Manual Trading

Manual Trading

 

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Manual Trading is an Art Form

Manual-Trading-1-300x200 Manual TradingAutomated trading is all the rage right now (please see my article, Automated Trading from Home) but if you really want to become a super slick professional trader you may wish to consider manual trading.  Manual trading is an art form.

To learn manual trading you must first understand the subtleties of the orders you place

STOP LOSS vs STOP LIMIT, UNDERSTANDING THE DIFFERENCE

Understanding the difference between stop loss and stop limit is very critical to profitable trading.  Understanding how to choose the right kind of order can prevent trading losses due to either failure to get out of bad trades or failure to get into good trades.

Stop loss usually means an order placed to get out of a trade, but stops can also be used to enter trades.

FIRST OF ALL SOME QUICK DEFINITIONS:

A STOP LOSS ORDER is a resting order placed with your broker prior to the price being hit.

For example you may have bought 1000 shares of XYZ at 51.5.  In order to limit your loss to about $1,500 you place a stop loss order to sell 1000 XYZ at 50.00 stop.  That stop loss order is ALWAYS filled once the price of 50.00 is hit.

Once the price of 50.00 is hit the stop loss order becomes a market order. As a market order it is it is going to be filled at whatever price is available at the time. Sometimes it may be filled at 50.00, but most likely it will be filled at 49.99 or lower. This stop loss order will NEVER be filled at a price better than 50.00 and if it is filled better rest assured that your broker will find a way to pocket the extra money.

The difference between your stop loss price (50.0) and the price you actually get, say 49.97, is called SLIPPAGE. If you are filled at 49.97 on 1000 shares your slippage amounts to $30. If you are paying your broker $20 commissions this means that your TRANSACTION COSTS for this trade is $50 (commission + slippage).

Commissions and slippage can eat you alive and this is why I recommend using a broker charging no more than $3 per round turn trade.

And to complicate the matter there are many dishonest brokers who make their living pocketing your slippage. Many years ago I had a floor trader take 6 minutes to fill a stop order and this delay cost me thousands of dollars. Acting as my own lawyer I took the guy to court and won (Buran v Lerman). The guy had to pay me back everything, pay his own attorney and court costs and in the end the exchange banned him from trading for life. But I was lucky and won only because this floor trader’s actions were so egregious. Usually dishonest brokers just nickel and dime you to death and you can’t prove anything. But they will erode your profits seriously.

You should assume the markets are corrupt because they are and you should assume your broker is dishonest because he probably is.

STOP LIMIT ORDERS

So is a stop limit order the solution? Many novice traders think that a stop limit order is the solution to all these problems. A stop limit order differs from a stop loss order in that it forces the broker to fill the order at the limit price or not fill it at all. A limit order must be filled WITHOUT SLIPPAGE.

The problem is the last part of our definition: “or not fill it at all”. A limit order will not be filled if there is a lot of competition for that price at the time the price is hit OR the market does not pull back or back tick after the price is first hit.

I have been trading a long time and I will tell you that the great majority of stop limit orders WILL be filled BUT it is the order that you desperately need to have filled that will NOT be filled. Limit orders are practically useless, in my opinion, because there is no guarantee that they will be filled. I am a systems trader and I must have ALL my orders filled. If all my orders are not filled I have no system.

Also rest assured that the limit orders that are NOT filled will cost you the most money. They could even cost you your account. Don’t play with fire.

Limit orders do not work for entry and exit of system trades and for that reason I never use them.

SO WHAT IS A TRADER TO DO? If, on one hand, stop orders are almost always filled with expensive slippage costs attached and, on the other hand, important limit orders are oftentimes not filled.

MANUAL TRADING AND THE MANUAL EXECUTION OF ORDERS

If you want to go with full automation ( see my article Automated Trading from Home) you are just going to have to accept a small amount of slippage for every Manual-Trading-2 Manual Tradingtrade.
But if you like to sit in front of the computers as I do watching markets and writing and reading, you may want to try something else. The solution that I have worked out over years of trial and error is something I call MANUAL TRADING or MANUAL ORDER EXECUTION. I still use a computer online order placement system to do this manual order execution. But I call it manual trading because I DO NOT place resting orders with my broker that allow him to play around with my orders and to execute those orders to HIS advantage.

Instead I make the trading decisions myself and execute all orders as market orders when my computer beeps me “market position has changed” (Please see Automated Trading Software). Using my trading platform my computer has no problems following my 70 markets simultaneously. The computer is still doing the thinking for me.

Although this requires me to be in front of my computers at all times when the markets are open, it is time well spent and when I have been trading millions of dollars it has saved me conservatively 100s of thousands of dollars.
I also get a lot of other work done in front of my computers and right now I am writing this article and posting on Stock Twits while I am monitoring my stock positions for today. Believe me I am working and making money while I sit here. This is not time wasted.

This is why manual trading can save you a lot of money if you can learn to be a sophisticated trader and NEVER skip trades. Normal price behavior follows a pretty predictable pattern. It goes up and then pulls back and then goes up again and then pulls back again. With no experience at all you will find that by placing market orders immediately after your buy price is hit that you will start getting some trades with positive slippage. When I say positive slippage I mean that you are getting a better price than your system price.

But when you place resting orders with your broker you will NEVER get better price than your system price.

NEGATIVE SLIPPAGE

But also be aware that just as you can sometimes gets positive slippage doing manual order execution there will be times you will get NEGATIVE SLIPPAGE as well.

Through practice you will learn when it is time to jump on a trade immediately and accept whatever price at the market you can get even if you must accept negative slippage.

A Scary Story about Manual Trading

I remember one experience I had that still makes me sweat a little thinking about. I was managing an account just under seven million dollars. A report came out that I was not expecting and prices exploded to the upside and I suddenly had to get into over 60 markets. I tried to stay calm and move my fingers as fast as I could, but it took me nearly 40 minutes to get 60 market orders in and filled.

