You Must Download & Use The Power Of RSS In Your Web Surfing
First off in this month's newsletter LearnMoney strongly advises you to download and install the new internet technology called RSS. If you like the internet RSS is a real advantage.
RSS stands for Really Simple Syndication and is starting to revolutionise the way we're looking and finding information on the web. In a sentence RSS is a way to quickly look at what's been published on a website without actually visiting the site. Of course if anything takes your fancy then you can simply click to visit the website in question.
RSS also enables you to follow multiple websites from the same window. Instead of visiting 20 different sites using your standard bookmarks you can see all the sites through the RSS program's window and this therefore saves a lot of time.
We've Made It Easy For You
LearnMoney has created a simple setup guide to using and installing RSS and everything including the software is 100% free. The guide will take you no longer than 10 minutes and is written so that anyone even if they're not that comfortable with computers can handle it.
Good luck with RSS!
Interested In Buying A Trading System?
There are countless trading systems for sale, mainly originating from the US. A very small number are actually worth their money with most being useless if you trade them over a long period of time, although any system can get lucky in the short term and make substantial returns.
However, as ever with trading you won't know which systems are good and which are bad until after the fact, past performance really doesn't play much of a part.
But here's an interesting website Collective2.com that ranks over 500 different trading systems. The site looks really good with a lot of sound programming behind the ability to track the systems in real-time trading. There's also no charge for using the website's information although you will have to register.
Two Ideas Of How To Use The Site
About 12 years ago an American programmer and mathematician called Ralph Vince came up with an interesting money management idea. His view was that the general consensus was all wrong in the leveraged markets. This stated that you should trade a large amount of money in a generally conservative manner. His argument was that you should trade a small amount of money in a very aggressive manner because if you're offered the potential of fantastic gains via leverage you shouldn't attempt to dilute it.
For Example
Investor A puts up £100,000 and demands that drawdowns (peak to trough losing periods, e.g. if you had £100k to start with and lost £10k that would be a 10% drawdown) should be limited to no more than say 25%
But using Vince's ideas investor B also has £100k cash but keeps £90k in the bank and trades the £10k super-aggressively always adding to position size (on the next trade) if the strategy makes money and cutting back position size if the system starts to lose. It's therefore possible using this kind of money management process to make 100's percent return in a matter of months (if the system enjoys a winning streak). But the flip side is that drawdowns are often horrendous, between 50-90% when/if the system goes through a losing streak.
Get Super Aggressive Running Multiple Systems
The idea would be to trade multiple systems very aggressively with multiple small accounts hoping that just one or two systems score big over the short term (say 3-6 months). These profits would then eclipse the small losses you'd encounter on the systems that didn't work. Remember Vince argues to significantly increase position size as every trade wins and reduce as trades lose.
It's an interesting idea anyway but a complex one which would require much further research. But we think the idea behind the strategy is a valid one.
If Systems Generally Perform Badly - Trade The Opposite
System developers travel down many dead-end roads in that most of the systems they develop lose money. But this is part of the game and often valuable information, for if you know what doesn't work you can explore other avenues.
But are losing systems actually a valuable commodity? Quite possibly yes, because you can always do the reverse. If the system instructs you to buy, go short and vice-versa. This actually makes a lot of sense but you'd have to look very closely at how the system loses money and in what kinds of markets. For example, trend following systems are usually characterised by many small losses with the occasional major win (perfect and explosive trends don't happen all the time). So although you may view that a certain trend following system is bad you don't want to trade it when the expectation is to produce many small profits with the occasional massive loss. No, in our opinion it's better to find losing short term trading systems that don't rely on major trends to trade in a reverse fashion.
So if you're into trading system development don't discount systems that you develop or come across which look horrendous because reversing the signals may turn them into a gold mine. Something to further investigate anyway.
