Most of traders I have come across who trade on system based trading have not been able to make money consistently. Why?? Human brain is more efficient than a mechanical trading system . One has to analyse the human greed, fear and hope to make profitable trades. I have often found that whenever market closes on extremes ie either at days low or at days high the very next day it closes at opposite. For example Nifty has closed near days low on Friday and Monday we may see it closing near the high of the day. If it happens then those who went short based on their mechanical trading system may see the stops being hit.
Now the question comes- what system one should follow and the answer is a combination of both. One must have a system but should not follow it blindly.
I have come across this article by Van K. Tharp, Ph.D titled Intuition and Trading.
The link is
http://www.iitm.com/Weekly_update/Weekly_443_Sept_30_2009.htm#feature
He has given one chart also. I too love to trade these type of stocks which show a clear pattern which gives you extraordinary results and the best part is that no one talks about these stocks on various business channels. These are the stocks which gets very little attention in media but nevertheless gives bonus rewards to traders . I made a huge profit in these two stocks. Study the charts and learn to identify the similar patterns on charts of the other stocks .I am giving you the charts of Torrent Power and Mcleod Russel.
These two stocks are at new highs and there is more upside left. The idea is to develop a system and buy when it reaches either 20 , 40 or 50 Dma - now which average is to be used is that part of system which you have to develop.
Have fun.
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