Mechanical trading


Mechanical trading can help you avoid many of the problems of emotional trading that can ruin your trading account. Emotion is your biggest enemy in trading. As you mature as a trader you need to develop a mechanical trading method.

Fear and greed are your two worst enemies in trading. Fear will come out of the trade too soon leaving you with a profit on the table. Greed will force you to trade in the hope of making more profit and eventually lose the unrealistic profits you make. You can avoid these two monsters by building a mechanical system based on rules and forcing you to make pure decisions based on merit. These are the two biggest enemies of your business!

Many traders start out as isolated traders which means each of their new trades is created independently from the previous trade. Isolated trading has some advantages but it is helpless against controlling your emotions. By building a mechanical system, you will ensure that you adhere to a certain discipline in your trading and do not make emotional decisions in your trading.

The best example of a mechanical trading system is the turtle trading system. The tortoise trading system is basically a system of futures trading. It was developed as a rule based system that told you whether to trade in the market or not. You just have to follow the rules. That’s it! Thus if you have good trading discipline, the chances have always been that in the long run you will make good profits in trading. In fact, many turtle traders eventually become millionaires!

Now with the advancement of computer programming and automated trading, any mechanical system can be programmed into an automated trading system. This way anyone can trade with a good mechanical trading system!