But what happened in those 40 minutes was interesting. For the first 10 minutes all the markets made their highs in the sky caused by filling all the resting stop orders that were in all those markets. But then for the next 30 minutes the prices came back as some profit taking, perhaps by day traders, came into the markets.

Manual-Trading-3 Manual TradingThen the buying came back in and almost all the markets made new highs before the close.

This resulted in my market orders for the first 10 minutes being filled poorly but the market orders for the next 30 minutes being filled at much better prices. Rest assured that if I had placed stop orders I would have been filled right at the top of the initial spikes and if I had placed limit orders I would not have been filled at all.

After the market was closed I put everything into a spread sheet and discovered that I had suffered $200,000 in negative slippage! That was the bad news. But the good news was that I had still captured about 70% of the move and that I had netted $600,000 in profits.

Not bad for a days work.

The Advantages of Manual Trading

But the point I would like to make here is that if you place resting orders with your broker you will never be filled at prices better than what your order specifies and most of the time you will be filled worse. However, if you manually execute your orders your fills will be a mixture of positive and negative slippage and, with a little practice, the two will tend to cancel each other out.

If you get really good at this you can all but eliminate transaction costs and keep all that money that your broker used to get.

So forget about stop loss orders and stop limit orders. When using those orders you are inadvertently making huge contributions to the corrupt brokerage industry.

Alternatively I would suggest that it would be well worth your time to learn manual order execution. If you really want to become a professional trader and make your living trading the stock market profitably you need to learn to sit in front of the computers and learn how to place orders manually. Learning manual trading should become the ultimate refinement of your professional trading skills.

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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.

Finding Hot Stocks

Finding Hot Stocks

 wp-content-uploads-2013-01-robertburan1 Finding Hot Stocks

Finding Hot Stocks to Build a Hot Stock Trading Portfolio

You need a good trading system, but that is only half the battle; you also need a good stock trading portfolio and be skilled at finding hot stocks.

Finding-Hot-Stocks-1 Finding Hot Stocks

 

I do not like day trading stocks.  But I am short term stock trader and I DO like in and   out trading (see In and Out

Trading).  I like to get into positions when they are moving and then get out in two or three days.  And if you are going in and out in 2 to three days you need stocks that are really moving.  This is a highly effective way to trade and combines safety with very high yields.

Finding-Hot-Stocks-2 Finding Hot StocksBut to do this I use a very unconventional style of trading.  I set up a very large group of markets, currently about 70.  If I am not trading a huge amount of money I limit my commitment to each market to about $1,000 ($500 traded on margin) and then take mechanical trading signals from a trading system that I  have programmed.  I use a custom trading platform that interfaces with live streaming data from E-signal or I use TradeStation 9.  All my systems are fully compatible with both.
If using TS 9 I can automate the process but sometimes I like to do it the old fashioned way and enter all trades manually while I sit in front of a computer for six and a half hours per trading day.  I typically take 5 to 15 trades a day.
My methods are highly margin efficient, that is we only get into markets when they are moving and then we get out in a day or two.  For that reason my methods do not tie up our money in dead markets (see In and Out Trading).
For this reason we I am able to trade 70 markets comfortably with only $12,000 to $15,000 traded on margin and I have customers trading 15 markets with as little as $3,000.
I work very hard doing what I do but I anticipate annual returns in excess of 50%.  In spite of the high yields I am risk aversive and seldom see individual losses in excess of $100 when trading $1,000 per trade.  I post all these real time trades daily on my web site on the home page and post a daily video and market wrap up and commentary.
I do sell my mechanical program and the software to interface it with live E-signal data.  You can also use the same systems with TradeStation 9.  (see Automated Trading From Home)

Identify Volatile Stock Markets

Finding-Hot-Stocks-5 Finding Hot Stocks

But because I take so many trades and am only in trades for two or three days my methods will not work in dead markets.  My methods require that I identify volatile stock markets.  And to identify volatile stock markets I must be skilled at finding hot stocks.
Identifying hot stocks can be a little tricky.  At one time I used a simple form of back testing to do this.  I would grab a market, get a couple months of tick data for that market and then apply our trading system and look at the results.  If the results looked good I would put the market into my portfolio and if the results looked bad I would discard the market.
The results of this method could be disappointing.  A market that had made good money for 8 weeks might produce a string of two or three losing trades just as I was putting real money on it and the market that I had discarded might start making money.
What I soon realized was that this approach was really a form of optimization that was in effect trying to predict future trading system performance by trying to fit a system to a given set of data.  It was a form of  curve fitting and curve fitting is the worst thing you can do to identify profitable trading.  This simply was not a good approach.
But what I realized when working with market data was that the critical factors for identifying profitable markets was volatility and follow through.
I then investigated some commercial software that allowed the user to scan large numbers of markets and enter certain criteria to identify markets that met that certain criteria.  I did find this commercial software helpful for identifying volatile markets but the results were nevertheless not as satisfactory as I had hoped for.

The Problem With Using Daily Range to ID Volatile Stock Markets

Finding-Hot-Stocks-3 Finding Hot Stocks

The problem was that most commercial software uses daily range over a period of time to determine volatility.  The problem was that sometimes that range took place in a single day or two and the rest of the time the market was dead.
This is an example of a market with a lot of volatility for two days but was nevertheless a waste of time to trade the rest of the time.  On 12/16/09 there was some breaking news on DCGN, deCode Genetics, and the market exploded and put in a range from 6 cents to over 30 cents, quadrupling its value in a single day.  That is volatility!

One day this market was at the top of the list for market gainers but on the next day it was on top of the list for market losers.  As I write this on 1/10/10 the market is back to where it started before the news and it is as flat as a pancake.  But if you run a volatility scan on all stocks for December 2009 DCGN will probably top the list.  And yet it was but a one day wonder and outside that one day it would be pointless to keep it in  a trading  portfolio.

