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I am around my computers most of the time and I can usually reply by E-mail  within  a few hours. My e-mail is

bobburan@juno.com

OR if you like contact forms this one works.

In early May 2010 the DOW Industrial averages dropped 1000 points and recovered, all in the space of about 15 minutes, and billions of investor money was lost.  Stock trading computers may have been responsible, but nobody is saying for sure.  Humans have not yet figured out what caused the greatest single price drop in stocks in investment history.

I think it is a little strange that human brains have not yet figured out what really was the problem with these computer stock trading programs, these machines of the mind.  They were programmed by humans but once networked and acting in unison, they seem to have defined their own sinister domain.  Personally I think Machines understand Wall Street, but the human mind cannot and the machines are taking over.  And if the machines take over Wall Street you are going to need a machine to make money.  If you are going to survive Stock Market Trading you must learn to Love Honor and Obey Your Computer.

EFFECTIVE MECHANICAL TRADING SYSTEM

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.  Your brain, no matter how brilliant you think it is, cannot do it.  Your brain cannot follow enough markets plus data and process that data fast enough.  But the greatest problem that the human brain has when competing` with computer stock trading programs is that the human brain is infected with the most nefarious of viruses, human emotions.

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 70 stock  markets up on this web site several times a day.  You can follow all my trades right here as they unfold.  I have been doing this since December 2009.

My goal now is the same as always, to utilize short term stock trading methods to get at least 50 percent annual gain on my investment and to do so with very low risk.

WHY USE A COMPUTER?

When most people start talking about stock trading they start by talking about their favorite broker who gives good advice.  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 (Please see: Trading Tips).

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.

WITH COMPUTER TRADING YOUR COMPUTER FOLLOWS THE SYSTEM AND YOU FOLLOW THE COMPUTER

“Following a trading 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

The “authority of a machine” is your computer stock trading program.  I post the results of one such program on this site several times daily and you can buy the program and a trading platform here (Automated Stock Trading Software).  But there are others and if you are really good you can program your own.
I have been trading this way for nearly 25 years and getting those 50% to 100% returns almost all the time.  But let me pull out an old EXEL spread sheet to illustrate with real time results just why I believe in the superiority of machines.

A Spread Sheet Confirms the Superiority of Computer Trading

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 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:

1899 trades
Most profitable = 11,792
Least profitable = (-6,675)
Net profits = 437,305
Average trade (win loss) = 230

Please note three things:

•   I trade a lot in order to spread risk over many trades.

•   The average trade (win loss) seems small.

•   The returns on the initial investment are about 100% adjusted for annual return.

If you go to my front page, Today Stock Market, and examine my current trading statistics you will see results similar to these 1999 results, but adjusted for a $1,000,000 account.

Computer Trading Allows you to keep Track of Many Markets

OK back to 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.

But there is another even more critical reason for bowing to the authority of the computer when trading this way.  Do you remember I said earlier that many wannabe traders will start ignoring the computer and start skipping some trades?

Computer Trading may keep you from Skipping Trades

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

This is why.  I took this spread sheet and figured how many trades would equal 5% of the 1899 trades.  I came up with 95 trades.  So I then put the top 95 trades into a separate column and summed the total. The sum of those top 95 trades was $433,116!  That is almost equal to our net profit of $437,305 on all 1899 trades!

Put another way that means that only one out of every 20 trades is going to make this system profitable and only one out of every twenty trades is going to result in those 100% annual returns that we are seeking.  Remove those one out of every 20 trades and we have nothing, but a lot of hard work with no positive returns at all.

So if the wannabe trader starts skipping trades rest assured he will skip these 5% great trades.  The reason why he will always skip the good trades is that good trades usually look terrible at the beginning.  To win in the marketplace you must be in the minority betting against the majority and if the trade looks bad the majority will not take it.  That is why good trades look bad and why the novice trader will ignore the computer and skip all the good trades.`

The only way around this is to park your brilliant trading mind someplace else and surrender to the  computers that are running your  stock trading programs.  Your computer will not skip trades and your computer will always follow the system.  LOVE, HONOR and OBEY your computer and you will realize riches in the marketplace beyond your dreams.   For a successful stock trader Computer Trading is the only way to go.

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Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.

  By Robert Buran

One of the Best Trading Tips I can Think of

Turn Your Stock Trading Hot with Normal Distribution Theory.
If you are looking for stock market trading tips let me give you one from a place that will surprise you, my college statistics book.  Yes, normal distribution patterns, taken from a dry statistics text book, may help you turn your trading hot.

