AUTOMATED STOCK TRADING SYSTEMS

An instructional manual focuses on setting up computerized trading systems that can manage the vicissitudes of the stock market.

Bensdorp starts his financial self-help book with a familiar observation: The stock market is notoriously unpredictable, and that volatility induces many investors to make poor decisions wrought by panicked emotions. As an alternative, he proposes the establishment of an automated trading system that doesn’t depend on accurate predictions at all since it is designed to successfully respond to whatever financial circumstances arise. Moreover, since the system runs independent of constant management, it eliminates the problem of emotional decision-making and the “psychological pain” of owning a plunging stock. The author breaks down the basic options for readers, describing four basic styles of trading and seven different systems that can accommodate them. The core of his approach is to employ several “noncorrelated” systems that “combine different directions and different styles, that is, trade long and short and trade trend following and mean reversion.” In other words, the investor can benefit from a market of any variety, bullish or bearish. In lucidly accessible terms, Bensdorp—“a self-taught trader”—explains the fundamentals of his methodology. His approach emphasizes a customized financial profile, one that clearly defines not only investors’ objectives, but also their tolerance for risk and willingness to patiently put in the time to set up the systems in the first place. The author’s counsel is unfailingly sensible and realistic: He cautions readers that this is a “get-rich-slow approach” that “does involve a good deal of effort upfront” and concedes that it could take “years of trial and error.” In addition, this manual is only for those “skilled with programming” since Bensdorp does not walk readers through that aspect of the systems.

A prudent guide for self-starting investors with plenty of time and programming abilities.