hi
I am going to be very candid with you right now, and I risk alienating myself from many of the other investing and trading educators out there. However, I had to make a decision: tell you the truth, or keep my mouth shut to make good with the 'hype merchants'.
Those of you familiar with my trading philosophy will have probably seen this before, but it's worth repeating. I have 4 "golden rules" I use to determine if a trading method is good. And if any method fails these rules, you should run like mad in the opposite direction before it does any more damage to your account.
It must be a complete method, with setup conditions, entry rules, initial stop rules, and exit strategy rules, leaving no decision to chance.
It must include specific risk management, money management, and portfolio management guidelines.
It must be based on technical analysis, but it must not be a 100% mechanical system.
It must take less than 20 minutes a day to apply after learning how to trade with it.
Let me talk about item #3 above for a moment, because this is where a lot of traders can potentially lose a lot of money.
When you rely on a computer to make 100% of your trading decisions, you do not learn how to become a trader, and you never will. Instead, you learn to follow directions.
This can be extremely dangerous to your portfolio, because almost every black box system I've seen since 1974 has been back-tested but often curve-fit, which means it will ultimately fail, or at least not live up to its past hypothetical results.
Now, that statement might get me into trouble, especially with younger traders, who tend to believe that you can create a 100% mechanical system that never (or rarely) loses. Folks, that's called the Holy Grail, and a week doesn't go by that I don't get an email from someone who thinks they have found it.
By the way, this becomes even more dangerous when you base your livelihood on a third party service that feeds you signals every day without telling you their "secret formula". What would happen to you if they went out of business?
(Just for the record, I believe some mechanical systems ARE good, at least for awhile, but I also believe the only way to maximize their use is if you truly understand
how to trade in the first place
http://www.etfmethods.com/z/?i=744155&l=f5