Laurens Bensdorp

The following is adapted from  Automated Stock Trading Systems  by Laurens Bensdorp. As a trader, you may make some profit and start to feel pretty good about your strategy. Then the profit stalls or you experience a long drawdown, or you hear from a friend who is doing even better, and doubt creeps in: Do you  really  know what you’re doing? Is your strategy working? That doubt will infect your decisions. Where before you executed trades without hesitation, you’ll begin to second-guess. Though your strategy could very well be working, you’ll start to abandon it at key moments. Trading is a long-haul game, and consistency is key. To succeed, you must be able to trust your strategy and execute it with confidence. By comparing your results to a benchmark, you can evaluate the effectiveness of your trading system and either build confidence or identify a need for improvement. Let’s look at two different benchmarks you should strive to beat with your tradi...

The following is adapted form  Automated Stock Trading Systems . When I ask anyone who wants to invest what their objective is, the first answer they all give is, “I want to make as much money as possible with the lowest risk possible.” That’s what everybody wants, and frankly, it’s a terrible answer. It’s vague and impossible to measure. Plus, everyone has a different idea of what constitutes risk. Entering stock trading with an objective like that is like taking a road trip without a map. Your objectives are a GPS that will guide your strategy and decisions as a trader. The more specific and clear you are, the better. In order to attain your personal vision of success as a trader, define your objectives in the following eight categories. #1: Personal Objectives Defining your personal objectives as a trader means answering questions around how you would define your perfect life as a trader, looking at your personal situation and asking what you really want. Wh...

The following is adapted from Automated Stock Trading Systems. Let’s say there’s a roulette wheel with only red and black pockets and a payout of 1.2: 1. If you bet $10 on red and it lands on red, you make $12, but if it lands on black, you lose your $10. If you instead bet $10 on  both  red and black, then no matter where the ball lands, red or black, you will make $2, as you will lose $10 on one bet and gain $12 on the other. Obviously, casinos don’t set the odds up this way, but this is a simplistic representation of what can happen when you use multiple systems of trading. Most traders I know spend far too much time filled with anxiety, worried that the market is going to turn and they’ll lose big. By utilizing multiple noncorrelated systems, you don’t have to worry about market changes, because you can make money in bull, bear, and sideways markets alike. For this strategy to work, you must avoid falling into the trap of your systems replicating each other’s ...