Automated Stock Trading Systems (eBook)

A Systematic Approach for Traders to Make Money in Bull, Bear and Sideways

Laurens Bensdorp (Autor)

eBook Download: EPUB

2020 | 1. Auflage
200 Seiten
Bookbaby (Verlag)
978-1-5445-0602-9 (ISBN)

Infos

Consistent, benchmark-beating growth, combined with reduced risk, are the Holy Grail of traders everywhere. Laurens Bensdorp has been achieving both for more than a decade. By combining multiple quantitative trading systems that perform well in different types of markets-bull, bear, or sideways-his overall systematized and automated system delivers superlative results regardless of overall market behavior. In his second book, Automated Stock Trading Systems, Bensdorp details a non-correlated, multi-system approach you can understand and build to suit yourself. Using historical price action to develop statistical edges, his combined, automated systems have been shown to deliver simulated consistent high double-digit returns with very low draw downs for the last 24 years, no matter what the market indices have done. By following his approach, traders can achieve reliable, superlative returns without excessive risk.

Textauszug

Introduction

The decade that began in March 2009 was a good one for fundamental investment advisors. It’s been easy in recent years for people to make money because the markets keep going up. But let’s be clear: do not confuse a bull market with skill. Because it’s been easy to make money for a while, people grow increasingly confident that the markets will continue like that.

However, our memories are short. Many traders forget what the market experience was like in 2008. And while in late 2018 we had a taste of what a downturn looks like, as of this writing in mid-2019 the markets are brushing up against all-time highs yet again. Sooner or later, bull markets come to an end. There will be a bear market. We do not know when. We do not know how big. But when it arrives, it will be ugly, uglier than most people expect. I am writing this book because I want you to have your investments arranged in such a way that you are protected and can profit hugely in markets of all types. To basically make yourself mentally immune from any kind of market movement, whether up, down, or sideways. Otherwise, it’s very likely that you will lose some or all of the gains you have experienced over the last eight or ten years. Those gains could vanish in half a year.

The traders I work with have a common fear. You are afraid that you don’t know what you are doing. You may be making some money. Sometimes you are up, sometimes you are down, but always you are afraid that the markets are going to turn, and then what the heck will happen? And what the heck should you do? You are afraid of losing what you have. Even when things are going up, you worry that a downturn is coming, and you don’t know how to prepare for that.

Many of you who are reading this book have lived through a substantial downturn such as the one you saw in 2008, and while that memory may be fading, it’s still there. You may have had an investment advisor, but those advisors usually do not outperform the benchmark when the market is rising, and when the market is falling you may well lose more than the benchmark. Yet you pay fees for this “performance”!

A Better Way

There is an alternative. In this book I am going to show you multiple, noncorrelated, quantitative trading systems that can make money regardless of the type of stock market behavior we are experiencing. If we’re in a bull market, this approach works, and if we’re in a sideways or bear market it also works. You do not have to be afraid of what the market is doing; you continue to accumulate wealth no matter what. In 2017, I wrote The 30-Minute Stock Trader, which introduced these ideas. Now, I will take you deeper into how to improve risk-adjusted return regardless of market conditions; and the power of understanding your objectives; and how to build systems according to your objectives, goals, and risk tolerance. In the following pages, I will show you how to lay the groundwork for building the right systems for you. This includes a deep, personal understanding of your own objectives and risk tolerance. By developing a clear view of your objectives, of what you want to achieve in regard to trading returns and risk profile, of how you want to trade long and short, of the style of trading that appeals to you, then you can build a system that suits your personality. That will be a trading system you’ll stick to. A system that you will be executing consistently, with confidence and without fear or hesitation.

These are quantitative trading systems built on historic price data. Once the systems are built, you will have simple entry and exit rules, and ways to quantify how those rules perform against past markets to develop an exact statistical edge for certain systems in certain market types.

In particular, I will show you how combining these systems and trading them simultaneously improves performance exponentially. What matters is not the performance of individual systems, but the nearly magical effect of combining them for exponentially better results.

