Stock trading: love, honor and obey your computer!

Tongue on the cheek

With my tongue on my cheek, I said, “Machines understand Wall Street, but the human mind cannot.”

EFFECTIVE MECHANICAL TRADING SYSTEM

But seriously, what I’m really saying is that using a computer and an effective mechanical trading system to earn consistent real money in the stock market is the only way to go.

Almost 20 years ago, during a ski trip, I developed a trading method, written in a yellow legal pad at the time, which, with some modifications, continues to operate to this day. Subsequently I programmed this trading system, wrote a book, “How I Quit My Job and Turned $ 6,000 into a Half-Million Transaction,” and even posted a hundred pages of my broker’s statements.

I remain sensitive to the fact that many tend not to believe that my unique approach to trading works and today I am satisfying my need to “test it out” by putting my real-time trading on 96 stocks on the internet multiple times a day. I also publish all the operations already carried out, and previously published on this same website, since December 2009.

My goal now is the same as always, to get at least 100% annual profit on my investment and do it with very little risk.

WHY USE A COMPUTER?

When most people start trading stocks, they start by talking about their favorite broker who gives them good advice. Or perhaps they speak of a good “value selector” that they have found on the Internet. Or perhaps they do it themselves through long research of various companies and economic fundamentals.

In my opinion, all of these 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 religiously follow your computer’s instructions day after day, month after month, and year after year. And to this I could add: diversify by taking many operations and maintain no more than three days.

Putting your own emotions aside along with your brilliant judgment and letting your computer think is not easy. In fact, judging from my conversations with hundreds of merchants, few can. But if you can do it, if you have the right things, and if you can truly believe in the superior wisdom of your computer, the riches in the market 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” during some operations, but then, if the system starts to lose a bit, they will start to skip some operations or quit some operations early and so on. Very soon they no longer have a system and are losing money.

To “follow the system” you must hand over all business 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 things?

WHY YOU SHOULD GET TO THE AUTHORITY OF A MACHINE

I have been operating this way for almost 20 years and getting those 100% returns almost all the time. But let me pull out an old EXCEL spreadsheet to illustrate with real-time results why I believe in machine superiority.

This spreadsheet is for real-time trading that I conducted in 1999, over four months, with an account of approximately one and a half million dollars. Most don’t 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 spreadsheet listed the real-time profit and loss for each trade. So I started by organizing all those trades in descending order, from most profitable to least profitable. These are some of the initial statistics that occurred to me:

1899 trades

Most profitable = 11,792

Least profitable = (-6,675)

Net profit = 437,305

Average trade (lost profit) = 230

Keep three things in mind: 1) Trade a lot to spread risk across many trades. 2) Average trade (loss-profit) seems small. 2) Return on initial investment is adjusted to approximately 100% for annual return.

The trade I post today today is not much different from these previous trade statistics, but I have adjusted the trade 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 would not be able to track 1899 exchanges without a computer. You won’t find 1899 stock picks anywhere, and you won’t have time to research 1899 operations. The only way to trade this way is to relax and let the programmed computer do the thinking for you.

But there is another, even more critical reason to bow to the authority of the computer when operating this way. Remember I said before that many aspiring merchants will start to ignore the computer and start skipping some exchanges?

Skipping trades and ignoring your computer is the worst thing any merchant can do.

This is why. I took this spreadsheet and calculated how many exchanges would equal 5% of the 1899 exchanges. I came up with 95 exchanges. So I put the top 95 trades in a separate column and added the total. The sum of those 95 major exchanges was $ 433,116! That’s almost equal to our net profit of $ 437,305 on all 1899 trades!

In other words, that means that only one in 20 exchanges will make this system profitable and only one in twenty exchanges will result in those 100% annual returns we are looking for. Eliminate those out of 20 exchanges and we have nothing but a lot of hard work without any positive returns.

So if the aspiring trader starts to skip exchanges, rest assured that he will skip these 5% of great exchanges. The reason good exchanges will always be skipped is that good exchanges generally look terrible at first. To win in the market, you must be in the minority betting against the majority and if the trade looks bad, the majority will not accept it. This is why good exchanges look bad and the novice trader will ignore the computer and skip all the good exchanges.

The only way to avoid this is to park your bright business mind somewhere else and turn yourself in to the computer. The computer will not skip the exchanges and will always follow the system. LOVE, HONOR and OBEY your computer and you will get riches in the market beyond your dreams.

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