The Solution to the Problem of Finding Hot Stocks

Finding-Hot-Stocks-6 Finding Hot Stocks

After some experimentation I hit on a solution to this problem which I will share here.  What I did was to develop a program that could scan a stream of data and identify the characteristics that typically work well with our trading methods.
The markets that worked best with our trading methodology, the true hot stocks, were markets that had repeated expanding, volatile break outs with follow through for a day or two.   After an expansion of range the market might contract for a few days but this contraction might then be followed by another expansion and then some more follow through.
In order to develop a tool for finding volatile markets I programmed a dummy day trading system.  I do not day trade and I am NOT recommending this system for actual trading.  But to identify good break out markets for us I set up the following simple rules for the dummy day trading system:
1)      This stock trading system uses my proprietary programming method for the determining number of contracts traded and limits the size of my positions to approximately $1,000 per position taken.  I do this to allow me to trade a large number of markets, currently about 70, and thereby protect my trading equity through diversification.  Hence I will buy 1000 shares of a stock selling at 98 cents per share but only 100 shares of a stock selling at $10.02 per share.  You can see better how this works by examining my posts of real time trading on the Home Page.  I show the markets, how many shares I buy, and the buy prices as the trades unfold in real time.
2)      After the close on a given day the dummy trading system determines the range for that day.  It then calculates 25% of that range and adds that value to the close to determine a buy point for the next day.  Hence virtually any kind of significant upside move the following day will result in the dummy system buying the market.  Typically the dummy system will get a buy signal about every other day and show around ten trades for every 20 trading days or so.
3)      A day of entry stop is immediately entered when a position is taken.  Using 15 minute bar data this stop will exit a market if it retraces its move more than 75% from the last intraday high.  This stop is rarely hit.
4)      All positions are closed out on the close of the trading day.
I call this screening device the Breakout Scan and it is included in my trading package (see trading software) and will run on either my trading platform or TradeStation 9.

Testing this Dummy Day Trading System

Using our formula to limit our trade commitment to about $1,000 per trade this is partial results from a good market, BIOF, which was tested on Intra-day data for eight weeks from 11/09/2009 through 1/08/10:

 

BIOF  BioFuel Energy Corp. (NASDAQ) 15 min bars 11/09/09 – 1/08/10
Total Net Profit = $552
Number Trades = 17
Wins = 10 (59%)
Average profit per trade (wins and losses) = $32.49

 

This is partial results from a bad market, ARBA, which was also tested on Intra-day data for eight weeks from 11/09/2009 through 1/08/10:

 

ARBA  Ariba, Inc. (Public, NASDAQ) 15 min bars 11/09/09 – 1/08/10

Total Net Profit = $44

Number Trades = 19

Wins = 12 (63%)

Average profit per trade (wins and losses) = $2.32

When you look at the three month charts of both these markets you may be inclined to believe that both markets are volatile and would be good markets to trade.  Using conventional methods of determining volatility will probably show that both markets are indeed volatile.  But when I apply the BREAKOUT SCAN to the 15 minute charts the difference between these markets becomes apparent.

 

The bottom line is that BIOF is a great market for my methods, but I am wasting my  time and money with ARBA.  ARBA trades well with my methods in so far as I get a good percentage of winners, my winners are larger than my losers and there are no big losers in the lot.  But the problem is that ARBA is simply not volatile enough to overcome my transaction costs when trading my relatively small positions.  For this reason I must reject this market.

 

As a rule of thumb when I scan markets with my Breakout Scanner, using $1,000 per trade, I like to see the average trade (win loss) over $10.  If the average trade is less than $10 I reject the market for use in my portfolio.
I have found that this method for finding hot stocks to be far superior to other methods, commercial or otherwise.  Time and time again I have found that markets that show an average trade greater than $10 on the Breakout Scanner will show handsome real time profits with my short term stock trading systems and strategies and for my in and out trading style this is the best method for finding hot stocks.

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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.

Stock Market Movement

Stock Market Movement

 

Trader Bob’s Theory of Stock Market Movement

wp-content-uploads-2013-02-robert-buran Stock Market Movement    The Rule of the Screw  By Robert Buran aka Trader Bob

Markets must move in such a manner so as to Frustrate, undermine and defeat the best interests of the majority of market players (Translate: “The Rule of the Screw”). According to this rule of stock market movement the majority cannot make money in the

wp-content-uploads-2013-02-rule-of-the-screw1-229x300 Stock Market Movementmarketplace. The markets will totally ignore technical indicators and fundamentals if the majority of the market players act on those technical indicators and fundamentals.

Price movement is predominantly random, not 100 percent random, but predominantly random. The “secret” to making money in the market is locating that small portion of market behavior which is not random and exploiting it. I do not feel that conventional technical analysis is of any value in doing this. The problem with technical analysis is that it will present the illusion of uncovering hidden relationships between price behavior and various indicators.
I would submit that all such indicators are as random as the price behavior they attempt to predict and that all profits and losses realized from trading such indicators will be randomly distributed.Stock-Market-Movement Stock Market Movement

Technical analysis is pseudo science.

Isaac Newton and the Market Place:

In place of technical analysis I prefer something I call market momentum theory.  For more details see my article, Stock Trading for Dummies.

  • First law of price movement is:

If prices move up there is greater probability they will move higher rather than lower.

  •  Second law of price movement is:

If prices move down there is greater probability that they will move lower rather than higher.

And from these simple rules comes the most important rule of trading:

  •  If price goes up you must buy the market and if price goes down you must sell the market.

You  may read this and think “well so what?, that is obvious”.  But trust me most traders and trader wannabes do not think that way at all.  When the market goes down they want to buy to get a better price.  And when the market goes up they hesitate because price is too high.

And they do not make money!  They are a part of the losing majority.

