Choosing a trading system

I am currently considering what to use as the basis for an initial trading system. Until now, I have made decisions based on pieces of information and opinion without considering the wider context.

A trading system seems to involve a number of aspects
* Money management -- decisions that are semi-independent from the trade itself, relating to ideas about conserving capital, how much to invest, why to protect profits and when to stop losses
* Regular review points -- consistent and regular examination of holdings and performance
* Share selection -- choosing candidates for purchase
* Triggers -- conditions for buying and selling shares (other than stop loss)
* Goals -- explicit goals so that one has a reference point to judge against
* That Personal Touch -- recognition that you must make all these decisions your own
* An understanding of fundamentals and psychology

I will make further posts about each area as I consider them further, and will also post on the construction of a simple system, but one which is based on real numbers and whose components will be backed up by reasoning, statistics and argument.

Cheers,
-MP

What to do in a wobbly market?

Do I get in? Do I get out? What does it all mean?

My investment books draw a big fat blank, are are mostly about making money when it's possible to spot a definite direction in prices. Right now though, they are just wobbling around. Can't sell short, no point in buying! What's there to be done?

One strategy is to hold and build up cash reserves. Another is to get out and get bank interest rates until an opportunity presents itself. It somewhat depends on how much is invested -- for small somes, too much trading will eat away at profits, so you need to be a bit more careful about executing a trade. If a trade is 5% of your stake, then you are in the game for Big Moves.

With this kind of trading, there are two options -- buy low and hold for a long time, or buy low and sell high. The trick is not to buy low and sell lower!

So, not many blog posts, since not many ideas.

Cheers,
-MP