I've been working pretty much non-stop (just ask my Julie) trying to develop a profitable trading system. I believe I've made some great strides with one that meets both of my main concerns: easy to use and understand; and takes the emotion out of trading.
Most books I have read on trading systems say, for the individual, to K.I.S.S. A system with less than 5 indicators can be developed that is very profitable. In the evolution of my current system I use 5 filters to find potential stocks to trade, and then only 3 indicators to determine whether or not to enter/exit a trade.
In past trading, my weakest area has been getting in/out of a trade when I knew I should or should not. Often times, I would hang too long to a bad trade or just get overly involved in the market instead of waiting until better opportunities came along. This system has defined rules that place trades with defined entry and exits points.
The concept is very simple, and I've found a way to make it profitable I think. In addition because I believe it will work in the long run, I feel no need to adjust what the system tells me to do on a daily basis. Therefore, no emotional decisions to change things in the heat of the moment should happen.
While I am happy with what I have found so far, I am still trying to fine tune it. This requires numerous studies to see how the stocks may perform under different scenarios/rules, but because I am a stats geek, I actually enjoy it.
I have been using this system (with some minor tweaks) since mid-to-late November with fantastic results. I have been running very well due to some very large gains in a few stocks that I know don't come along very often. I am fully aware that this could system may not work in practice and that this hot streak is just an anomaly. My hope is that my study on this system is accurate, and that while this hot streak is just that - a hot streak, I can still make decent returns over the long-run.
