Finding A Trading Method That Works For You, Part 1
My name is Steven Primo and I am General Partner and
Head Trader for a private investment firm. I was previously a 9-year
specialist on the floor of the Pacific Stock Exchange where I traded for
Donaldson, Lufkin and Jenrette.
When I left the Exchange in 1994 to trade on my own, I soon realized that a
method or daily plan was needed in order to capture consistent profits. In
addition to this, I needed a strategy that was easy to implement and follow
during the most intense of market times.
In
this week’s column I will teach you Step 1 of how to find a swing trading
method that works for you, and then in later articles I will explain how to
simply follow the rules without fail. By doing this, you are able to run your
trading operation like a business. And like a business, you will have a daily
plan, which when followed, potentially enables you to achieve a desired level of
financial gain each month.
How do you achieve this? There are three steps that I suggest you
follow. Here is Step 1:
Step 1: Look for a trading method that allows you to trade
systematically.
A systematic method is one in which all trading decisions are
determined by an exact set of rules. These rules have been back tested and
researched, over years of past data. The reason this is done is to see whether
it’s worth putting your hard earned money into the methodology you are testing.
After all, wouldn’t you want to know “in advance†what this particular
strategy’s Profit Factor or Maximum Drawdown was before you invested a dime?
Finally, if you’re comfortable enough with the results to actually trade the
system, all that is required is to simply “buy” when it says “buy” and “sell”
when it says “sell.” That’s it. But you must avoid getting influenced by outside
influences such as market gurus, TV commentators and fundamental news. It’s been
my experience over the past 27 years of trading the markets, that this is
nothing more than glorified guesswork. Of course, I readily acknowledge that
there are many successful non-systematic traders in the world. But based upon my
personal experience, if you were starting from scratch today, I’d say that
trading a rule-based system is the best way to go.
To
be continued…..
Steve Primo
P.S. Join me for an intense 14-week swing trading program in which I’ll cover
six statistically-backed systems.
Click here for the details.
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