Mats Bengtsson

My Own Trading systems

Mats Bengtsson mib over the years

I base my trading on single systems as well as on consensus between systems

I constantly research new trading ideas. The ideas are based on pattern recognition, candlesticks, common indicators, proprietary indicators, chart patterns, ... I do not limit myself on the ideas, only to what can be tested.

Whenever I find a tradable system I add that to my repertoire, having yet another way to receive signals about trades to take or exit. Each and every one of the systems are quite simple, and each and every one of the systems have proved profitable over all the stocks in the market and in the period I test them against.

I thus always know that if I get a signal from a single system and trade that signal, statistically I would make a profit. I do also believe, and I have managed to test that to some extent, that if I select the stocks that get more than one signal on the upside, and few, if any, signals on the downside, I am more likely to make money on that trade than if going with one single system.

Trading based on many different systems keeps me in the market most of the time

If you trade a stock index, and are not a day trader, you need a system that triggers easily to enter the market frequently during the year. Even if you do, you are likely to lose compared to trading the market as a "buy and hold" market (since the market bursts rather then trends and you thus you will have a tendency to come in a little late, and also to leave a little late).

To enter the market more frequently lead me into trading single stocks instead of trading indexes. In that way, I can catch buy signals more frequently than would be the case trading an index. To do this I need to be able to scan many stocks against my trading ideas.

There are a lot of technical analysis tools that can scan a lot of stock on defined trading systems so that is no problem. Scanning enough stocks lets me find a pretty diversified market, and thus being able to find stocks going upwards even if the market index is in a downtrend.

Even so, if I would have had only one single system, I would still be likely to be out of the market during long times of the year, since I would need to have quite a complicated system to be able to do both bottom fishing, trading with the trend, and trading within ranges (most systems only work well in one of those situations).

The systems I have when scanning the market gives me signals for all of the above situations, and I also have developed a "voting" mechanism that gives me a rating based on which systems as well as how many systems said what on which stocks.

Most of my systems run with a modest chance of win, and also a modest profit per win

That is, the winning percentage varies between 33-58% depending on which system we look at. The average profit in the systems, considering cost for commission and so is not great, but the number of consecutive losses are neither very high although some systems do run a double digit number of losses in a row.

I use stop loss levels and look at profit targets, but they are not fixed

That is, as time passes my systems continue looking at the price pattern and might change both the stop loss level as well as the profit target to assure i get out of the trade in a good way. I very seldom enter trades based on "if the stock reaches x tomorrow, then enter the market (it would demand too much time spent looking at the stock market during day time and I am not day trading).

Headlines

Never trade stocks without having tested your system. In fact, most trading systems are not profitable if tested over many stocks. Full story...

Do not invest in heating equipment without having compared the alternatives, not only to current situation, but also to each other. Full story...

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