TONGUE IN CHEEK
With tongue in cheek I have stated, “Machines understand Wall Street, but the human mind cannot”.
EFFECTIVE MECHANICAL TRADING SYSTEM
But seriously what I am really saying is that using a computer and an effective mechanical trading system to make consistent real money in the stock market is the only way to go.
Nearly 20 years ago while on a skiing trip I developed a trading method, written on a yellow legal pad at that time, that, with a few modifications, I continue to trade to this day. I subsequently programmed this trading system, wrote a book, “How I Quit My Job and turned $6,000 into a Half Million Trading”, and I even published a hundred pages of my broker statements.
I remain sensitive to the fact that many tend not to believe that my unique approach to trading works and today I satisfy my need to “prove it” by putting my real time trades in 96 stock on the Internet several times a day. I also post all the trades already taken, and previously posted on this same web site, going back to December 2009.
My goal now is the same as always, to get at least 100% annual gain on my investment and to do so with very low risk.
WHY USE A COMPUTER?
When most people start taking about stock trading they start by talking about their favorite broker who gives good advise. Or perhaps they talk about a good “stock picker” they have found on the Internet. Or maybe they do it themselves through lengthy research of various companies and economic fundamentals.
In my opinion all such methods are doomed to failure over time because they involve human judgment and human emotions. A much more effective and consistent way to trade is to use a programmable trading system and follow the instructions of your computer religiously day after day, month after month and year after year. And to this I might add: diversify by taking many trades and hold nothing longer than three days.
Putting your own emotions aside along with your brilliant judgment and letting your computer do the thinking is not easy. In fact judging from my conversations with hundreds of traders, few can do it. But if you can do it, if you have the right stuff and if you can come to truly believe in the superior wisdom of your computer, riches in the marketplace can be yours.
YOUR COMPUTER FOLLOWS THE SYSTEM AND YOU FOLLOW THE COMPUTER
“Following the system” is what few people can do. Most people can “follow the system” for a few trades, but then if the system starts losing a little they will start skipping some trades or getting out of some trades early and so on. Pretty soon they no longer have a system and they are losing money.
In order to “follow the system” you must surrender all trading authority to your computer and do exactly what it tells you to do, day after day, year after year. Do you think you have the right stuff?
WHY YOU MUST BOW TO THE AUTHORITY OF A MACHINE
I have been trading this way for nearly 20 years and getting those 100% returns almost all the time. But let me pull out an old EXCEL spread sheet to illustrate with real time results just why I believe in the superiority of machines.
This spread sheet is for real time trades I took in 1999, for four months, trading an account of about one and a half million dollars. Most do Avatrade Trustpilot reviews not have that kind of money to trade, but trust me; these identical methods can be used on an account with as little as $3,000.
I took 1899 trades in those four months and the spread sheet listed the real time profit and loss for each trade. So I started by arranging all those trades in descending order from most profitable to least profitable. This is some of the initial statistics I came up with:
Most profitable = 11,792
Least profitable = (-6,675)
Net profits = 437,305
Average trade (win loss) = 230
Please note three things: 1) I trade a lot in order to spread risk over many trades. 2) The average trade (win loss) seems small. 2) The returns on the initial investment are about 100% adjusted for annual return.
The trading I post daily today is not much different from these older trading statistics but I have adjusted the trading for a $20,000 account.
But I still believe in the importance of bowing to the authority of a machine. First of all it should be noted that a trader could not possibly keep track of 1899 trades without a computer. You are not going to find 1899 stock picks any place and you are not going to have time to research 1899 trades. The only way to trade this way is to relax and let the programmed computer do the thinking for you.