Actually, when I first started trading, I *did* make money. I doubled my initial investment in under two years. Looking back, I realize that I did everything right at that time:
1) I studied and studied, reading books on psychology, trading system development/testing/optimization, trading methodologies, technical analysis, and fundamental analysis. I read I think around twenty or twenty five books on the subjects.
2) I paper-traded and watched charts for more than a year, testing my ideas and developing them into full-fledged systems or methodologies.
3) I absolutely didn't trade until after I had sufficient proof that I would turn a profit.
Lately, I lost most of my account when I switched to futures from stocks. I had gotten lazy and overconfident with my success at stock-trading and simply didn't do the things I spoke of as being so important.
My best system was easy: scan through a list of recent high-performing stocks (usually gotten from the news or websites).
My programs would run a mechanical system on each stock's chart of daily OHLC bars and select the ones that were in tight consolidation just after rapid movement. All I had to do was put a long bracket on top and a short bracket underneath to catch the inevitable explosion out of the consolidation, and voila, I'd invariably make small but steady money (about $250 on a $3000 position, over the course of 2 weeks per position).
To those in the know, I was basically trading a straddle but using the underlying stocks instead of options. That way, I could avoid the nasty loss of time value that option traders face and have an essentially unlimited amount of time until the long or short bracket triggers a position entry.
That's it! I tell people my system freely because what I use has been common knowledge for years. Besides, I know that even if they use it, they may or may not actually succeed at using it thanks to the more important factors of psychology and process.
1) I studied and studied, reading books on psychology, trading system development/testing/optimization, trading methodologies, technical analysis, and fundamental analysis. I read I think around twenty or twenty five books on the subjects.
2) I paper-traded and watched charts for more than a year, testing my ideas and developing them into full-fledged systems or methodologies.
3) I absolutely didn't trade until after I had sufficient proof that I would turn a profit.
Lately, I lost most of my account when I switched to futures from stocks. I had gotten lazy and overconfident with my success at stock-trading and simply didn't do the things I spoke of as being so important.
My best system was easy: scan through a list of recent high-performing stocks (usually gotten from the news or websites).
My programs would run a mechanical system on each stock's chart of daily OHLC bars and select the ones that were in tight consolidation just after rapid movement. All I had to do was put a long bracket on top and a short bracket underneath to catch the inevitable explosion out of the consolidation, and voila, I'd invariably make small but steady money (about $250 on a $3000 position, over the course of 2 weeks per position).
To those in the know, I was basically trading a straddle but using the underlying stocks instead of options. That way, I could avoid the nasty loss of time value that option traders face and have an essentially unlimited amount of time until the long or short bracket triggers a position entry.
That's it! I tell people my system freely because what I use has been common knowledge for years. Besides, I know that even if they use it, they may or may not actually succeed at using it thanks to the more important factors of psychology and process.
