Develop a mechanical stock trading system for Singapore stock market

Abstract

This project is aimed to develop a fully mechanical trading system. Fully mechanical means that the decision to trade only comes from mathematical and statistical calculations. It does not involve any news, personal opinions or the company performance. Only when the trading is mechanical, then the trader will be relieved from the adverse psychological stress while investing their hard earned money. The research is studied in a way that using technical analysis, it is possible to create mechanical trading system that is profitable and easy to use. This project also make good use of the trading software, “Metastock”, to implement the trading analogy into practice. It includes the programming and testing of the trading methodologies, and also scanning through the market for stocks that matches the trading methodologies. I have experiment some trading methodologies and along the way, I have faced difficulties and failure. But after reviewing the failed trading systems, then I could finally create the final mechanical trading systems. We could never predict how the stock market is going to move in which direction. But I have achieved the objective of using technical analysis which to obtain large gains from successful trades which exceed small losses from losing trades. This final system is back tested and has a very low risk assessment result by the “Metastock” software. I have created it in such a way that it is very easy to use. The Metastock would need to be installed with my program files and with the help of a daily check list and an ETET table. Wealth accumulation can be achieved through trading with my mechanical trading system. The trading process would only take about 30 minutes for every trading day.