Perhaps the most appealing part of this approach is that, once you have established your strategies and set up your trading systems, you rely on your computer to tell you what to do. The emotion and fear that cause so much angst among most traders are not part of your experience any longer. The computer runs algorithms built on your values and beliefs about the market, and your comfort level with risk and reward. You trade daily, weekly, or monthly, based on what you want to accomplish, after the market has closed. Your computer does the hard work—you simply enter the orders (though that part can be automated, too; in fact I have mine running 100 percent on autopilot and many of my students have done the same).

This is not a handbook that tells you simply to do what I do in order to make money. Trying to follow what I do won’t work for you, because you are not me. Your goals, desires, fears, and psychology are different. This is a book that first lays out the concepts behind my systems and what I do, and then shows you a complete suite of multiple trading systems you can develop. Nothing is left out. All buy and sell rules are revealed.

I am not trying to show you how to follow my systems. Rather, I am showing you how to use my approach to build systems that you understand, embrace, and will adhere to. As long as you execute your systems in a disciplined way, you’ll have a statistical edge for making money. I will show you a quantified approach involving trading seven noncorrelated systems simultaneously that generated a compound annual growth rate from 1995 to 2019 of over 30 percent, but this is only an example of what you can achieve. It is a map of where you can go; you can and should find your own way using what I teach in these pages, rather than try to mimic what I’ve done.

Traders have experienced many different market environments in past decades. For example, there was the Depression from 1929 to 1933. There were huge inflationary environments from 1964 to 1982. There was the big crash in 1987. If we are willing to examine the past, we gain a good understanding of what has happened, but not what will happen. The future won’t be the same, but it may be similar—or very different. Understanding what bear markets have looked like in the past, you might develop a system that would not have performed well over the last ten years. But when a bear market comes again, suddenly that system may save your financial life. Using a strategy of multiple noncorrelated systems, you’ll be making money regardless of what the market does.

If what you are looking for is an automated trading system with quantified results, this approach will work for you. If you want to stop being afraid of losing in the markets, yet you want a statistical edge on building wealth, this book is for you.

However, if you find trading exciting, if you like to follow the news, if you enjoy the approach that most traders take of trying to predict what is going to happen, then this book is not for you. My systems are based on quantitative analysis, which looks backwards at market history to develop ideas about future market performance. It is the opposite of most trading approaches, which look forward, focusing on “fundamentals” to predict stock performance. The fundamentals approach is built on analyzing a variety of factors, such as growth and earnings, and making a decision. It is an approach epitomized by Warren Buffett and Charlie Munger. I have great respect for them, but I don’t follow their path. I actually would like to know before I place a trade what the statistical edge is instead of using a more predictive method like stock picking, in which skill and decades of experience is so important. I work to understand and capitalize on historical price action, with no regard to the underlying fundamentals of a particular stock.

How I Learned To Trade This Way

I’m not a typical investment advisor. In fact, I’m not an investment advisor at all. I’m a self-taught trader. In the 1990s I had a whitewater rafting company in Mexico. Our family business in the Netherlands was a small venture capital firm—and it got into trouble. The advisors the firm had hired were not doing a good job, and there was a string of bad investments. My father called and said, “Listen, it’s really going south, and we can’t trust those advisors. I need somebody I can trust.” There was quite a bit of money at stake, so I wrapped up my life in Mexico and came home to take a deep dive into the financials of that company.

I needed to educate myself. I don’t have a math degree. I don’t have a finance degree. But I’ve got a good brain, I’m incredibly driven and hard-working, and my father trusted me to turn things around. I was going to figure out how to do that.

There were two parts to the company: a venture capital arm that invested in different companies, and a stock trading arm. Within two or three months I determined that the investment bank advisors we were using had their own agenda and were incompetent. I fired them all.

I decided I had to handle the portfolio myself. This was right at the beginning of the dot-com crash of the 2000s. We were...

Produkt-Details

• Erscheint lt. Verlag: 31.3.2020
• Sprache: englisch
• Themenwelt: Sachbuch/Ratgeber ► Beruf / Finanzen / Recht / Wirtschaft ► Geld / Bank / Börse
• ISBN-10: 1-5445-0602-3 / 1544506023
• ISBN-13: 978-1-5445-0602-9 / 9781544506029