I have been trading for nearly 25 years and consider any year that I do not make at least a 50 percent return on my investment a bad year. But I am cautious and I do not take big risks. So how can I have my cake and eat it too?

Well I have been arguing for some time that 100 percent returns and low risk should be the norm for a stock trader and in fact I wrote a book, “How I Quit My Job and Turned $6000 into a Half Million Trading”. And I published my broker statements to prove I really did that.

By the way it took me six years to make that half million bucks and my returns each year well exceeded 100 percent returns on my investment. I took about 10,000 individual trades and lived off the money I made.

Two Additional Trading Tips

So what are my trading secrets? I will give you a couple of my secrets right here:

• I get into to a lot of trades (diversity)

• I get out of my trades in two to three days (safety).

If you follow only those rules you will see your stock trading take a quantum leap in profitability. And because you are diversified and are out of the trades in two or three days your risk will be low.

I put all my trades in about 70 markets up on this website every day to prove my point, but if you do not believe that I say the proof is in the pudding. Let me give you a little statistical theory here.

Some serious market research about these three important trading tips

I am a serious market researcher and one of the things I have noticed is that a lot of market behavior follows normal distribution patterns. So just what does that mean?

• Let us look at a common measure of market behavior, daily range. Daily range is simply the daily high minus the daily low. If a market makes a high of 66 and a low of 61 the daily range is 5.

• Now let us take 100 market days and measure the daily range of a theoretical market and assume normal distribution of range for those 100 days. What we find is that 68 days have ranges of 5 or less. 95 days have ranges of 10 or less. 99 days have ranges of 15 or less. But there is one day out of the hundred with a range of 40!

• Put another way: For 68 days the range is 5 or less. But for 27 days the range is between 5 and 10. And for 3 days the range is between 10 and 15. And finally on ONE day the range is between 15 and 40!

NORMAL DISTRIBUTION AND STOCK MARKET STOPS

When we trade stocks we use stops to limit our losses. If we buy 50 shares of XYZ at a price of $50 per share and we want to limit our loss to $250 we will place an order to sell our 50 shares 5 dollars below where we bought or at 45 stop. Of course if our stop is too shallow it is almost always going to get tagged and result in us always losing small amounts of money with each trade. Conversely if the stop is too deep we are going to win more but when our deep stop finally gets hit the loss may wipe out all our gains.

Using normal distribution patterns is one way we can set intelligent stops. Using the hypothetical data above we know that in two out of every three market days the range will be 5 or less. Therefore if we bought 50 shares at 50.00 we can set our stop at 45.00, limit our loss to $250 and know that on any given day we have only one chance in three of having our stops hit. If we hold our trade for only two days we have a better than even chance of getting out of the trade without our $250 stop being tagged. And being as we are NOT limiting our upside potential that means that we are going to make money even if we only win 50 percent of the time.

HERE IS THE RUB

•  BUT here is the rub. If we get greedy and try to hang on to the trade 5 to 10 days without setting a deeper stop it is virtually certain any profit we may have held will go to a loss. If we have one chance in three of getting tagged on any given day we simply cannot hang around more than two days.

•  And while I have you thinking about stops, risk and length of trades let us quickly examine those who might consider “buy and hold” strategies. If you decided that you wanted to hold this trade for even 100 days you must, using the hypothetical data presented here, increase your stop from $250 to $2000 to accommodate that one outlier day with a range of 40. And there can be no assurances that you have a $2,000 upside potential to justify that risk.

WHY A SHORT TERM APPROACH TO STOCK TRADING WORKS

On the other hand with the two day approach you never risk more than $250 on any trade and you can move in and out of this market many times during the same 100 days. You can elect to get in only when the market is moving topside. And when it is moving sideways, which is usually about 85 percent of the time, you can go trade something else that is moving.

And that my friends, right out of a college text book, is a stock market trading tip that is worth its weight in gold and is offered here absolutely free. In fact I have, in the simplest terms that I can present here, demonstrated why short term stock trading works.

Getting 50 to 100 percent returns on your investment in stocks is not only possible, but it is possible with relatively little potential for significant equity draw down or risk. I have been doing this for many years and to prove my point I put my real time trades up on this web site every day.

The proof is in the pudding and what I have offered here is a simple statistical explanation for my success. I do not think that I could give  better trading tips than that.

