The Road to Success
Stockscores.com Perspectives for the week ending August 16, 2009
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Stockscores Trading Desk
Coming this Fall, the Stockscores.com Trading Desk. The ultimate stock picking challenge allowing you to develop your trading skills and compete for trading supremacy. How will you rank against the Stockscores community?
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In this week's issue:
I have been asked more than once about how I learned about the stock market and how to trade. What books had I read? Who showed me how trading worked? In the search for trading mastery, aspiring traders want to know the path that other traders took with the hope of emulating it. The hope is that a walk along the same path will take them to the same destination.
I have been teaching people how to trade for about 10 years and, in the past couple of years, I have thought a lot about what it takes to become a good trader. I have come to realize that telling people what to do is not enough, that it is only a start. Developing in to a successful trader requires more than an instruction manual.
We all recognize that you can't learn to ride a bike or swing a golf club from being told how to do it. You have to actually engage yourself in the activity to gain mastery. Advice along the way will help but it is the act of putting that advice in to practice that brings mastery.
So, what did I do? I practiced a lot! When I was learning how to trade, there were very few books written about trading and very few people willing to teach. There was no alternative but to figure it out for myself. So, I spent thousands of hours doing just that.
It does not seem like that long ago, but it was probably close to 20 years when I decided to lock myself in an apartment for a week with a computer, printer and a chart download service. At the time, I had to do a nightly download of stock market data to update the library of charts that I had. The download took about half an hour but was so far beyond what I had been doing. At one time, I was actually drawing charts out by hand on graph paper.
My aim was to look at the charts of all stocks that had done well and see if there were recurring patterns in those charts that predicted what stocks would be winners. I found those patterns and developed my trading strategies. Surprisingly, the basics of the strategies that I use today are the same as what I was doing back then.
But I did not go from developing trading strategies to making thousands of dollars a day. For every trade that I have done in my life, I have probably done 100 paper trades. I have spent a lot of time practicing. Even now, 20 years after I started trading, I still spend time each day studying the trades that I should have done. I always try to uncover the clues that a stock gave before it started to outperform the market.
Paper trading is a valuable part of the learning process. Armed with theory and good study, the aspiring trader needs a way to trade without risking capital. You learn a lot by going through this practice and it is a lot less expensive than making real trades. Making mistakes is part of learning.
But paper trading lacks the element of fear that causes many traders to fail when they begin to risk their capital. We should not fool ourselves to think that paper trading engages our emotions the way real trading does.
Soon, Stockscores will introduce a new service to help traders learn how to trade. The Stockscores Trading Challenge will allow our users to pick stocks and track their results. It will not be a portfolio management exercise but instead, a stock picking challenge; a chance to prove that you can pick winning trades and manage risk effectively.
Unlike the paper trading you may do now, this new service has an element of accountability that I think will help improve the realism of the practice. In the Stockscores Trading Challenge, your picks will earn TradeScores and you will be ranked for your performance. This competitive element will make it fun, but also emotionally engaging. I am confident that it will make any participant a better trader.
It will work quite simply. Enter trades much like you would a real trade. Select the entry price, stop loss point and how much risk you want to allocate to the trade. Each will affect your TradeScore when you exit the trade. Set a stop loss that is too wide and your TradeScore will suffer. Enter one too narrow and you run the risk of being stopped out and taking a loss. Our system will track all of your trades in the challenge and rank you against other participants. Consistent and profitable traders will rank highly while riverboat gamblers may go from the top to the bottom of the list in just a week.
Just like real life!
Perhaps the best part of the new offering is the price. There will be no cost to track your picks in the Trading Challenge or for your personal and private portfolio management.
There are other new things that we are developing to help you make money in the market, check in next week for more information on what we have coming in the Fall.
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References
Get the Stockscore on any of over 20,000 North American stocks.
Background on the theories used by Stockscores.
Strategies that can help you find new opportunities.
Scan the market using extensive filter criteria.
Build a portfolio of stocks and view a slide show of their charts.
See which sectors are leading the market, and their components.
Disclaimer
This is not an investment advisory, and should not be used to make
investment decisions. Information in Stockscores Perspectives is often
opinionated and should be considered for information purposes only. No
stock exchange anywhere has approved or disapproved of the information
contained herein. There is no express or implied solicitation to buy or
sell securities. The writers and editors of Perspectives may have positions
in the stocks discussed above and may trade in the stocks mentioned. Don't
consider buying or selling any stock without conducting your own due diligence.
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