Let us look at the following chart:

wp-content-uploads-2013-02-chart-fig11-300x181 Stock Market Movement

 

This is exactly what system venders show in ads.  They show that their system buys the lows and sells the highs.  But that is a fantasy and it cannot be done.  Yet some smart traders see this and they buy the system because it shows traders what they want to believe.  Even smart traders can get sucked into this kind of thinking.

The problem is that when we look at any chart we want to buy low and sell high. You cannot, however, buy bottoms and sell tops. You can only follow a trend which has already been established through price movement in the same direction as the position you are taking.

You must understand that when you elect to buy a market when price rises you are in effect buying the market at the worst possible price at the time of your entry. It’s not going to feel good and it’s not going to look good on the charts. But by “buying high” you are probably going to be placing yourself on the minority side of the market and therefore assuring yourself of profits.

Exiting a Position

Getting out of a position is just as critical as getting in.  In my opinion most of the popular ideas for getting out do not work.  Let us look at just two of those ideas, the stop and reverse method and the trailing stop method.

Stop and Reverse method of exiting a trade:  The stop and reverse method involves utilizing some kind of indicator or a price based on an indicator. If the system is long one contract and the market comes back and the price is hit the system sells 2 contracts and reverses to a short position and so on. If you have read much of my material you know I do not like to short the stock market.

Of all possible trading strategies I have found this to be the least profitable and grossly inefficient with respect to the use of margin money. I will discuss margin efficiency in greater detail later but for now it need only be said that systems that are in the market all the time tie up your margin needlessly (see my article, Hit and Run Trading). Markets tend to move sideways about 85% of the time and consequently these systems will have your margin money tied up doing absolutely nothing for at least 85% of the time. These systems can also whipsaw you to death while moving sideways.

A system like Jordi’s Intra-Day2 is, by contrast, very margin efficient.  It gets into a market only when a given market starts significant movement and it is  usually out of the trade the following day.  “Jordi” does not tie up your margin money.

Trailing Stop:

The second most common way mechanical systems take profits is through the use of a “trailing stop.” The idea behind a trailing stop is that it allows you to “let your profits run” while at the same time “locking in” any profits you may have already made. My experience with system design and trailing stops has been that the trailing stop is at best a mediocre method of exiting a profitable position. The problem is that if the trailing stop is too tight it results in your having your stop tagged right before the start of a big move. Conversely if your stop is too deep it results in many small profits going to large losses.

The other problem I have with trailing stops is more theoretical. With a trailing stop you are trying to take profits only after the market has turned against you. Frequently you are forced to sell out your long position when many others are trying to sell too. You are then moving with the crowd and this is almost inevitably going to cause you excessive losses.

Therefore the rule I have developed with regard to taking profits is:
You should try to take profits only when the market is moving strongly in your favor.

This is much more consistent with my contrary philosophy of trading. If you are long a market and the market takes off like a space ship you should sell. By doing so you put yourself on the minority side of the market selling to the majority of panicked buyers. That is how you make money in this game.

What should you do, however, if your position starts out bad, get worse and then threatens an uncontrolled hemorrhage of your account equity?
Unfortunately this happens with about 15 or 20% of our trades and our ability to keep these losses within a normal distribution pattern is what makes or breaks us as traders. This is a particularly critical issue if you are using Systems without stops on day of entry.
Out of  frustration I developed a simple strategy that probably works better than anything I ever developed. If you are sick of always having your stops run, this simple strategy is going to be a big help. If you got into a trade based on a longer time frame such as a time frame based on daily data you need to develop a stop loss strategy that is based on a shorter time frame.

This is why Jordi’s Intra-Day2 is an improvement over my previous systems using only daily data.  Jordi uses two data streams, daily data and 15 minute bar data.

To see how looking at two different data streams can improve our analysis you should kick up a chart on your computer screen and set the bars to something like 3 to 10 minutes. If you are following our trading rules you are going to buy when the market goes up. This upward movement should create some kind of upward wave on the intra-day chart. You should measure this wave from its top to its bottom and if you are long the market you should place your stop at the point that represents a 75% retracement of that wave. If you are short the market you simply reverse the process. Hence my rule for placing your protective stop is:

Place your protective stop at a point that represents a 75% retracement (5/8 or 6/8) of the wave/move that got you in.

Let’s look at an illustration (click to enlarge):

wp-content-uploads-2013-02-chart-fig21-300x182 Stock Market Movement

Here again you see why the “buying high” strategy doesn’t sell systems. Buying point B (which is the high) looks like a terrible place to enter this market. Why not sell at point B? Or if we have to go long why didn’t we buy at point L (which is the low)? Don’t despair.

Because you feel that way others will feel that way also and so they, the majority of market players, won’t buy because it’s too scary. The market in the best tradition of the “Rule of the Screw” will sense this hesitation by the timid majority and move much higher. That will encourage the timid majority and they will then jump into this market in a buying frenzy.

At that time you will calmly sell your positions back to the frenzied majority and take your profits.  The whole scenario looks something like this (click to enlarge):

wp-content-uploads-2013-02-chart-fig31-300x230 Stock Market Movement

The point I’m making is that when you first get into these trades they seldom look good and you need to use the 75% retracement rule to place a stop so as to give yourself some peace of mind. If you go back and look at Figure 2 you can see how this stop was calculated. I measure from point L (low) to point H (high) and take 75% of that and subtract that from point H to determine the stop which is equivalent to the price shown at point SS (sell stop).

If you are an Elliot Wave purist you may notice that there are other smaller waves in figure

Try to keep it simple and try not to miss seeing the forest for the trees. I’m not an Elliot Wave purist and what I do with a 3 to 10 minute chart is to measure from the highest high after your buy point has been hit to the lowest low on the screen.

Usually that is going to be the lowest low in the last day or two. That’s what I mean by “the wave that got you in.”