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Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.

I am a stock trading dummy

Keep it simple stupid KISS.  There are a million ideas out there about how to trade stocks and there may seem like a million people trying to tell you how to do it right.  The good news is that you can ignore  them and improve the probability of your stock trading success.  You should be happy that you are a stock market dummy because this fact may help you in making real money in the stock market.

 Some of the smartest people I know are in the stock trading business and many are stock brokers and financial advisers.  I am going to let you in on a dirty little secret.  Of all the forces in the economy that have caused people to lose money in the stock market, none have been greater than the advice of financial experts and brokers.  There does in fact seem to exist an inverse relationship between intelligence and effective stock trading.  It would seem that the smarter a person is that the more effective they are in finding ways to cause you to lose your money in the stock market.

It has been scientifically proven that the performance of stock brokers in picking profitable stocks could be replicated by having monkeys throw darts at a page of stock listings in the Wall Street Journal.  So the first lesson for the wannabe stock trader is to plan to MAKE YOUR STOCK TRADING DECISIONS YOURSELF and stay away from those stock brokers in their pin stripe suits and shiny shoes. (See my article Do it Yourself Investing)

STAY AWAY FROM TECHNICAL ANALYSIS

 You should also stay away from technical analysis.  I call it wiggly line theory. Technical analysis of market behavior is pseudo science and frequently promoted by snake oil salesmen disguised as brokers and other financial advisers.  Other technical analysis proponents include trading system vendors and trading system software companies.

For some brokers and financial wizards technical analysis is a kind of religion promoted to explain what otherwise cannot be explained about markets.  It is the opium of stock market losers everywhere.  I call it WIGGLY LINE THEORY.  (see my article Stock Market Price)

 For example, the proponents of technical analysis may tell you to buy XYZ stock when the 15 day moving average crosses the 45 day moving average and then take profits on your positions next year when the stock moves into “overbought” territory provided that the stochastic confirms the sell signal.

 Hogwash and financial sophistry I say.   Again technical analysis of market behavior is pseudo science and if you are really fascinated by the technical analysis of markets you might also consider the study of cloud formations.   Both technical analysis and cloud formations have a kind of imaginative beauty to them and both can appear to have shape and meaning.  But then as the market moves and the winds blow those shapes and meaning disappear and are soon forgotten.  It is not a good idea to use technical analysis to determine where to put your money.

 You may ask, “But all the financial experts use technical analysis and why can’t I use this science to make financial decisions regarding stock market investment?”

 This is my answer: In the simplest terms technical analysis is pretty useless, not because its math and formulas are flawed, but because the data it attempts to organize and make sense of is predominantly random.  Short term stock market movement is predominantly random.  It is difficult to make sense of random data no matter how sophisticated are your methods of analysis.  It is garbage in and garbage out.  The randomness of the markets defeats technical analysis along with the bravest and brightest financial experts and traders.

 Be happy you are a stock market dummy.  If you can’t understand it you can easily shut out the noise and not become unnecessarily confused.

MARKET MOMENTUM THEORY

Let me illustrate with a pool hall example.  In pool one player makes the opening break shot by striking the cue ball with the cue tip causing the ball to move towards the racked balls on the opposite side of the pool table.  The cue ball can end up anywhere on the table, in a pocket or even on the floor.  However, because the original momentum pushed the ball from one side of the table to the other side of the table, probability favors that the ball will stop rolling on the opposite side of the pool table from where it was initially struck with the cue tip.

We can easily transfer this theory and apply it to stock market movement.   First we must define “significant price movement” and we can call it the “cue ball condition”.  So let us say that in a hypothetical market the “cue ball condition” is met if price moves higher by five dollars.  OK, now let us say that a market closes at a certain price on Monday.  But on Tuesday the market meets the “cue ball condition” by moving five dollars higher and so we decide to buy it at that price.  Now using the previously mentioned market movement theory we decide to always sell our positions acquired on Tuesday on the open on Thursday.

 So what will happen?  Well what will happen is that we will make money over time and that about 55% of our trades will be profitable.  Why?

 Because by first defining significant momentum we in effect turn stock market price movement into a cue ball headed for the opposite side of the pool table.  There is no guarantee that the ball will always end up on the opposite side of the pool table but momentum theory says it’s more likely it will end there than bounce back.  Similarly the stock that meets the “cue ball condition” on Tuesday is more likely than not to open higher on Thursday and if we sell it there we are more likely than not to make money.

