What is mechanical trading?
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erroll
Apprentice
Joined: 05 Jul 2007
Posts: 7
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 Posted: 10/14/07 - 06:39 Post subject: |
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| I am a complete beginner in the stock trading business. I am still learning about stocks and stock trading. Most techniques and terms are still unknown for me. I have heard about mechanical trading. What does it stands for? I do need some help please. It would be apreciated a lot. |
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massimiliano
Apprentice
Joined: 19 Jun 2007
Posts: 6
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| Posted: 11/07/07 - 03:50 Post subject: |
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| Mechanical trading is unemotional. Our collective experience suggests that traders that could eliminate emotion are generally more successful than the others are. Mechanical trading encourages traders to apply the rules of good trading that we all know. In the absence of mechanical entry criteria, trading opportunities are often not taken because confidence is lost. When this happens, it often shoes that missed trade could have paid for the series of losses plus more if it was taken. In order to manage risk, stop loss orders are applied on your behalf at pre arranged price levels. Mechanically based targets help to prevent the problem of exiting profitable trades too early. Mechanical trading promotes consistency. Just because something has not worked a few times does not mean it is not good. One of last rules is that you should become emotionally distant from the market. |
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