COOLTRADE PERFROMANCE TIPS By Regina Guinn. Here are some things that subscribers should be aware of when running an automated trading platform.

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1 COOLTRADE PERFROMANCE TIPS By Regina Guinn Here are some things that subscribers should be aware of when running an automated trading platform. Run Long and Short Strategies The markets go down, often times, more than they go up. Therefore, it is important to run a Long AND a Short stock trading strategy. Shorting the market is just as easy as going Long, since the software manages the positions and can just as easily take profits no matter which direction the market or your positions are going. If you set your auto trading program to take a

2 maximum of 5 long positions and a maximum of 5 short positions, then no matter which direction the market is moving, you can take profits on something. One of the things we have learned with robotic trading is that those profits can add up quickly and can be more profitable than buying and holding positions forever. When you buy and hold, you may end up riding the stocks higher, then lower again without ever taking profits. For new traders: Short means that you want the stock to go down in value, and Long means that you want the stock to go up in value. It has nothing to do with how long you hold a position. Consider Number of Long and Short Strategies Per Account Due to the size of the online trading platform, there may be a limit to the number of strategies that you can have loaded on each account. If you want to run, say two long trading strategies, then you may need two accounts. Also confirm if you have enough memory on your computer for two or more accounts. Experienced active traders may run two or more live long and short strategies, while having additional accounts for trading strategies that they are testing in a simulator mode. Consider Blocking Certain Symbols Your automated day trading system should include the ability to block certain symbols from trading. For example, if you're running a long trading strategy, you won't want to buy Exchange Traded Funds (ETF's) that short the market. More information on Exchange Traded Funds is available at Yahoo Finance. Add to Advancing Preferences The best automated trading systems will include the ability to add to advancing or declining positions. Within CoolTrade, Advancing Preferences will tell the Auto Trader what to do when your stocks' prices are increasing. You may choose to either add or not add additional shares to profitable positions. If you decide to add to these positions, you can choose to add additional shares if today s current bid price is a certain amount greater than the highest purchased price or you can use the system predefined table which based on your inputs to the max trading range. The advantage in choosing to add is the potential to gain additional profits as the stock is going up. There is always a risk that if you add to already profitable positions that you may be overpaying and the stock may drop. Add to Declining Preferences Declining Preferences will tell the Auto Trader what to do when your stocks' prices are decreasing. You may choose to add or not add additional shares to losing positions. If you decide to add to those positions, you can choose to add additional shares if today s current bid price is a certain amount less than the lowest purchased price or you could use the system predefined table which based on your inputs to the max trading range. The advantage in choosing to add is the opportunity to buy when the price is going down. There is always a risk

3 that if you add to already declining positions that the price may not recover before the position is sold. Set Profit Requirements Robotic trading programs should give you the ability to enter profit requirements and set parameters on how to handle the positions if they continue to advance. You can tell the CoolTrade Automated Trader to stay in each position until after it has reached your profit goal. This tab also contains safety measures that you may take, such as: -Profit Protection, which is a reduced profit goal -Pullback after Reaching Profit Goal -Re-Entry Pullback -Stop Loss -Trailing Stop Loss Watch the Sectors Display Some automated stock trading programs visually display the percentage of symbols up and down in each sector from the specified time frame to the current time so you can see how the market is turning. This feature is available in CoolTrade and is useful in watching the market direction at a more detailed level than just looking at the major indices. It shows the move of sectors within the last 1 minute, 5 minutes ago, 10 minutes ago, 15 minutes ago and 30 minutes ago. Under the last 5 minutes there are 5 boxes each labeled with a number 1 through 5. If the box is green then it was up that many minutes ago. If it is red, then it was down. For 1 minute

4 through 30 minutes, the percentage of the symbols that is up is displayed in green. The percentage of the symbols that is down is displayed in Red. Set Profit Goal This is the minimum price increase you expect your stock will gain before its position should be closed. In CoolTrade, you have two choices when specifying your profit goal. You can do this in the form of a fixed amount or a percentage gain from your entry price. If you would prefer to use the percentage gain from your entry price, you can also specify a minimum amount in case the percentage gained is too low. Specifying the profit goal doesn't guarantee that you'll make this profit - the stock will need to reach this level before the Auto Trader closes it. Set PullBack After Reaching Profit Goal After the stock reaches its profit goal and continues to rise, the CoolTrade Auto Trader will wait and let the profit increase. If the stock price pulls back (decreases) this amount after it has already reached your profit goal, the Auto Trader will close the position and lock the profit. This pullback value has no effect before the profit goal is reached. If you would prefer to use the