 How do I know this?  Well first of all I have tested this very basic idea extensively and have traded similar ideas thousands of times.  In fact in one two year period, while trading around two and a half million dollars, I took about 10,000 trades and pushed millions and millions of dollars worth of trades through the marketplace while making about five million dollars in profits.

 But what was interesting is that I did NOT have a trading system that was 95% accurate.  Instead I used a simple system based on market momentum theory that won about 55% of the time and lost about 45% of the time.  Because of the random nature of short term stock market price movement I knew that 55% was about the best ANYBODY could do and I settled for 55% accuracy.  And by settling for 55% accuracy I made close to 100% annual returns on the money invested and I made nearly five million dollars in profits in two years.

BE HAPPY WITH A 5% “HOUSE ADVANTAGE”

 So 55% accuracy is not really so bad. If you can trade consistently with 55% accuracy you have a “house advantage” of 5%.  That means that for every $100 you push through the market you are going to make $5.  It’s like owning your own casino and YOU ARE THE HOUSE. (See my article, Is Investing in the Stock Market Gambling)-

 SOME ADDITIONAL RULES AND STRATEGIES

 Now that I have given you a robust theory of market movement that can make a lot of money for us stock market dummies let me just add a few more important rules and strategies.

• 1)      MECHANICAL TRADING SYSTEM:  Now that you have a theory, you should develop a mechanical trading system, and resolve to follow it for at least one year. (see my article, Automated Stock Trading)

•  2)      GET YOUR SYSTEM PROGRAMMED:  Put your system into a program that can be run on a computer.  You are a stock market dummy so now let your computer do the thinking for you.  You do not have to understand technical analysis; you just need to love and follow your computer.   You do not even have to think about markets; you just need to place the orders your computer tells you to place. (see Automated Stock Trading Software)

•  3)      DIVERSIFY:  Spread your money out thin in many markets.  We follow 96 markets and sometimes are in as many as 35 at a time.  Market diversity can protect you from aberrant price movement and aberrant price movement is an occupational hazard of trading random markets.

•  4)      IN AND OUT IN TWO TO THREE DAYS:  Limit your trades to two or three days.  The cue ball is struck and it goes forward and then stops.  It’s a short term move and so is stock market price movement based on momentum theory and probability.  Momentum theory ends with day 3 and oftentimes sooner.  But keep in mind that there is also great safety in limiting your trades to two or three days.  You have certainly heard stories of people who have lost everything in the stock market.  Let me assure you that the only people who lose everything in the stock market are people who let brokers do their trading for them and who marry stocks and refuse to sell them.  By making it a rule that you will ALWAYS get out after two or three days you cannot lose all your money and become a stock market casualty. (See my article, Stock Market Trading Tip )

 So stock trading for dummies may be the way to go.  Ignore the experts, trade simple ideas you can understand, and let your computer do the thinking for you.  By following these rules for stock trading for dummies we can easily take over Wall Street and put “the suits” out of business.  Stock market dummies can be rich!

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Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.

Latest posts by Robert Buran (see all)

• Friday October 24, 2014, Today Stock Market – October 24, 2014
• Thursday October 23, 2014, Today Stock Market – October 23, 2014
• Wednesday October 22, 2014, Today Stock Market – October 22, 2014

 

Intraday Stock Trading does NOT mean just day trading.

To understand how I use the term Intraday Stock Trading it is first necessary to define some terms.  The conventional definition of  “day trading”, means buying and selling a stock within the same day. Day traders typically carry very large positions in order to make profits by leveraging large positions that will make a lot of money with just small price movements.  Day traders need a combination of high liquidity and volatility for all this to work.  Volatility is measured by the daily range and the larger the range the larger the potential profit or loss.

Intraday Stock Data

However over 20 years ago I became interested in intraday  data, not for purposes of developing day trading systems, but as a way for developing strategies for short term stock trading.   Intraday data became an indispensable tool making it possible to make 2 and 3 day trading systems far more sophisticated than ever before.

When most traders hear the phrase Intraday Stock Trading they think of day trading.  I have never liked day trading because I have found that day trading systems that I have developed, although marginally profitable, make more money if they are held onto for an extra day or two.

There was a time when day trading had some appeal because brokers allowed a day trader to trade more positions with less money because, or so the reasoning went, there was much less risk if no trades were held overnight.  Hence a trader with limited funds could still trade significant position size as long as he was out of his positions at the end of the day.  The bottom line was that a day trader could leverage his positions more than could a position trader.

