Trend trading is the straightforward investment method and doing it with software should be a pleasure. But most investors try it the other way round. Instead of going with the flow, they want to be cleverer than the market. The real trend investor judges a company’s product portfolio or the economic outlook and its meaning for any or a specific commodity. In other words, the real investor is not value but growth oriented.
Growth investors have the fine advantage that they don’t have to deal with bean counting and sifting through piles of fundamental numbers. No, they are allowed to look at the real world. The number crunching is then delegated to a piece of software. Of course, not fundamental number churning is meant, which is data and labor intensive and only for the big funds. No, the modern automated investor gauges the trend and its entry and exit points with trend trading software.
So, we have a team of two players. The human trader interprets what he knows best, the world. And the automatic swing trend trader analyzes price events mathematically. It should be clear that a computer is able to do a more precise and independent analysis of trends and other chart formations than a human trader.
What kind of trend trading software is needed for our growth hunting trader? The typical swing trading system uses an oscillator, which means some sort of continuous indicator represented by a complex formula delivers trading signals. Buy, hold, sell, short and so on.
More modern trading automatons do it similarly to the brain. They have a net of neurons, modeled in software, that is able to “learn a stock”. Implicitly such a neuron trading system extracts the way a stock and its surrounding market behaves and is then able to forecast prices for a short period of time.
Of course, this forecast is limited and error prone, but it is enough to trade on that information. Eventually such a neural net is able to adapt much better to the underlying pricing mechanisms than a more coarse granulated indicator based trading system could ever do.
We are working together with a site that has such a miraculous artificial intelligence trading software. It is marvelous, but far from being infallible. No problem, trading is statistics. The only thing that may be missing for its usage is an investor with the sleeping inclination to ride the momo.
Right! You must be able to transform yourself. Just see it as an experiment. Upon success you have identified your value investment behavior as what it really is, a ball and chain.
So, here is your new neural net trading investment formula:
Make a selection of growth stocks with promising products.
Look for the steepest trends in that selection.
Let this neural net trading software do the actual trading. I am sincere with this last item!
One more thing…
You are now on your way to become a fine beach trader, the transformed version of an old school investor.