A Mechanical trading strategy

I am going to share more about mechnical trading and trading strategy here. Okay, let us start with some basic stuff...

When I started to trade HSI future. I found that it requires much of my attentions. It can drop or up like hell in a few minutes. If you are in a wrong position, you can lost your month's salary in a minute. I was a busy guy (actually a lazy guy). I cannot afford to have my only two eyes on this thing every minutes. I will definitely get fired before I can make any fortune from the future market. I finally found this tool call Tradestation and the concept all mechincal trading that safes me from getting fired.

So what is a mechanical trading strategy. A mechanical trading strategy is a quantified decision mechanism that tells the trader or the "trading robot" when to enter or exit a position, when to stop and determines the position size. the key point here is "quantified'; that means there is no trend reading by drawing trend lines (although this can also be quantified), no emotional guessing, no personal guts feeling.

More importantly, if you don't have a "trading robot" (automatic trading program) to execute your trading strategy. You have to straightly follow the signal of your trading strategy when you trade or else your trading strategy means nothing.

A trading strategy can be as simple as:

Entry: when 20 days moving average cross over 50 days moving average, buy.
Exit: when 20 days moving average cross under 50 days moving average, sell.
Stop: 10% cut loss

But his may not a robost strategy. How to buil a robust mechnical strategy? to be continued...