Algorithmic Investing System

What can you gain from an computer trading system? Is it any better or worse than flipping a coin? Unlike popular thinking an algorithmic trading system based solely on stock charts can pick a good quantity of profitable trades.

Why is it so? To begin with let's be selective. Not all stocks that you come across to trade are worth putting your money at risk. That's in fact a benefit because you have a limited amount of money to trade with – therefore you have to be quite specific about what you choose. Individual shares peculiarly those with a small capitalization are to be left alone unless you have insider knowledge. Indices and very large stocks behave well under the scrutiny of technical analysis. Further on futures have the reputation to be the most tame. In April 2010 a commodity such as palladium yielded close to 100% returns in just 9 months. Imagine doubling your money in one year.

A trading robot doesn’t care about a company balance sheet (or what remains of it after the creative accountants have done their interpretation on it.) As the old saying goes: "Everything you need to know is already factored in the price!" An automated trading system doesn't fidget whether or not to be in or out of the market. It is constantly in the market swinging from long to short and back again. It does not give in to market emotions but it does take advantage of big moves in the market by being brave enough to change position early in a move.

You might think such an automated trading system is the privilege of players who can afford to hire hordes of computer geeks. Check out this automated trading system with results published daily. It runs on a 9 months rolling window of data. For each item traded a chart and a log of trades with a listing of profits and losses is produced.

Even though there is still quite a choice of items to choose from investors tend to trade in an field or market they know about. They mentally recall the last high or the last low over the last 6 months. Nevertheless comparing your own trades with what Trading Pal did can be quite a wake up call to the shortfalls of your own ad-hoc system (If there is such a term when all you do is give in to your emotions.)