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Looking for the "Best Trading System" has become the most
challenging question. However, many traders are looking for
something unreal that would deliver huge profits, without any
risk and worries and without putting a lot of work into it. The
right way should be to build it yourself or find a working
trading strategy and adjust it to the personal trading style and
risk tolerance. It's not an easy task - otherwise everyone would
be a winner on the market.
Basically, for each individual trader the best trading style
would be different and it directly depends on the chosen market
(equates, options, currencies...), personal trading style and
the risk a trader is willing to accept.
It's logical that different markets may require using different
trading systems. The trading system that performs well in the
equity market could be a financial suicide in options or futures
markets because of the expiration. What works well in the
currency market could not always be applied in mutual funds
trading, simply because mutual funds could be traded once a day
while currency almost 24/7.
There are many factors that would affect a trading system in
different markets. Example could be the fact that holding an
option position opened for more then a month could result in the
negative trade even if the market moves in your favor. At the
same time you may keep equities position much longer. It would
be completely wrong to say that the "Best Trading System" should
perform well in any market. If you decided to become an options
trader, it would be logical to look for a trading system that
works in options market instead of applying the trading system
you used for equities without any changes. Different markets
require using different trading systems and different trading
strategies.
Each trader has a personal style and each trader has a different
portfolio size. A trader with a big portfolio size has the
ability to diversify, use dollar cost averaging. This trader can
play on less then 1% trades without worrying about commissions.
At the same time a trader with small portfolio size would be
able to invest in one stock only, could be willing to use margin
trading and very often has to spend up to several percents from
the profit for commissions and other fees. Each trader manages
the personal investments in unique way and there is no doubt
that the trading system has to fit the personal trading style.
The trading system that works well for $100,000 portfolio could
be a complete failure for an investor with $5,000 in the pocket.
Each trader would define and build the "Best Trading System" in
a personal and a unique way, simply because a lot of personal
factors affect it. The "Best Trading System" is the system that
best fits to the selected trading vehicle, personal trading
style and risk tolerance. Every trader should build his own
"Best Trading System" or at least find the one that works well
in the chosen market and adjust it to the personal trading
style, portfolio size and risk tolerance.
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QQQQ
Signals
Past 3 Months |
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1%
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2%
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Compound |
Compound
Margin |
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As of 5/11/2008 |
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