
It is not necessary to over complicate trading, anyone can learn the rules and become a successful trader, these are the basic rules for short term trading.
1. Use price breakouts to generate open positions. (up for long and down for short)
2. Confirm the price performance over a set period is positive for long positions and negative for short positions.
3. Use price percentage change over a set period as a close position (this indicates a trend reversal)
4. Use price percentage movement in points over a set period to calculate stop loss as a value (use a percentage of the original value as the stop loss)
5. Keep each trade to less than 5% of the total fund value. ( Meaning, keep margin / deposit to less than 5% of your total fund value )
6. Cut your losses short and let your profits run.
The information below is necessary to follow the Back Office Trader System.
The following rules and principles must be followed at all times to become a successful Back Office Trader:
1 – Learn the rules of trading:
Before you start risking your hard-earned cash, use a demo account for at least 6 months to test your trading system.
2 – Never spend more than 5% of your total fund value on one stock: ( Meaning, keep margin / deposit to less than 5% of your total fund value )
If you risk everything on one stock and then you are wrong, it’s over, taking smaller risks will ensure you don’t lose everything and can fight another day, this is very good risk management.
3 – Know when you are getting out before you get in:
Be clear on what the exit strategies are before trading, this will avoid you holding losing stocks for too long.
4 – Cut your losses short and let your profits run:
Losses are unavoidable, accept them and keep them small, this the biggest mistake many traders make.
5 – Don’t add to a losing trade:
Losing trades should be sold if the sell trigger has been generated, if not then hold, but do not add to losing trades, adding to losing trades will compound the loss, don’t be afraid to take a loss, this is a natural part of trading as we can’t be right all the time.
6 – Ensure you can perform your own due diligence:
Don’t just buy or sell because of a friend’s recommendation, ensure you have the training to perform your own due diligence.
7 – Don’t trade on market sentiment:
Trading on sentiment is dangerous, as we know sentiment causes the markets to rise and fall, we can react to the rise and fall caused by the sentiment, but not the sentiment itself, if our buy and sell signals are generated then we act.
8 – Keep your emotions out of trading:
Trading on emotion will cause the buying and selling of stock without good reason, emotions have no part in trading, we only trade based on our rules.
9 – Be very disciplined in your investing approach:
Adhere to your trading rules ( don’t keep changing the rules due to changing market conditions ).
10 – Be patient at all times:
Be very patient at all times, there is no need to rush, there is no need to trade everyday, if nothing meets your trading rules then don’t trade, only enter the market when the signals and conditions meet the rules.
11 – Avoid listening and especially reacting to the noise:
News, commentary and opinions are everywhere 24/7, much of this is noise and should avoided, if a trading system is in place and works then we don’t need the noise.
Please don’t underestimate the importance of following these principles, following these principles are key to becoming a great trader
Trusted Trading Platform :
IG Markets Ltd
Average monthly returns since 2017 while developing the database system and back testing has been 15.5% the new revised live database system has been fully operational since January 1, 2019 ( we expect higher monthly returns with this revised database )
1,000 compounded at 20% per month for one year (must use the power of compounding)
10,000 compounded at 20% per month for one year (must use the power of compounding)
Opening a Long Position ( opening a ticket )
Opening a Short Position ( opening a ticket )
Must read or listen to these three books before following Back Office Trader