Simple Stock Trading

Simple Stock Trading

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Simple Stock Trading is the key to making the big money.

The randomness of short term stock behavior can only be tamed with simple trading systems using very limited parameters; trading and making money is easier than you think.

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KEEP IT SIMPLE STUPID.You have probably heard of KISS, “keep it simple stupid”.  When it comes to stock trading no advice could be better.  In fact I am of the opinion that simple stock trading is the only way you can consistently make money in the stock market.

If you get the chance you should read my longer article, How to Trade.  In that article I tell about a brilliant engineer who believed he could write a trading formula that could accurately predict all market movement.  He anticipated that the formula would run about 50 pages in length.

The engineer was not successful.  The problem is that markets are not perfect and in fact most short term stock movement is random.  The most sophisticated formulas cannot predict random price behavior.  It is garbage in and garbage out.  You may wish to read my longer article, Stock Market Price.

So to deal with markets that are predominantly random you need to use formulas that are very simple with limited parameters.

EXAMPLE OF A SIMPLE STOCK TRADING SYSTEM

Let me give you an example of a stock market trading system with few parameters. At the close of a market day you take the LOW of the day and subtract it from the HIGH of the day. Next you take half of that value and add it to the CLOSE. So let us say that on Monday WUZOO makes a high of 20, a low of 10 and closes at 14. Then we will subtract 10 from 20 to get 10 and take half of that to get 5. Then we will add 5 to 14 to get 19.

The number 19, (.5(H-L)) +C, is the market price to buy on Tuesday. If the buy price is hit on Tuesday you hold the position until the open on Thursday and then you sell it. That’s it. There is nothing more to this simple system with the most limited number of parameters.

Then I tested this simple system.  I randomly selected four markets from the top of my list of traded markets that are arranged alphabetically. The four markets I selected were ADCT, ADSK, AMD, and ABGX.

I tested each market using this simple trading system for one year. I used a formula that commits $10,000 to each trade, hence you buy 2000 shares of a stock trading at $5.00 and you buy 200 shares of a stock trading at $50.00 etc. I tested ADCT, ADSK, and AMD from mid January 2009 to mid January 2010. As a check against correlated markets I tested ABGX from mid August 2000 to mid August 2001.

In the real world of stock market trading and trading on margin you could probably trade all four of these markets at the same time with about $10,000 in your trading account. Furthermore it is unlikely you would ever get a margin call on a trading system that is out of the trade on the open of the third day. By the time the margin clerk calls you are out of the trade.

This is the net profits from each market: ADCT $2,376, ADSK $2,401, AMD $4,308, ABGX $7,299.

If I put the numbers for all four markets together this is what they look like:

Gross profit = $35,604

Gross loss = $19,219

NET PROFIT = $16,385

NET PROFIT AFTER TAKING OUT $50 PER TRADE FOR TRANSACTION COSTS = $10,835

Number Trades = 111

Number win = 72

Number loss = 39

Percent profit = 65 %

Average Trade (win loss) = $148

MAX intraday drawdown = -$2,848

SIMPLE STOCK TRADING CAN MAKE YOU RICH

So the bottom line is you are making conservatively $10,835 and that translates into over 100% annual return on your investment of $10,000.

If you compound $10,000 for five years you get $1,208,221

If you can commit yourself to sitting in front of computers for five years you can become rich by using simple trading systems like this.

I am not just playing around with numbers and idle trading ideas either.  I have already done this.  I wrote the book “How I Quit my Job and Turned $6,000 into a Half Million Trading” and I published my broker statements to prove I had really done this.

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I made over 100% for six consecutive years.  The reason that I did not total over one million dollars was that I had to take money out of the account to live on.

I refuse to believe that I am the only person in the world that can consistently follow any one of these simple stock trading systems and I have integrated software and market data to make it easy for others to trade this way also.  (Please see, Automated Stock  Trading Software).

The point of this post is that stock trading is not complicated and a smart trader will simply tune out all the bogus stock experts and keep it simple (KISS).  Believe me Simple Stock Trading can make you 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.


Trader Bob

Trader Bob

wp-content-uploads-2013-02-robert-buran Trader BobMy name is Robert Buran and I live in Reno Nevada.  I was born on September 14, 1943 in Madison Wisconsin.  I graduated from Madison West High School in 1961.  I earned a Bachelors degree in English and Spanish, and a Master’s degree and EDS in school psychology, all from the University of Wisconsin.  I practiced psychology in Alpena Michigan and Redlands California for about 15 years.  I left psychology and became a full time commodities futures trader in 1988.

moon-and-us21-269x300 Trader BobBetween 1998 and 2002 I managed large sums of European money in the US stock market and my annual returns exceeded 80%.

I have been a trader and TradeStation programer for over 20 years. My stock trading systems are outside the box and I post them on the web every day.

I am a single dad, age 69,  and raise my only child, a 12 year old gifted male 6th grader, unassisted.

In my “spare time” I write articles about health, diet and age reversal and I run a web site at  http://www.loseweightgetyounger.com

 

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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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