AU Editorial: You and Your Methodology
Email This Article
Print This Article
Digg This
Delicious
SubscribeMOST POPULAR ARTICLES
- Kaeppel's Corner: Catching Up on a Few Ideas
- Closing Wrap-Up, March 19
- Foreign Exchange: The Running of the Bulls
- Growth Stock Swing Option: March 18, 2010
- Weekly Outlook: March 22, 2010
- Midday Action: March 19
- AU Editorial: What If?
- Volatility Alert: Fear Indices Fall to Support as Stocks Rise
- Market Trends: Boomer Time Horizons, Part 2
- AU Editorial: Elliott and Its Ways
- Weekly Outlook: March 22, 2010
- Foreign Exchange: The Running of the Bulls
- AU Editorial: What If?
- Midday Action: March 19
- Growth Stock Swing Option: March 18, 2010
- Market Trends: Boomer Time Horizons, Part 2
- Economic Watchdog, March 18
- Midday Action: March 18
- Midday Action: March 17
- Kaeppel's Corner: Catching Up on a Few Ideas
SPONSORED LINKS
January 22, 2010
In some recent editorial I have referred to methodology and making sure whatever system you use is well founded and has been successfully tested. I would like to elaborate a little more on this.
First let's look at methodology. Basically these fall into four categories. The first is Fundamental and even though I don't personally use this approach, nevertheless it is used by the vast majority of investors - retail and institutional.
The next three are technical. The first are what I would call trend-following indicators; the second are range trading indicators; and the third are what I would call pattern recognition such as Elliott Wave and Gann.
I personally use Elliott and have so for the past 15 years. Perhaps conservative at times, but it does not lose you money in my view. If you are going to use technicals, then it is important to have at least a basic understanding of each of the three so you can make an informed decision. No approach is the Holy Grail. Yet I see many would-be successful investors waste effort searching for the easy route to riches. It does not exist. It is like the 'Long March' - one step at a time. But with experience under your belt there are short cuts.
The reason why I mention this is because I also see many study one approach, try it and then give up because it does not bring the instant riches. And they then spend a fortune studying the next system.
But I also see others who are too mite-minded to properly invest in education.
I will also say here that it does not matter which system you use as long as you use it with an applied approach and with discipline. They all work. I would say you could choose any approach and apply it in this way and you will succeed.
The other key point is that you must apply it in a measured way. That is, you try your new-found knowledge steadily. Many investors jump in head first after a training seminar. You apply your learning in small easy comfortable steps at first using a small trading kitty.
The sleep test is important here but, to mix my metaphors, you must at some point fully immerse yourself after putting your toe in the water.
It reminds me of that old adage "slowly slowly catchee monkey."
Enjoy the ride!
Tom Scollon
Chief Analyst
Trading Tutors Team
© Copyright 1995-2010 Optionetics. All rights reserved. This material is for personal use only. Republication and re-dissemination, including posting to newsgroups, is expressly prohibited without the prior written consent of Optionetics. Optionetics is a registered trademark of Optionetics, Inc.