What would it be worth to you to be able to trade Apple without fear, to feel completely confident in your trading decisions and execution? What if the hard work of analysis and timing were no longer issues, you simply get the signal and trade? What if you knew hours before hand what the trade was going to be, and exactly when you were going to enter the trade into your smart phone?
I know, this sounds like a dream scenario for any trader, or for someone that has little time to trade because of other commitments, like a job. What if the emotion and angst were completely removed, you were freed from the drudge work of analysis, then had plenty of time to execute, freeing you up to do whatever else fits your fancy?
This is what systems trading is all about. Taking your freedom and sanity back. Allowing you to spend time on other important matters, while growing your trading account.
If you’re spending hard hours laboring over how to make a profit, only to find you are losing as much or more than you are making, or you go through huge swings in your P&L, constantly on an emotional roller coaster, then you are working for less than nothing.
There are two main things you should ask yourself…
- Do I enjoy the fear I invoke upon myself every time I push the trade button?
- Can I trade completely without emotion, and perform analysis better than an expert system?
If the answer is yes to both of these questions, then all I have to say is good luck to you. You have won a gold star for being a first class masochist. You must subscribe to the saying…
What does not kill me, makes me strongerFriedrich Nietzsche
So, if you’re are going for character building, then have at it. But if what you really want is to make a profit, and retain your sanity, then there’s a much better way…and it’s called systems trading, or trading with alerts.
The best part about systems trading is that you know in advance what to expect from your strategy. It was designed by someone that probably has a lot more trading experience than you, it has been tested under every conceivable condition, it has been proven to work, and it performs perfect execution every time.
Does this mean it wins every trade? Of course not, that kind of system does not exist. However it wins with statistical regularity, and the performance is as good as one could expect, enough so that you no longer have to worry, you just have to get good at pushing the trade button when the signal comes.
One More Thing …often overlooked
Perhaps the most important thing that systems trading provides for you, something that even the most experienced traders pay little attention to, or completely put off, or don’t understand the impact, because they have yet to master the simplest of things…and that’s money management.
How do you deal with money management? Do you have a strategy and plan that is well thought out, calculated to give you optimal performance over hundreds of transactions? Or is it ad hoc, driven more from the fear of losing than from understanding the principals of capital preservation and risk?
Most traders don’t understand why price is going against them, and in that ignorance, or stubborn belief that it will turn around, they watch price go against them, and their P&L sink lower and lower. You should have gotten out a long time ago, but you couldn’t because you are programmed to want to win.
What most people don’t realize is that money management has as much, or in many cases, even more to do with your overall profitability than the trade setup does. Yet hardly any traders know what it is, never mind how to create a plan and execute it. The auto-trader does it for you. Problem solved.
News Driven Why technical analysis fails
As big as Apple is, it is more subjective to news and rumors than most small high beta stocks, sometimes to the most arcane and insignificant rumor. That’s because there are so many impassioned people playing the stock. They equate the stock with the company, and even more so with their own personal philosophy.
Apple Analysts are the bane of Apple traders. They are mostly Ivy league schooled people that work for the advisory arms of investment banks, who have little or no actual industry experience, or understanding of the Apple ecosystem. And they are tasked with advising retail customers on how to trade Apple, but what they really do is compete with each other to see who can inject the greatest amount of controversy and FUD, to make headlines.
Apple is also the tool of many fund managers, it’s often the biggest holding, and so when there’ negative news, there’s often a mass exodus. You can’t predict these events, and the news that often sparks them occurs through channels that are not mainstream, and so you sit there dumb-founded wondering what happened.
Technical Analysis (TA) simply doesn’t work in this kind of environment. Besides the fact that Technical Analysis relies a great deal on a trader’s subjectiveness, as everyone seems to interpret patterns in their own way, there is little statistical backing that TA, like candlestick patterns, or Head and Shoulders, have any more than a 50/50 chance of working.
I suppose that’s better than a 30 percent chance, so if you have a handle on money management perhaps you can salvage a tie, or a eek out a small profit every once in a while.
The Answer Let a system to the hard work
Automated systems traders are not phased by all of this. They can often employ dozens of strategies, with deft execution, and zero emotion. They have no fear, and can evaluate complex scenarios at light speed, and make the correct decision with amazing regularity.
This is something you simply can’t do. So, why not let a system do the hard work for you? You can still enjoy the action, just not all the pain. And quite frankly, it’s a lot more fun making consistent profits, while completely relaxed, than throwing money down a pit, with fear looming over you with virtually every trade.