The Fibonacci Connection

Some of you sharper readers may at this point notice that maybe I might really just be playing around with Fibonacci ratios. Indeed what we are really saying when we elect to place a stop at “75% retracement of the wave that got you in” is that if the market fails to be supported at the 5/8 or .618 Fibonacci retracement point, it becomes a “Fibonacci failure,” a trend reversal and we need to get out of the way of a collapsing market.

Believe me you are going to be very happy to be out of the market if these stops are hit and it will be very unusual for the market to “tag” these stops and then move higher. This is the most effective stop loss strategy we use.

Some of you technical analysts may at this point feel somewhat vindicated. Here I am telling you first that technical analysis is a lot of baloney and then I turn right around and start using Fibonacci ratios for stop placement.

Of course the ratio .618 wasn’t invented by a technical analyst. It was known to ancient Greek and Egyptian mathematicians as the Golden Ratio or the Golden Mean and was used in the construction of the Parthenon and the Great Pyramid of Gizeh.

 Summary and Conclusions

These “laws” (If Prices move up there is greater probability they will move higher rather than lower; If prices move down there is greater probability that they will move lower rather than higher) are permanent, will not break down and cannot change in the future.

Once we have entered a trade based on these rules we will reject traditional “stop and reverse” and “trailing stop” strategies of exiting our trade. Instead we will:

Take profits only when the market is moving strongly in our favor and place our protective stop at 75% retracement of the wave that got us in.

Some of you may at this point be ready to reject these market theories as being far too simple to be useful. Before you toss these ideas in the trash, however, I want you to look below and see at my equity curve for the past seven years. Look at the summary of my monthly profits from January 1, 1989 when I became fully automated, through June, 1991. Look at the consistent income and small draw downs.
How many gurus do you know who have included seven years of real-time trading records along with the materials they are selling?

I learned these rules in the marketplace and while attending the “School of Hard Knocks.” On the surface they may seem simple, but implementing them in the marketplace is a more complicated process.

You can integrate these ideas perfectly into your short term stock trading.  Later I will show you how you can consistently gain an edge on the stock market and automate a stock market trading system using these same simple rules. Using these strategies and rules of stock market movement you need not fear that these basic rules will break down or stop working. They can’t stop working anymore than Newton’s Law of Gravity can stop working.

Consider reviewing my market momentum theory in the article, Stock Trading for Dummies.

I believe if we stop looking at all those wiggly lines, stock market charts and complicated formulas and concentrate instead on simple up and down price movement we can beat the pants off the big boys. Call this back-to-the-basics trading or call it anything you like. I call it financial security:            CLICK IMAGES TO ENLARGE:

wp-content-uploads-2013-02-chart-fig51-300x249 Stock Market Movement

wp-content-uploads-2013-02-chart-fig41-280x300 Stock Market Movement

share-buttons-share-medium Stock Market Movement

High Return Investments in 2015

High Return Investments in 2015

wp-content-uploads-2013-03-robertburan High Return Investments in 2015 By Robert Buran

Most Americans have become weary of this slow economic recovery and may be searching for High Return Investments in 2015.

2015-300x154 High Return Investments in 2015

Many may be thinking of investment in the stock market, but few may have seriously ever thought of short term stock trading as a way to ramp up their income in 2015.
Like almost every year before, 2015 has been the subject of much speculation by the “doom and gloomers”.  There are videos floating around the Internet with credible “financial experts” predicting that 2015 will be the year of the worst stock market crash in history and that investments in the stock market will lose at least 90% of their value.  Forget the media hysteria and general stock market pessimism.  I have been short term stock trading for over 20 years in all kinds of economic environments and I can tell you that short term stock trading can be a simple, effective and safe way to invest your money in the stock market while realizing high returns.  In the year 2015 short term stock trading still works.  And using money this way can become more than a simple investment it can become a full time job.

Long before the beginning of 2015 I started to do short term trading while I was working for a public school district.  Within only five years I had quit my job to trade full time and was making far more trading than I ever dreamed of while working.

So what is it like to be a full time successful and experienced stock trader working for yourself and making a good living?  Well this may surprise you but it can actually seem like a fairly boring job.

It is February 2015 and I am bored out of my mind.  I am a stay-at-home stock trader which means I spend six and a half hours every trading day of the year in front of two computer screens trading about 60 stock markets on line.  I do not get days off; I must do this every day.  That is the downside; the upside is I work for myself.  I roll out of bed every day and walk to my computers and I can get dressed or work in my underwear if I want.  The only commuting I do is to the kitchen for coffee.

Today the DOW climbs out of a hole and gains 35 points.  I closed out  TOTAL+ $525 profit

BIG WOOP!

It’s a beautiful day and I would rather go fishing or skiing in the mountains, but instead I sit here for six and a half hours to make a few hundred bucks.

100 % Investing

funnel-grinder High Return Investments in 2015

Should I hang it up?  Should I give up?  Well I do not think so.  And this is why.  If I look at my trading statistics for the past 20 years or so and I add everything up, the good, the bad and the terrible I can see that I am making an annual equivalent of well over 100% annual returns a year on my investment.  When the markets are moving like this I call it 100 percent investing.

 

How-I-Quit-small-246x300 High Return Investments in 2015

And dear people if you can maintain 100 per cent annual returns on your investment for five years you are going to be rich even if you start small.  It really hardly makes much difference what you start with.  Quite a few years ago I wrote a book, “How I Quit My Job and turned $6,000 into a Half Million Trading”.  Being as I was not a market guru at the time and nobody quoted me in the Wall Street Journal I figured nobody would believe me.  So half the book is simply copies of broker statements to prove that I made well over 100% for six straight years in a row.  And because I was not working any real job I took out most of the money to live on.  So I did not maximize the compounding effect.

