Most traders make their trading decisions by relying on news, reports, and intuition or gut feelings. Such traders confront the market without a concept. This explains why most of them lose money in the markets, which is statistically confirmed.

Trading decisions made from fundamental data, news and tips are not free of human emotions. There are all base on your personal assumptions and predictions. These methodologies rarely can bring in consistent profits and it is far too risky for anyone to depend upon. They are trading what they hear and not what they see.

A more systematic trading approach is needed with disciplined alignment of technical trading parameters allowing you to trade without having to make the decisions thus removing the chance for emotional trading. It is statistically proven that trading with a system can improve the overall performance dramatically while simultaneously reducing your risk.

Systematic investment decisions can cause short term, intermediate term and even long term profits. The success of a trading system should be based on many years of research, back testing and trading experience. Here is the order of sequence that I use in my trading systems.

  1. Short Listing – The first tool that I need is a screener to screen out only the potential ones, those that can provide me with high probability.
  2. Technical Indicators – Different tools for different job done effectively. Choosing the right indicators to use is very important.
  3. The Qualifying – The parameters that I set to screen out stocks that are able to meet my requirements before I even consider them.
  4. The Set Up and Entry – Proper set up will be able to provide me with the entry signals. Different systems have different set up and the strategies may differ.
  5. Exit Signals – A good system must be able to provided signals for exits as well. Without it you are not able to remove the emotions from your trading.

There are plenty of tools that are available from the web, most of them are free but you’ll have to be subscribing for the more advance tools. I only use the free ones and I find it excellent. Many traders spend thousands of dollars trying to get a perfect system. Why pay when you can use them for free.

“It’s not that stock prices are capricious. It’s that the news is capricious” - Burton Malkiel (Author of A Random Walk Down Wall Street)

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