Two good ideas fused into one may become a great idea. Stock market indices are known to behave like “friendly stocks”. Their swings are often smoother than those of individual stocks and their intraday open and close runs are often more predictable.
Autotrading the stock market is the undervalued weapon of modern trading. Autotrading is common in Forex. Sadly without much success for the autotrader. The reason is the lack of regularity in Forex. Not so in the stock market, which is driven by large players, and these are investors. They buy and sell value.
Forex is driven by current news and the current balance of demand and supply, which in turn stems from unrelated global trade operations that only have a currency side effect. In short, it is clear that Forex prices should fluctuate more irregularly, and the reality confirms that.
Stock autotrading can be done in many forms. Most convenient is the swing trading time frame. While intraday index trading with the right system may be even more lucrative, the more relaxed version is accomplished by holding positions for some days.
Swing trading has a catch compared with long-term investing. You have to watch the market carefully and switch your positions at the right times. A machine that has to run with continuous perfection is error prone.
Moreover, swing traders are especially vulnerable to psychologic problems. Every trader and investor can experience mental trading blocks or judging distortions. But in swing trading, and even more so day trading, psychologic problems tend to overwhelm a trader.
The solution to many trading problems is autotrading and the advantage of the stock market is that it offers the choice of thousands of stocks, hundreds of ETFs and many indices.
Is the autotrader out of work with his trading robot making the tough decisions? Not at all!
The traders job is in case of autotrading to select the right trading medium at the right time. Generally all stocks are candidates, but indices and their ETFs are especially interesting, for the reasons mentioned above.
There is a tiny gem necessary to make this trading system work. The autotrading algorithm. If done with this neural trading machine that adapts itself to the specific price history of a given stock or index, the trading automat becomes perfect – with regard to the automation.
The trader has nothing else to do than finding the right and swingy trading situations. The general tip is that after a smooth upswing or downswing the opposite follows. This is especially true for a down swinging index.
There is nothing left for me than suggesting that you apply your new trading machine to the right swings and feel the monetary vibrations in your wallet.