So you think I was lucky?  Do you think this was just a flash in the pan when the markets were different?  Do you think this can be done with a small amount of money but the returns will be reduced as soon as one gets into big money?

Well I traded managed money for several years also and I pushed a couple billion dollars worth of trades through the marketplace.  Most of this is on my web site.  (see Stock Trading Millionaires) But guess what?  I made close to 100% trading millions of dollars also.

And whats really exciting to me is that here in February 2015 the markets are almost as good as when I did that about 12 years ago.  I cannot guarantee that 2015 is going to be this good for the rest of the year.  2012 was not very good.  Even with my stock trading systems it is possible to have less than optimum stock trading performance.  But even in 2012 we still made money.

But the point I really want to make in this article is that back then in different markets and even when trading millions of dollars most of the trading days were boring and it does not make any difference how much money a person is trading or the markets they trade.  Most trading is boring.  This is profitable, but it is not as exciting as you think.

I have been researching all kinds of markets for nearly two decades and two major points of my research are these:  1) 85 % of the time markets move sideways rather than up or down.  2) Using the trading strategies that we use about 70% of our profits come from about 5% of our trades.

I will say that again:   70% of our profits come from about 5% of our trades.

Do a little extrapolation from these figures and you can predict that nine out of every ten days of trading are going to be uneventful and not very exciting.

A good trader is someone who can sit there and follow the rules day after day after day.  I talk to a lot of trader wannabees.  When I tell them truthfully that I think it is quite possible for an average Joe to sit at home in front of computers and starting with a modest amount of money, to become rich in a few years, they start to salivate.  That sounds so easy.

But quite surprisingly most would-be traders drop out because they expect a lot of excitement and what they get is so routine that it becomes boring.  I frequently tell wannabe traders that one of the most important activities they must engage in is accurate record keeping.  I must spend at least 60 minutes at the end of each market day just doing spread sheets.  Ho Hum, that is not very exciting, but if you fail to keep accurate records you will never be a good trader.

But one of the worst mistakes that bored wannabe traders make is to try to introduce excitement into the trading day by taking trades outside of the rules of their trading systems.  Without going into the many stories I have heard, let me just say that is the fastest track to trader extinction.

One of the great myths pushed upon would-be investors by financial advisers and brokers is that high returns on your investments mean high risk and that low returns mean low risk.     It is no different in 2015 than 25 years ago.  People think high returns in our soft economy are impossible and IF possible come with very high risk.

The one thing I have learned from my research is that risk and returns are not statistically related.  High return investing does not have to be risky.  What is related to risk and returns is the amount of trades taken and the length of time those trades are held.  Short term stock trading is one of least risky of investments.  If the market does crash in 2013 you are going to have one really bad day, but then you are going to be out of the market and standing aside still holding most of your money.

I have been able to get very high returns with low risk for many many years in all kinds of market environments.  But to do this I must trade intensively day after day, week after week, month after month and year after year.  And after all these years I put my stuff up on my web site every day, several times a day, to prove it.  It’s right there day after day.  I can’t fake it and you can’t argue with it.  I have some good days; I have some bad days, but over time I make money.

But nevertheless most days are boring.  Some days I hate doing my daily video.  Even doing high return investing and making 100 per cent every year can be boring.

If you want excitement take up sky diving.  But if you want to get rich and be a really good trader and be willing to do it on your own, you much commit yourself to years of just doing the same thing over and over again.

But if I can do this you can also.  2015 could be your lucky year.  Why not make 2015 the year that you begin a new career and really learn about high return investments?

 

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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.

Automated Stock Trading Software

 Introducing: Intra-Day Stock Trader 2016  with 15 day risk free trial

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How to trade like a millionaire:  This software contains, without a doubt, the most powerful tools on our planet for turning a small amount of money into a small fortune.  Up to this day, I can assure you that there is no other trading package similar or even close in content to what you can buy right here, right now. 




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This trading package, The Intra-Day Stock Trader 2013, will definitely increase your chances of making it big in the stock market

 

How effective is this trading methodology?

I started developing these methods over 20 years ago and I have made millions (see Stock Trading Millionaires) trading the identical methods you can get right here right now.  I started with less than nothing, over 20 years ago, and I am still going strong.  And I am so confident in this trading package’s effectiveness that I put the real time trades up on this web site every day AND I offer it to you with an unconditional money back guarantee. If you do not like it after loading it up on your computer you can send it back and get all your money back. 

And furthermore you can see results before you even put out any money.  What you can see from the results posted on this web site daily is that The Intra-Day Stock Trader 2013 just keeps making money over time with small draw down and little risk to your trading capital.

Trust me there is nothing else like this out there.  Nobody else posts 10 to 20 of their trades on a web site every day and you can replicate these trades by buying this package.  I cannot fake these results.  This is real time stock trading on steroids.   This is the Lamborghini of stock trading packages.  This is absolutely the best there is for getting high returns with little risk.

What is DIFFERENT about this trading package and this trading methodology?

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For starters when I published “How I Quit my Job and Turned $6,000 into a Half Million Trading” I also published nearly 50 pages of broker statements to verify the profits and returns that I was writing about.  NOBODY HAS EVER DONE THAT.  This is not a theoretical trading methodology, dreamed up by a computer programmer, and sold to you without having been tested in real time with real money.  I have lived, breathed, traded and researched these methods for over two decades and know, without any reservation, GC-manual-253x300 Automated Stock Trading Softwarethat they work.  The trades generated by this trading package are posted daily on this site to demonstrate that this robust methodology has worked for 20 years in real time and continues, to this day, in 2013, to work in real time.

Why you should buy NOW:

  • Price is going up.  The price used to be $500.  Now it is $1,000.  Very soon it will be $1,500 or higher. 
  • My time is limited and yet I want to really help anybody who buys my materials.

