Trading Systems and Methods

As I noted elsewhere, there is no ‘one size fits all’ answer to this question – the right trading strategy for one person may not be the right one for another – the right trading strategy for you is one that you UNDERSTAND, and have tested for yourself sufficiently to believe that it works, and will work in the long run.  All trading systems will have losing trades, sometimes more than one in a row, and for the system to work; you have to believe in it sufficiently to stick with it through the losing trades to be able to reap the rewards of the winning trades.   Do your due diligence by investigating each one using the criteria mentioned earlier, and considering whether it is the one for you. Online subscriptions should be chosen for their ability to save you time and effort in making your trading routine easy and enjoyable. You may decide to subscribe to more than one service. I have two different subscriptions for stocks, and one for options. While subscriptions to such services are not inexpensive, one or two winning trades will more than pay for the annual dues.

Here are some that I feel are worthy of review:

Stock Trading Software:

  1. OmniTrader: This is an excellent company with an excellent website with much by way of educational support, in addition to software that makes it easy to run scans to find tradable stocks, ETFs and indexes. For individuals who are not inclined to run their own scans, OmniTrader has an Omniscan feature that will run the scans for you – all one then has to do is decide what type of trade to place. For those who are more ‘visual’ in their outlook on life, they have special software (called ‘Visual Trader’) that displays results in a visual format with columns that rise or fall into a virtual floor, allowing one to easily see where the opportunities lie.
  2. Vector Vest: This is another excellent company with a market timing system that has ‘never failed’. The company, built on the trading system created by Dr. Bart DiLido, has many educational offerings to help newbies get up and running quickly.  In addition to the software, which will allow you to scan the market for opportunities, every evening, the company issues a market report that guides investors and traders on what they should do the following day. Each stock in their database is given a buy, hold or sell recommendation daily – this clarifies for the novice what to do.
  3. Dynamic Trader: Here is another excellent company with a long track record of educating traders on how to scan for tradable opportunities in the stock, futures and forex markets. Components of Elliot wave theory are built into the software, which highlights for the trader when the opportunities exist, and how far a trend is likely to continue. Rober Miner, the creator of this system, has an excellent book ‘High Probability Trading’ that outlines his methodology very clearly. In addition to the software, he has a multi-media trading course geared toward teaching students both the theory behind the predictions made by the software as well as details of how to use the software.
  4. TC2000: This yet another great company that has very easy to use software with very quick scans, and a community of users that are very willing to help with sharing their own experiences in the market.  The website is replete with many videos and webinars.  The focus is on getting users to ‘Think for themselves’. One of the best ways to decide if a product meets one’s expectations is to try it out for oneself – Worden Brothers offers a free 2 week trial of a fully functional product to enable users to make this determination themselves. Check it out here.

Options Trading Education Companies:

  1. RandomWalkTrading: This company is geared towards educating traders on how to use options.  They also have an excellent series of books that are written in a very practical, down-to-earth manner with ‘step-by-step’ directions of how to buy what, when and how to manage your trades.  While the books are great (I have all 4), for the newbie trader, perhaps the best way to get ‘up and running’ quickly is to attend one or more of their seminars or webinars.  Learning from experienced traders the right way to trade options will prevent substantial monetary losses and much frustration later.  (I initially made the mistake of assuming that I could trade options after reading the theory from a book – options are a ‘double-edged sword’ allowing one to make money readily because of the high leverage one can obtain, but also lose money readily if one is not savvy enough to understand and guard against the risks inherent in the market.)
  2. Optionetics: Another company geared at educating traders in the art of trading stock options and futures. It has many seminars and other educational offerings (including home courses). One of its most memorable events is OASIS (Optionetics Annual Super Investor Summit), where one meets fellow traders from all around the globe.
  3. OptionsXpress: Ironically, this is a brokerage company with much online educational content including videos, webinars, workshops and seminars (see link below). The online site also has a virtual trading platform that not only allows investors and traders to practice trading strategies without risk real money, but also has real-time access to quotes which guarantees that trades placed are filled (or not) as they would in real life.

While there are many trading systems that one might investigate, one should guard against searching indefinitely for the perfect system – trading successfully in the market is less about the system than it is about oneself, and having the discipline to follow a trading system.  It is up to each to find a system that works for them.  I use one system to find my stock trading opportunities, and another to create an option trade based on my prognosis of what the stock is going to do. I focus on minimizing the risk in the trade, which allows me to have more trades working for me at any given time.  If you can find or develop a system that ‘wins more often than it loses’, and you minimize the risk of the trade such that the ‘reward is always greater than the risk’, then you have a ‘winning’ system that is profitable.  (For the geeks amongst you, at later date, I will delve into the math behind this statement).