5 percentage gain from your entry price, you can also specify a minimum amount in case the percentage gained is too low. Consider Re-Entry Pullback This is the amount that the stock must move before the Automated Trader will consider reopening a position after it is closed. If you would prefer to use the percentage gain from your entry price, you can also specify a minimum amount in case the percentage gained is too low. If you set this value to zero, the Auto Trader will re-open the position for a stock only based on the Open New Position Rules. Consider Stop Loss Most sophisticated stock trading systems will allow you to set stop losses and trailing stop losses. The automated trader will close your position if the stock price declines by your stop loss amount from its entry price. At CoolTrade you can use the percentage gain from your entry price, you can also specify a minimum amount in case the percentage gained is too low. Some traders set the stop loss at the maximum in the system of $300, because they don't want to sell, therefore realizing a loss if the stock goes down. Consider Trailing Stop Loss This is similar to the stop loss, except its loss will be measured from the stock's highest point achieved during the trade. If you would prefer to use the percentage gain from your entry price, you can also specify a minimum amount in case the percentage gained is too low. Again, some traders set the trailing stop loss at the max but will risk a margin call in doing so. Know SEC Day Trader Rules The Securities and Exchange Commission (SEC) has imposed a $25,000 minimum on accounts they classify as day traders. The definition involves the number of completed single-day trades in a five-day period. More information about these regulations is available at It's important to understand if you will be day trading first. All pattern day traders must maintain a minimum of $25,000 in equity at all times. Traders can satisfy a margin account day trade minimum equity call by closing positions or by depositing additional funds and/or marginable securities. Once an account has shown a pattern of day trading, the $25,000 minimum equity requirement remains on the account permanently. Day traders will want automated trading software that tracks and displays the number of day trades remaining. CoolTrade allows you to choose to have the Automated Trader enforce the SEC day trader rules. If the number of your day trades exceed five during last five trading days including the current trading day and your account value is below the SEC required $25,000, the CoolTrade Auto Trader will cease the automated trading. But the manual trades through the Auto Trader are still available. If you do not select this option, CoolTrade Auto Trader will let your broker enforce the SEC rules.

6 Decide the Amount to Invest The amount you decide to invest depends on your trading style. A conservative trader can start with as little as a few thousand dollars. Please consult your broker for the type of account and funding requirements to suit your trading needs. Some CoolTrade traders have found that $30,000 can a good starting point, as it allows you to do 2:1 margin and qualifies the account for the SEC Day Trader Rules with a little extra to spare. If you don't have $30,000 to invest, you can still use CoolTrade. However, you won't necessarily be able to buy and sell the same security in one day due to the SEC Day Trader Rules. That means that you won't be able to close your open positions, even if you've met your profit requirements before the end of the trading day. Remember, it depends on the strategy that you choose, your comfort and experience level. Use Caution During Earnings Announcements When earnings reports are released and the results are lower than analysts' expectations, as is the case in a Bear Market or during a transition between the two, the stock can take a big tumble. If you want to guard against this, you can add a condition in CoolTrade to your Open New Position criteria such that the Days To Next Earnings are Greater Than x (days). Some traders use 5, 10 or more days. However, if it's a Bull Market, by adding this restriction, you could miss an upside earnings surprise and the profits that accompany it.

7 Reflect on Down Days Before Making Changes When the market has down days and you lose money, you don't necessarily need to change your strategy. Look at your trades for the remainder of the month and if they've been profitable, then stay the course. Some long strategies will open more positions during a down day, when the prices are lower. You may sometimes make a profit if the market is down in early trading and if it bounces higher later in the day. Review the overall results of your trading strategy for at least four weeks. Weeks of losses or no trades when the market is up will indicate that your strategy likely needs to be revised. See the off the shelf Strategies that are available at no additional charge to CoolTrade subscribers. Schedule Your Auto Trader to Turn on Automatically To ensure that you are trading right at the market open when a lot of the action occurs, schedule your PC to turn on the Auto Trader automatically. For many PC's, the Schedule Task function is within the Control Panel. Many stocks trade heavily in the first 5-30 minutes after market open. Some close positions in the last minutes before the market closes. Max Bid / Ask Range The max bid/ask range is the maximum bid ask difference that you will accept before any position is opened. Some automated trading programs will allow you to set a limit on this. You'll want to consider how wide a "spread" you'll accept. Since you Buy on the Ask Price (higher number) and sell on the Bid Price (lower number), you are immediately a loser at the instance you open a position. How much of a loser you are depends on this spread. You can have a huge advantage if you only enter trades while the spread is small. In fact, this is such an important rule that all of the default CoolTrade strategies have the Max Bid/Ask Range set to.02. Research Brokers Before Trading in a Retirement Account You can you day trade in an Individual Retirement Account (IRA) but not all firms allow your trade proceeds to be available to continue to open new positions immediately. Interactive Brokers is the only broker that we are aware of that offers something called an "IRA-MARGIN account. All other brokers only offer IRA-CASH accounts. An IRA-MARGIN account frees up your funds immediately after every trade and thus allows you to continue opening and closing positions without a waiting period. Whereas, an IRA-CASH account takes 3 days to clear funds and makes you wait 3 days before you can utilize the funds again, even if you have no open positions. Even though they call it an IRA-MARGIN account, you still cannot borrow funds or short in an IRA account. For more articles on CoolTrade TM go to For more information on CoolTrade TM go to

8 To purchase CoolTrade TM contact: Richard D. Dover RoboticReturns Independent Sales Affiliate