Trading System Common Mistakes

Here are some common mistakes.
 

Only Entry Rules
 

 
Here the trading system is made up of Entry Rules only. This is a mistake because you've only told ATM when to place an order. You have not told it where to put that order. And you have not told it where to put the initial stop loss.
 

Assuming the stop loss will move
 

 
Here you have satisfied the 3 mandatory fields - the Entry Rules, Entry Values, and Initial Stop Loss Values. And because all the mandatory fields are filled in, ATM will place orders for you.

However, unless you want to do the trade management manually (which is fine), then the stop loss will never move. Maybe you thought that the above settings would "automatically" create a trailing stop loss. But the thing to realise is that the Initial Stop Loss Value is just that - an initial value.

If you want the stop loss to move after the trade has been opened, you need to put in Stop Loss Management Rules and Values as well. See here for a simple trailing stop.

Alternatively, or as well, adding a take profit is the other way to give you a chance of making money. See here for a simple take profit.
 

Forgetting that ATM will do exactly as you tell it

Let's say you want to enter a long trade when a fast SMA crosses from below to above a slow SMA (and vice versa for shorts):
 

 
This is close, but not quite. Following the rule of "ATM will do exactly as you tell it", hopefully you can see that you have not set up a cross-over at all. You have only told it to enter Long whenever the SMA(20) is above the SMA(50) - not necessarily that the previous bar had the SMA(20) below the SMA(50).

You need one more rule to complete the cross-over aspect, as demonstrated in this cross-over example.
 

Mismatching #1, #2, etc

There are Stop Loss Management Rules and Values #1-#9, and Take Profit Management Rules and Values #1 & #2. This gives you nine different ways to move the stop loss (plus the Move To Break Even settings makes 10), and two ways to move the take profit.

You don't have to use those Rules and Values in any kind of order. You can use Stop Loss Management Rules and Values #7 if you want, without having anything for Stop Loss Management Rules and Values #1 through #6.

However, if you are going to use Stop Loss Management Rules #7, then you need to use Stop Loss Management Values #7 as well. It's no good to use Rules #7 with Values #1, for example. See the Decision Flowchart for more detail.
 

Not putting both rules *and* values

The Rules specify when to do something. The Values specify where to do it. One without the other leaves ATM with only half the information it needs.

The only exception to this rule are the Move To Break Even Rules. There are no Values required with this one because the Value is going to be the entry price (i.e. the break-even point).
 

Putting the stop loss on the wrong side of the entry

Should the initial stop loss be on the wrong side of the entry price, ATM will not place the order.

To be specific, the initial stop loss for a Long order must be below the entry price. For a short order, the initial stop loss must be above the entry price.

Here's an example of a system set up incorrectly:
 

 
The Long settings are fine - the initial stop loss will be put below the entry, and the initial take profit will be put above. But it's the last 2 entries which are incorrect. The Short settings, most likely copied hastily from the Long, are also putting the initial stop loss below the entry price, and initial take profit above. That's the wrong way for shorts. So in this case this system will place Long orders, but will not place Short orders.
 

Hedging (on purpose or not)

You can hedge if you want, but if your account does not allow hedging then you need to do it in two different accounts. See how to hedge.

This goes for inadvertent hedging as well - where you don't purposely set out to hedge, but your trading systems ends up in both a long and short trade at the same time.

If there's any doubt in your mind about whether your system may allow inadvertent hedging, just follow the steps in that "how to hedge" post mentioned above.