Stockcoach's Corner

My portfolio continues to tread water. For the week, I lost $4,875 (0.7 percent). This does, however, compare favorably with the rest of the market, which saw even deeper declines, with the S&P 500 losing 1.0 percent, the NASDAQ declining 1.3 percent, and the Russell 2000 shedding 3.2 percent.

For nearly a year now, I've been thinking of ways to compliment my longer-term focused investing with shorter-term trading. Because I have a full time job, one prerequisite is that whatever system I introduce has to allow me to enter orders when the market is closed and rely on preset limit orders to exit the position during the day while I am busy at work. Obviously, this limits my choices, but that's just the way it has to be since I really don't want to be distracted with the stock market during the day.

Since that lousy NTGR trade, I've basically gone back to the drawing board and put together a variety of "systems" to test out. While I'm not going to give away the details, all the systems I am testing have one idea in common. This idea is almost so simple that you'll laugh. It's common knowledge that beginning traders who have no clue about the stock market and no discipline in their trading decisions lose money. Who could argue with that? Fine. The idea is to isolate what these traders do and do the opposite (The George Costanza Trading System). Go long when they go short and go short when they go long. Exit a trade when they enter and enter a trade when they exit it. I have been following the market long enough that I think I have a pretty good sense of how beginners trade so coming up with ideas for a system to exploit newbies hasn't been all that difficult. Right now I'm paper trading a couple of systems, and one in particular looks very promising. I'll keep you posted!