I personally started trading the stock
market when I was 13 years old. Of course,
it was only on paper. Who would let
a young teenager play the market with
real money? Twenty years later, I trained
and was a licensed New York Stock Exchange
broker for real. Let me share with you
what I have learned about stock trading
systems.
Everybody who studies the market
closely will eventually think that
they have found the secret of all
stock trading systems. That includes
beginners as well as the pros. However,
when you say the phrase “stock
trading systems” the immediate
thought is that you are talking about
some way to forecast the future. That
is true, but only partially.
Forecasting trading systems try to
predict what will happen tomorrow
based on what happened yesterday.
For example, for two decades, if the
AFL won the Superbowl, the market
ended lower for the year. If the NFL
won, the market went up. Had you followed
that as the best of all trading systems,
you would have made money. Other stock
trading systems that are created to
forecast, rely on phases of the moon,
even the weather. Did you know that
when the weather is bright and sunny
in New York City, the stock market
rises more often on those kinds of
days than when the weather is cloudy
and rainy? That is a fact that you
can take to the bank. Nevertheless,
is this idea of forecasting the market
really one of the stock trading systems
that we should be interested?
My experience tells me that when
we look for trading systems, we ought
to be looking for a way to profit
after we are in the market and worry
less about forecasting the direction
of the market. Never are any of the
stock trading systems that try to
forecast the market, right 100% of
the time. However, what if I told
you that you could make money in the
stock market even if you are wrong
about the direction of the market
most of the time? Now that would be
one of the stock trading systems worth
knowing.
Suppose you were able to devise two
systems; one for when the market was
going up and another for when the
market was going down. Meaning when
you made money, you made a lot and
when you lost money, you lost a little.
That would be the mother of all trading
systems that you could find.
When you look at the computerized
trading programs that tell you they
have a variety of stock trading systems
that they are using, always question
if the program gives sound advice
to keep from losing when the stock
market goes down. The same approach
should also be taken with human stock
market advisers who tell you about
their stock trading systems.