But alas in 2015 this is no longer the case.  After the 2008 crash Day traders became like the perceived communists of the 1950s and got blamed for all the stock market melt downs of the first decade of the 21^st century.  Of course day traders had nothing to do with those melt downs, but the government that has never understood the dynamics of market behavior anyway, nevertheless instituted many restrictions designed to restrict day trading.

First and foremost among these restrictions is a rule that requires “pattern day traders” to have trading accounts of at least $25,000.  If the account of a “pattern day trader” falls below $25,000 the account must, by law, be closed.  Of course the rule makes no sense at all and to my knowledge nobody has ever asked the logical question, “How is it that people with less than $25,000 to trade could have caused, in 2008  a world wide melt down of virtually all equity markets?”  Nevertheless day traders were in reality “little guys” with no political clout and consequently they made easy scapegoats for the government.

Regardless, in 2015, there is no good reason to day trade.  Today day trading will cause you to need more money to make less.

This pattern day trading rule never has really affected me because I do not day trade.  But I did have to eliminate most of my day of entry stops so that neither my broker nor the government would ever perceive me as a day trader.  Surprisingly the elimination of day of entry stops has not degraded the performance of my two and three day short term trading systems.  (For more interesting details on trading without stops (please see my article, Stop Loss Order).

So if I am not a day trader why am I interested in intraday stock trading?

The reason is very simple.  Intraday data gives the trader the opportunity to better control his positions even if he holds his positions, as I do, for two or three days.  In order to understand what I am talking about let me first share with you just one general observation about markets.

I have said many times that I believe markets are predominantly random.  HOWEVER, it is also my observation that the markets are more random at the beginning of the day and less random at the end of the day.

To work with this observation it is very important to be able to observe intraday data and plan entries and exits based on time frames other than daily bars.  My trading system, Jordi’s Intraday 2 (please see automated stock trading software), does in fact use two time frames, daily bars AND 15 minute bars.

Using intraday data, 15 minutes bars, is very important for my trading system even though I do not day trade.  On Friday July 9, 2010 when the market opened my open trade equity was negative $5,000 but in only 10 minutes it went from minus 5k to positive 20k!  Like I say the market is very random at the beginning of the day and I have programmed my system never to enter or exit a trade in the first 15 minutes.  On that same Friday I closed out all those positions with a nice profit of $24,000.  Can you imagine how upset I might have been had I exited all those good trades when they were negative five thousand dollars?

Furthermore if you read my article, Stop Loss Order, you will note that I prefer TIME STOPS over PRICE STOPS.  Obviously Price stops are based on price only whereas my time stops combine price AND time, which of course requires intraday stock data for calculation.  If I was using only price stops on Friday I would have been stopped out of my positions at the worst possible time.

But by writing time into my stops I avoided the wild random price swings at the beginning of the market day and took $24,000 in profits towards the end of the day when the markets are far less random.  My intraday trading systems are unique because they combine two data streams, daily AND 15 minute bars, and this allows me to trade a vastly superior trading strategy and still hold trades beyond a single day.

But the real point I wish to make here is that Intraday Stock Trading does NOT mean day trading.  I am a short term stock trader, but I am NOT a day trader or a swing trader and even though I hold positions for as long as three days I AM an Intraday Stock Trader and I am glued to 15 minute bar data throughout the market day.  Using intraday data in this manner gives me an enormous advantage over most other traders.

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Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.

 

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Is Investing in the Stock Market Gambling?  Stock Trading and Casino Gambling Compared; In my opinion you can be the House.

I have argued for a long time that trading stocks and gambling are very similar.  So is investing in the stock market gambling ?

By definition, gambling means to play a game of chance for money or other stakes. And a game of chance is one in which the outcome is determined by chance rather than by the skill of its players .And by definition chance means that events happen without cause.

In trading we often see events that happen by chance, but regardless if they happen by chance we know that there are certain probabilities that some things are more likely to happen than other things.  And in Gambling probability is also a factor and that is why there does exist a link between stock trading and gambling.

Well what if investing in the stock market IS gambling?  I do not think that means that you should stop trading stocks, it only means that you need to understand something regarding probability of winning when you trade stocks.  You need to learn how to put the odds in your favor when investing in the stock market.

