I am sure Wiley will be happy for me to make reference to their recently released ‘The Wiley trading Guide’ in which yours truly contributes a chapter. My contribution headed ‘With the click of a mouse’ deals with the idea of whether computes can enhance investment returns.
The answer to this is yes for disciplined investors. Computers allow access to an avalanche of information – both fundamental and technical. For those already over awed by excess data they will possibly become more overwhelmed and end up being totally confused. For the resourceful investors computes are ‘heaven sent’
As many readers know, the educational path can be a long and tedious one but I am a great believer that no matter what approach you want to take it is important to try and distil as quickly as possible all the information gathered into a clear investing strategy - which culminates in a written plan.
This is especially so when using computers. To start with, many people I know become immediately distracted when they sit down at a computer. It is straight to emails or the internet. You almost need to have a plan just to manage the process when you first sit down at the computer to use it for investing purposes.
This may take the form of:
(I will assume you work and you do this at the end of the day)
- Checking capital movements for the day or week or whatever time frame you are using. For me this is consolidating all my balances for the day from various funds onto a spreadsheet. I know my movement by fund and totals for the day, the week with percentage calculations thrown in – all compared against the movement in the market for the day, week etc.,
- The next task might be to then undertake analysis of data for the day just finished. If it has been a long, tiring day then you may just do an initial scan and then follow up with a more detailed review of short listed stocks the next morning when you are fresh.
So my analysis is cycling through the top 400 – yes daily – but it only takes about 20 minutes. When I have short listed a few – based on Elliott wave – I then do a more detailed analysis looking at Bollinger Bands etc.
This is something I may do the next morning and at the same time, look at market depth and plan my trades if I plan to place bids at the opening.
My day is absolute routine and clockwork. I take only planned breaks.
When you have the feeling the routine is starting to kill you then I can say you are starting to get somewhere!
Enjoy the ride