Trade Simple, Trade Smart
By Cory Mitchell
We can reduce the amount of time and "homework" it takes to find highly tradable securities by running screens and stock scans but there is still the common problem of making strategies far more complex than they need to be. Complex strategies generally start from a simple strategy which works well for the trader, but then that strategy is tweaked and re-tweaked in an attempt to make it even more profitable.
If this tinkering has worked with some strategies, that's excellent, but it is common for the trader to begin to have too much on their mind; profits cease and the trader ends up going back to simple strategies anyway or fading from the market. There seems to be an allure to complex and bizarre strategies. While a method may sound elegant and sophisticated, that in itself will not put money in the trader's pocket. (For more, see Getting To Know Stock Screeners.)
Is Simple Better?
Complex strategies can easily draw in traders since it is somewhat logical that the more information we factor into a system, the more reliable it will be. Yet, the market does not always reward logic and when it does it, it may not do it in the trader's timeframe. Remember, the market can be wrong a lot longer than the trader can afford to be right.
Read more: Trade Simple, Trade Smart http://www.investopedia.com/articles/trading/09/simple-trading.asp#ixzz4idBQgAfD
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