Systems

The word ‘systems’ when used in terms of trading and investing invokes thoughts of complicated computer software tools completing intricate analysis tasks and procedures but in reality, systems create order, consistency and objectivity. Systems are the very definition of a Road Map and they enable us to operate in “auto pilot” mode and react to […]

Position Size Calculation – Part 4

The facts about managing your portfolio to beat the market A few weeks back, an avid reader of the Gary Stone Journal posted a number of questions that, in essence, needed to be answered by all active investors. So over the past 3 weeks I have done just that. This fourth post brings an end […]

Position Size Calculation – Part 3

In this series of posts on position sizing using the Percent Risk per Trade model, this week I will explain how to use a more scientific approach to determine what Stop Loss to use to determine the Dollar Risk per Share or the Trade Risk. The objective is to overcome the problems highlighted in last […]

Position Size Calculation – Part 2

In last week’s posting I covered the steps for calculating the position size for a trade using the Percent Risk per Trade model. This week I will deal with the problems presented in that calculation with determining where the Stop Loss is placed for a trade. Typically, a technical analysis technique of some sort is […]

Position Size Calculation – Part 1

This Journal posting and the next couple will be devoted to answering these specific questions posed by Simon to my 27th March journal post with the key questions repeated below: http://blog.sharewealthsystems.com/?p=2380&cpage=1#comment-15666 “It appears that the definition of the level of risk, both trade risk and portfolio risk, is central to adopting a robust and reliable […]

Why I’m a mechanical trader

Considering I am a huge advocate for mechanical trading, I thought that this week I would give a definition to all those that are interested and share the ten benefits of mechanical trading. For most, mechanical trading is a relatively new concept requiring explanation in itself. Mechanical Trading- definition: Mechanical trading is defined as using […]

You are surrounded by systems

Systems underlie everything we do, they are everywhere we look and we are in contact with or use them all day, every day. Yet there are many investors who have no system for their share market activities – believing instead that insider knowledge or tips from their broker or reading a newsletter will provide them […]

Designing a trading methodology – Part 8 – A brief recap

Over the past 7 weeks we have had a detailed look at the steps and processes involved in trading system design and development. Briefly recapping, these steps are:- Step 1 – Developing a Traders Mindset, and accepting that losses are just a part of the business. Step 2 – Identifying the tools and resources needed […]

Designing a trading methodology – Part 7 Degrees of freedom and optimisation

In this week’s posting I would like to explore in more detail the concepts of degrees of freedom and optimisation and the impact these two variables can have on the development and outcomes of a trading system. Degrees of freedom in a trading system relates to the number of criteria that are used to filter […]

Designing a trading methodology – Part 6 A winning trading system

Having worked through the processes to either develop and test your own trading system or perform detailed due diligence on a commercially available trading system using the steps discussed over the past weeks, this week we will look at what constitutes a winning trading system. A winning trading system will give you a profitable ‘edge’ […]

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