I spend a lot of time on the phone answering customer questions or doing lengthy exchanges in writing by way of E-mail.  Anybody who buys this package has virtually unlimited access to my expertise.  But I can only handle so many customers at any given time. 

As word of Intra-Day Stock Trader 2013 has spread across the Internet more people are buying it and I am becoming very busy.  Shortly I must control these numbers by raising my price.  I know of trading system vendors selling trading platforms inferior to this for $30,000. 

  • Trust me, you are getting a deal at $1,000 and to get that price you need to buy NOW.

What is included:

  • 1)      A proven and previously unpublished system that I have traded for years with both small accounts and large accounts.  This is the identical system posted on this web site every day.  I have made a lot of money with this system, but rather than talk about all that stuff in the past, I have put all real time trades up on this website for 75 plus markets, every day, so that you can view my real time trades and judge for yourself.  In fact you can see exactly what this system did TODAY.

 The system I call JORDI’’s INTRA-DAY 2, is the identical system I used to trade millions of dollars with.  The trades posted on the site daily assumes a million dollar portfolio.  However, “Jordi”  can be adjusted to accommodate the trader who has just a few thousand dollars to start with. That is how I started.

  More on Jordi2 

  • 2)      A longer term system.  In 2012 I was plagued by low volatility markets.  Low volatility can hurt a very short term system because even when you win most of the time the wins can be small and result in commission costs eating into your profits.  To offset this I developed and traded in real time a system that held trades typically two or three weeks rather than just a few days.

More on the Weekly system.

  • 3)      A Software Platform that can run my trading systems as well as many other systems including all the systems discussed in the two trading manuals included in the package.  The platform even allows you modify my systems and to design your own trading systems.  No black box systems; you can see all the rules of trading.  This customized platform allows you to connect with E-Signal’s streaming data and trade my systems tick for tick and in real time.  With this package you will be able to replicate exactly what is posted on this web site every day.
    wp-content-uploads-2013-02-works-with-wibdows-8 Automated Stock Trading Software
  • And Windows 10 as well

 

  • 4)      Two fascinating classic trading manuals written by Robert Buran aka Trader Bob.  That includes “How I Quit my Job and Turned $6,000 into a Half Million Trading.”  I actually traded $6,000 into over a half million dollars in six years and in these manuals I will tell you exactly how I did it and I will disclose fully the exact trading systems I used.  AND I include copies of my brokerage statements.  These older systems using daily data have also been programmed and are included in the trading package.  You can load them into the trading platform.  Or you can buy JUST THE MANUALS.  If you buy just the manuals for $300 I will credit you $300 if you want to later buy everything.

Buy Just the Manuals:




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  • 5)    Fully compatible with TradeStation 9.  If you are a TradeStation trader this package is for you.  Everything even the 20 year old systems are fully compatible with TS 9.5 and I can provide support for work with that software.

More on working with TradeStation 9

  • 6)      Unlimited Support for technical or trading issues.  I am both a trader and and a kind of software geek.  I really trade this stuff and am are in front of computers most of the day and I like to talk.  So you are absolutely free to call me anytime (702-490-5317) and ask questions.  I am probably watching the very trade you are wondering about.  I will also quickly respond to E-mail sent to traderbob@einsteinstocktraders.com

 COST:  $1,000 for the entire package.  Your purchase is RISK FREE.  I allow you 15 days to examine the package, read the manuals, install the software, E-mail or talk to me or do anything else you need to do to convince yourself that this is the smartest money you have ever spent.

But if you are not happy with the product you just have to call me or E-mail me  within 15 days of receipt your package and I will cheerfully return all your money through PayPal when I get the package back.  But the mail time does not count against your 15 days for risk free examination of the product.  

If you have questions prior to purchase you may E-mail traderbob@einsteinstocktraders.com or call United States + 702 490 5317;  it is OK to call during market hours.

I do not collect credit card information and this transaction is absolutely secure with PayPal although you do NOT need a PayPal account to purchase.  All shipping and tax is included in the $1,000 US dollar purchase price.  I do standard shipping to anywhere in the world free.  You get 15 days to examine the product from the time you receive it.  You may notify me by E-mail within 15 days that you want a refund and I will refund $1,000 US dollars when I get the physical package back.  You must pay return shipping.




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Copyright 2010-2013 Short Term Stock Trading

WANT TO CONTACT ME?

I am around my computers most of the time and I can usually reply by E-mail  within  a few hours. A hacker messed up my contact form for this site but my e-mail is

bobburan@juno.com

or my telephone is: 702 490 5317

OR if you like contact forms this one works. I am the thin guy at:

http://loseweightgetyounger.com/contact-me

 

8698821-0-0fdb66bb-0 Automated Stock Trading Software

Computer Trading

Computer Trading

 

exploding-computer-1 Computer Trading

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.

computer-trading-1 Computer Trading

 

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.exploding-computer-2 Computer Trading

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

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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

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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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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.

Trading Tips

Trading Tips

 

wp-content-uploads-2013-03-robertburan Trading Tips  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.

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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.

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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?

Hot-Trading-Tips-2-300x108 Trading Tips

 

  • 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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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.

Stock Trading for Dummies

Stock Trading for Dummies

 

wp-content-uploads-2013-02-robert-buran Stock Trading for Dummies

 

I am a stock trading dummy

 

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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.

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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

 

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 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.

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 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

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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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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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Trade the System

Trade the System

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Why can’t people just Trade the System?

 

I am always telling trader wannabes to just trade the system.  Sometimes I think that either they are deaf or must not understand my English.  Few people seem to be able to understand the importance of trading the system.  And to that observation I might add it would seem that few people can or want to work at home for five to eight years in order to make wp-content-uploads-2013-05-following-trading-system-298x300 Trade the Systemone million dollars.  I am serious.

Following a trading system is on one hand about the easiest thing a trader can do and on the other hand it becomes almost an impossible task for most traders.  In truth few traders can follow a trading system.  I have known hundreds, perhaps a thousand traders, some who were positively brilliant, and I will tell you very few could just trade the system.

