Trading seems like an area where individuals could fare as well as professionals but that is rarely the case. Individuals face a number of challenges when it comes to trading and one challenge is to understand they are unlikely to beat professionals in some areas. Individuals might find success in day trading, for example, but that will be difficult because institutions and high frequency trading (HFT) firms have access to faster data and lower execution costs.
One area where individuals can compete on the same footing as professionals is in swing trading where positions are held for a day or several days at a time. Momentum trading, rapid profit target trading, and trend following strategies are other areas that can also be profitable for individual investors. Professionals often have well-defined trading rules focused on these strategies.
In addition to using well-defined strategies, one of the keys to the success of many professionals is diversification. Professionals will often use diversified strategies to trade while individuals might tend to favor a single approach. With diversified strategies, professionals lower their risk and are able to find trading opportunities under a variety of market conditions. They apply multiple strategies to put the odds of success on their side.
A final difference between the two groups to consider is the use of quantified data. Professionals tend to use strategies that have withstood the test of time and been shown to work through quantified testing. Some professionals have an intuitive feel for the markets but many apply a quantified approach that could be replicated by anyone with access to descriptions or the computer code of their trading rules.
Larry Connors and TradingMarkets.com have been providing individual investors with access to strategies and the computer code for many of their strategies for more than 20 years. TradingMarkets.com is now offering a suite of tools with over 100 quantified trading strategies that can be used to trade your own account or to join the group of professional traders with the solutions needed for a professional trading business.
Now let’s look at the most overbought and oversold stocks (according to ConnorsRSI) heading into trading for September 16, 2014. ConnorsRSI is a proprietary and quantified momentum oscillator developed by Connors Research that indicates the level to which a security is overbought (high values) or oversold (low values).
SNX (Synnex Corp) is the most oversold stock with a ConnorsRSI reading of 0.54.
EPP (iShares MSCI Pacific Ex-Japan) is the most oversold non-leveraged ETF with a ConnorsRSI reading of 1.49.
YINN (Direxion Daily FTSE China Bull 3x) is the most oversold leveraged ETF with a ConnorsRSI reading of 3.60.
CNC (Concert Pharmaceuticals Inc.) is the most overbought stock with a ConnorsRSI reading of 96.64.
TMV (iShares Short-Treasury Bond) is the most overbought ETF with a ConnorsRSI reading of 92.28.
TradingMarkets Lists provide users pre-populated lists of stocks and ETFs identifying symbols with overbought and oversold ConnorsRSI and Bollinger Bands® readings. The Screener Lists are powered by The TradingMarkets Screener.
All data is as of the end of day on 9/15/2014.