We trade a system, JORDI ( see automated stock trading software).  It is a very good trading system and it consistently yields good returns on our investment over time.  But as good as that may sound if we test our system in numerous markets over many years involving say about 10,000 trades, we find that it only wins about 56% of the time.

I have been studying these market statistics for nearly two decades and without presenting an argument here I will state simply that given that market movement is predominantly random, no practical trading system can be expected to do better than 60%.  If somebody brags that they have a trading system or that they can predict market behavior with 90% accuracy, I assume they are either idiots, charlatans or both.

So we work with a system that has about 56% accuracy.  In this article I will show how a system with 56% accuracy can still make tons of money and do it with little risk.  In order to do this I am going to compare stock trading with casino gambling with one significant difference: WE ARE THE HOUSE!

In order to understand the casino side of my argument you have to understand at least one popular casino game, roulette.  The roulette table has 36 numbers, half are red and half are black.  It would appear that if you put $10 on one number that your odds of losing would be 36:1.  But you could lose many times and still break even because eventually the ball will fall on your number and the house will pay you 36:1 or $360.

HOWEVER, there is a catch.  If you examine the roulette table there is not just 36 numbers, there are 38 numbers.  There are in fact two extra slots, both green, 0 and 00.  When the ball lands on one of those slots the house gets everything.

How does this change the odds?  What this means is that the house advantage at the roulette table is 5.3%.  What 5.3 percent house advantage means is that the house will make $5.30 for every $100 bet at the roulette table.

No person can win at roulette if they keep playing.  Over time the house ALWAYS wins and they will always win at least $5.30 for every $100 bet.

OK, now if we are trading stocks how do we become the house?  We become the house by trading a system accurately that consistently wins with 56% accuracy.  This assumes of course that our average wins and our average losses are about the same.  If our system is 56% accurate our house advantage is 6 % and we will make $6 for every $100 bet.

Now that we know that how should we trade?  Well obviously we need to trade a lot.  Our profits are going to be a percentage of how much we bet and so we want to bet a lot.  Presently we are trading 96 markets.  We usually get in one day and out the next.  We probably average around ten trades a day, but each one has a 56% chance of winning.  We make good money with this strategy.  We are the house.

I will give you another extreme example from my trading past.  Over a two year period I made over 5 million dollars profits, (see Big Trading), trading an account of about 2 million.  I made over 11,000 trades, the average trade was only $385, but I pushed nearly TWO BILLION DOLLARS through the stock market with all that trading.  You can make a lot of money with a low house advantage when you are taking a percentage of two billion dollars!

So how do you become the house when stock trading?  Well first of all forget about brokers, financial experts and stock pickers.  You need a solid computer-driven trading system that you have tested with many markets in many different market conditions.  You want to see accuracy between 50% and 60%.  If its more than 60% there is a problem with your data or the system is a hoax.  You need to diversify across many markets and you need to trade a lot.

And if you do all those things you can run your own Wall Street Casino and become rich!  You are now the house!

So is investing in the stock market gambling?  Gambling and stock market investment are similar because both involve odds of winning and loss and both involve probability theory.  But the fundamental difference is that the odds are always against you when you gamble in a casino whereas you can literally turn the tables with stock market investment and put the odds always in your favor. With stock market investment you can enjoy the house advantage.

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• Bio
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Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.

by Robert Buran

Automated Trading from Home
similar to what banks and hedge funds do

I have been trading for a living from home for about 25 years and entering most of my trades manually, but what about AUTOMATED trading from home?   This is indeed now possible and is fairly easy to do with automated trading software that you can run on a desk top personal computer.  First of all what exactly is automated trading?  Automated trading is sometimes called algo trading.  Algo means algorithmic.  In mathematics and computer science, an algorithm is simply a step-by-step procedure for doing calculations.  A simple algorithm for stock trading would be to buy a stock when the three day moving average goes from below the twelve day moving to above the twelve day moving average.

In order to get that trade executed with a broker and have true automated trading execution we must program trading instructions that include all the variables such as the price at which to buy and how many shares to buy.  And to qualify as fully automated trading we must use some kind of electronic or computer platform so that this trade is executed without any human intervention.

I am a trading system pro and can write just about any stock trading algorithm using TradeStation Easy Language ™.   In fact I have some of the best automated trading systems around.  Please see Automated Stock Trading Software.   And so then by using the TradeStation software platform it is fairly easy to make a trading strategy fully automated for executing all stock trades with a broker.

