subject: Sizing Up Stock Trading Programs [print this page] If you're ready to take control of your own stock investments, you're certainly not alone. Many investors are starting to try their hands at making their own investment decisions. It's really the best way you can possibly do things. However, before you start just listening to your "instincts" and trading accordingly, why not try to use a proven system that can help you grow your investments more effectively?
Didn't know there was such a thing? Many of the best traders who make the most profits from their stock market investments have actually used trading systems for years. These systems aren't magic. They're just based on math.
Basically, scientists and mathematicians can get together and figure out formulas to show how the stock market acts at different times. You can use these formulas in certain steps to determine when things are getting ready to change, and then you can make your investments accordingly. There are, of course, different systems you can use.
Some companies have taken their formulas and turned them into computerized stock trading programs. These programs are excellent for investors looking for a simple way to make decisions, but they are not all created equal. If you're interested in using one of these programs, there are some different criteria you can use to size them up.
The most important criteria for stock trading programs is their performance, of course. You should easily be able to find out how well a program has performed in recent years, especially during the recent financial crises. Make sure you are looking at actual gains and losses, though.
Sometimes companies will use a benchmark such as average mutual fund performance or whatnot to make themselves look better. As long as they performed better than that benchmark, they can put a positive spin on their performance, even if "better" still meant losing the customer money.
You also want to look at the amount of time a program has been around. If it's a newer program, it should at least have been back tested. This is basically when technicians run the program with old stock market numbers. They can test the calls the program would have made in old situations, and then they can see how the numbers would have looked had you followed the program. Information like this is invaluable in helping you choose a legitimate program that's going to help you make money.