I am not sure just why this is so.   Before I became a trader I was a psychologist and so naturally I have an interest in the psychology of trading.  Nevertheless I have yet to develop a clear explanation why intelligent people cannot follow a trading system.

Why do I Trade the System ?

I post my trades and positions several times a day on this web site  and do a video trading wrap up every day also (please see Today Stock Market).  Anybody can see I have good days and I have bad days.  But overall my returns are excellent and generally do in fact exceed the performances of most professional traders.

I have also demonstrated that this methodology has been working for over twenty years and that I have traded it with accounts ranging in size from $6,000 to $6,000,000.  Using this methodology I am certain that any person with 10 to 20 thousand dollars has the potential to earn hundreds of thousands even millions of dollars if they just trade the system for several years.

Yes I sell my system (see Automated Stock Trading Software) but this is not the only good system out there.  There are a 100 ways to skin this cat.  Just read some of my articles like Simple Stock Trading and you should start getting some ideas.  But just keep in mind that once you select a system you must stick with it and probably stick with it for years.

 

I did this and made millions.  And this is what I recommend you must do to if you want to become a millionaire:

My Specific recommendations for trading the system and making the big money.

  •       Open up a trading account with a discount broker with ten to twenty thousand dollars.
  • Sit in front of computers for nearly eight hours a day for every day the markets are open.  Plan to do this for five to eight years.
  •   Do exactly what the computer tells you to do to do.  Buy when the computer says buy and sell when the computer says sell.
  • Keep careful trading records and strive to improve your skills with order execution.
  • Pay your taxes on time.

In theory the worst case scenario is that it will take you eight years to become a millionaire.  This is not a bad salary for five to eight years of work.

Why you may fail to Trade the System

I am certain you would like to make the big money, but why do I think you might fail?  Why can people not follow a simple system for several years to make a million dollars?

Well like I said I am a psychologist AND a trader.  Also I have come in contact with hundreds of traders.  Unfortunately, however, the portrait of the AVERAGE trader I have known is not very flattering.

Based on my contacts and experience this is why you probably will not be able to follow the above five steps to attain one million dollars:

  • Boredom – Becoming a professional trader may prove disappointing.  Most people think of trading as very exciting.  It is not.  The truth is that markets tend to move sideways about 85 % of the time and so that is not very exciting.   Furthermore I make about 60% of my profits with 5% of my trades.  What that means is I take a lot of mediocre trades while waiting for the big one.  Trading is like fishing and sometimes requires a great deal of patience.    I think that a good trader has a personality a little like the personality of an accountant.  But not many people who are attracted to trading have personalities like an accountant.  They tend to be thrill seekers and the thrill seekers quickly become disillusioned with my style of trading.
  • Desire for Change – Making a million dollars using my systems and methods require that you do exactly the same thing day after day for several years.  Most people cannot do that.  People naturally want to stimulate themselves, perhaps as a reaction to boredom, through change.  Oftentimes this may come in the form of switching trading systems.   I have known a lot of people in this business and a few of them have actually treated me with some contempt simply because I continue to trade the same way I did 20 years ago.  Even though I have made a ton of money doing this they feel that I suffer from some kind of intellectual impairment because I have not developed something new.    But my experience is that the system switchers lose money faster than anybody else.
  • Negative Life Events – When I suggest to persons that they can make money staying at home and doing something no more difficult than taking trades that their computer tells them to take, their eyes light up and they think that perhaps they have found the key to happiness.  But trading can cause emotional problems that can lead to depression, anxiety, divorce and despair.  When I really did quit my day job and started trading full time I initially felt very isolated and I missed seeing my friends at work. Initially I felt profoundly alone and isolated.  Having a busy and somewhat preoccupied Dad at home all the time can also cause stress on families.   And even making a lot of money in the markets can put stress on families.  If you go from being poor to rich your relationships will most certainly change and the changes are not always for the better.   Good trading demands stability and consistency but walking around with $100,000 in your checking account can undermine that.
  • Negative Psychiatric Programming – Running a web site and selling trading software and advice helps reduce my feeling of isolation that comes from working at home all the time.  Although some of my best friends and business contacts started out as my customers, this business has also put me in touch with some of the strangest people on the planet.

Strange people I have known who did not Trade the System

  • Hobo John was literally homeless and called me frequently from phonewp-content-uploads-2013-05-trade-the-system-2 Trade the Systembooths.  Fifteen years ago he put together a few thousand dollars, probably selling drugs, and paid me $1150 for my trading package and used the balance to open a trading account.  What he got from my trading materials was that if you invested in the stock market you would get rich.  The guy bought one stock index contract and held onto it until all his money was gone.  I was almost happy when that happened because he had been calling me every day from a phone booth to report on the progressive decline of his account.
  • Millionaire Mike had all the family money anybody could want and had neverwp-content-uploads-2013-05-trade-the-system-3 Trade the Systemput in an honest day of work in his life.  He hardly knew how to turn on a computer and could not follow my system if his life depended on it.  He lost large amounts of money on a daily basis and this did not seem to bother him at all.  He talked to me like I was his best friend and, like Hobo John, called me daily to cheerfully report on his losses.  His marriage was in trouble and curiously he would tell me about buying gold and burying it on public land to keep it from his wife.  The phone calls ended mercifully with his divorce.

I am absolutely convinced that some confused people get mixed up with trading because they want to punish themselves and want to lose money.

In any case there are many reasons why people cannot sit in front of a computer, at home, for several years in order to make a million dollars.  Following a Trading System can be either easy or nearly impossible depending on how you want to see it.  But if you really think you might have the right stuff and can avoid some of the pitfalls I have described here I strongly suggest you give it a try.  Anybody should be able to Trade the System.

 
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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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