This technology is relatively new for the stay-at-home stock trader.  But the trading industry has been doing fully automated trading longer. Automated stock trading has been widely used by investment banks, mutual funds, pension funds and other buy-side (investor-driven) institutional traders for some time.

Financial researchers estimate that over half the trades in the US stock market today, in 2013, are fully automated and are executed by algorithmic trading programs.

But fairly recent advances in software technology make it possible for anybody with a computer to do fully automated trading from home.  You can do at home exactly what the banks, pension funds and hedge funds do.  Why let all these institutions make all of the money? You can do it yourself and not pay someone to do it for you.

Automated trading vs manual trading

Making trading decisions can be stressful and I have argued for a long time that there are many advantages to letting the computer do your thinking for you.  Computers do not get flustered in fast markets and can execute many orders with lightening speed.  Computers function without emotion and are fearless.  These are just a few of the advantages of automated or robotic trading.

In early 2012 I started trading a couple accounts with the TradeStation 9 computer platform and it has been a real eye opener for me.  But for starters I would like to say that I have no business relationship with TradeStation Securities and I get no kickbacks from them of any kind for referring customers to them.  My comments here are nothing more than my opinions based on my own work with their company and with their software, TradeStation 9.1.

One beef that I used to have had with this company was bad data.  With older versions of TradeStation, that I use to post charts on the web site, the data was stored on the hard drive on your computer and when there was bad data it was possible to correct it immediately.  However, with TradeStation 9.1 the data was not on your hard drive; the data was on their server in Miami and one had to wait for THEM to correct it.  This used to create all kinds of problems for me as a systems trader.  I preferred the older versions of TradeStation that allowed me to correct my own data.

Well I am happy to report I no longer experience this difficulty.  I do not know what they did, but in six months or so of trading I have yet to have a problem with bad data and TradeStation 9.1.  As far as I am concerned bad data is no longer an issue with TradeStation Securities.  Problem Solved!

Let us look at some of the things that can be done with TradeStation 9.1 when trading my algorithms using this software.  Although I have been working with TradeStation for over 20 years I am basically writing this article for people who know nothing about TradeStation.

First let me tell you about the thing that I like best about TradeStation 9.1 and the thing that puts it heads and shoulders above all previous versions. With this software I can run any of my systems or strategies on full automation.  I can easily do automated trading from home using nothing more than my desk top computer.  By full automation I mean that after loading my systems into TradeStation 9.1 and setting up the charts, I can, if I wish, let the computer do all the trading for me.  This means several things for me as a trader.  First of all it means that I do not have to sit in front of the computer while I am trading; the computer will execute all the trades and if I have my speakers turned on, every time a trade is executed an automatic voice will say “order filled”.  So if I want I can go golfing while the computer is trading I can.  Or I may wish to trade overseas markets all night long while I sleep.  In the morning I can be confident that the computer has flawlessly executed all the trades.

Are automated trading fills any good?  Do you see a lot of slippage, that is a large difference between the system price and the actual price?  My studies with real time trading would suggest not at all.  I have kept spread sheets on this for several months and am happy to report that slippage with automated trading is quite minimal; the fills are in fact almost instantaneous with the system price being hit.  Whatever tiny slippage might be incurred is more than offset by flawless trading.  You can be a total novice and still after having me help you get this all set up, you can be trading exactly how I trade without making a single mistake.  You do not have to worry about trading discipline and fear of “pulling the trigger”.  You can fall asleep and let the computer do the work for you.

This is a screen shot of the TradeStation page dealing with fully automated trading :

You can see that the system we have automated is highlighted and has been applied to the market GOOGLE (GOOG).  Note also that we have set the system up to trade only from the long side, but we can change this with a click.

But the most important part is the check marks at the bottom.  The Generate strategy box in combination with the Automate execution using account with confirmation TURNED OFF means that our orders will be sent to the trading desk automatically.  If we set the box to TURNED ON the system will generate the orders but will prompt us first and will not execute the order until we click a prompt that yes we want to execute that order.

I do not use this last option.  I trade exactly as this screen shows and I let the orders go automatically to the trading desk.

Another great advantage of trading with TradeStation 9.1 is the ability to test all systems and track system performance with all stocks.  TradeStation Securities has a data base that is unequaled by anybody and with just a few clicks of the mouse one can test 100 years of market data in less than an hour.  This is a fantastic research tool and is great assistance in choosing the right strategies and right markets for maximum profits.  This is just a little example of this testing capacity:

This shows a chart of the market EXPE.  This is a trade we actually took in real time at the end of May 2012.  The chart shows where we bought the market and where we sold the market.  But the trade list window shows us exactly what we did.  We bought 40 shares of EXPE on 5/19 at 43.37 and sold 40 shares on 6/1 at 46.07 for a profit of $108.00.  The trade list also shows that we have a net profit in EXPE of $1,208.60 trading 40 shares of EXPE over a given time period.

With TradeStation 9.1 you have the advantage of almost instantly checking the system performance in any market for virtually any time period.  With TradeStation 9.1 you do not have to trade blind.

If you are totally unfamiliar with TradeStation Let me show you some screen shots of pages I use every day to do my real time trading :

The above page is my main page and is what I watch most of the time.  If I want to switch from this page I click one of the tabs at the bottom.  For Example #1 AAPL-APC displays the markets AIV, AMD, AAPL, ANR, AMGN, APC, ADSK, AIG, and AV and to each of these charts I have applied one of my systems and set it for fully automated execution.  I am presently trading 72 markets.

Down at the right hand bottom of this work space I see this:

This tells me how I am doing at any given minute of the market day.  It shows that I am presently about break even with my open positions, but that I have closed out positions for this same day worth $146.65 after commissions.

If you turn on your speakers with the automated trading every time an order is executed you will hear an automated voice say “Order filled”.  But if you want to see all NEW executions on any given day you just have to click the average price tab to see:

From this we can see that we have sold, that is taken profits on four positions, NOV, NWL, ZAGG and F on the same day we are looking at it.

TradeStation offers endless brilliant and graphic displays and ways of looking at the markets we are trading:

In the above trade we have going in HP we can see clearly not only where we bought 40 shares, but we can see where our profit point is, 47.94, represented by a red line on the chart.

Here is a real nail biter in KSS.  After establishing a nice profit objective on Friday the market appears to be retreating from the red line on Monday (Click image to enlarge):

Fortunately the market did regain its momentum and we did, after some white knuckle time, reach our profit objective.

This shows just a tiny slice of what this powerful software can do for your trading.  But working with the greatest software in the world can also save you money.  You do not need to buy this software.  You get it to work with when you open an account with TradeStation Securities.  And you can open an account with as little $5,000.  AND you get your data free as well after paying exchange fees.

But there is another dirty little secret about TradeStation Securities I do not think many traders realize.  Their commission rates are rock bottom especially for the small trader.  You can opt to pay commissions on a penny per share basis rounded up to the nearest dollar.  So for example in the above examples involving only 40 share trades the commission rate is 40 cents rounded up to a dollar going in and out or a total of only two dollars per round turn.  You just can’t beat that anywhere and furthermore I think TS Securities is now letting you trade the first 60 days for free.  So when you add up the benefits of the best trading software in the world, plus nearly free data, plus rock bottom commissions, it is hard to justify going with any other brokers.

By the way again I am not employed by TradeStation Securities and I get no kickbacks for making these recommendations.

BUT if you do open an account with them using my trading package there is a lot I can do for you.  You do not have to struggle alone and in the dark.  I can hold your hand if need be and get you set up so you are trading exactly like I do.  I can give you a list of good markets, suggest systems that fit your finances and trading style and help you set up every market and chart.  And you can call me or E-mail me anytime because I am trading with real money the same systems and markets that you are.  When you are in trouble I am in trouble and when you are making hay I am making hay also.

In any case I consider TradeStation 9.1 and TradeStation Securities a fantastic way to trade my systems and strategies.  All of my materiel is 100% compatible with TradeStation 9.1 and furthermore I can give you all the technical support you need, for life, when working with my materials and TradeStation 9.

In any case I consider this automated trading system software and TradeStation Securities a fantastic way to trade my systems and strategies.  All of my materiel is 100% compatible with TradeStation 9.1 and furthermore I can give you all the technical support you need, for life, when working with my materials and TradeStation 9.  With this software it is possible to trade just like the hedge funds do and do fully automated trading from home.

The following two tabs change content below.

• Bio
• Latest Posts

Robert Buran

CEO at Computer Software

I am a trading system pro and have been trading markets and have been involved with trading system development and the programming of trading system software for 25 years. “Today Stock Market” is my opportunity to share with you some of my trading experience while discussing stock market news and giving my daily stock market update.