Mechanical Investing – Best Hope For Average Investor
Mechanical investing (also known as systematic stock investing) is a strategy that uses a set of predetermined rules and criteria to make investment decisions. Mechanical stock investing typically involves using software programs and algorithms to evaluate various factors, such as company fundamentals, price trends, and market conditions, to determine which stocks to buy or sell. The goal is to remove emotion and human bias from investment decisions and rely on objective, data-driven analysis.
See if this sounds familiar to you. An investor sees everyone cashing in big on certain stocks. The investor wants some of those big gains too. Greed takes over and the investor rushes to buy the stock, but by now it has been overbought. Over the course of the next week or month, the stock comes crashing down. Fearing they will lose all their money, the investor exits the stock right as the stock reaches the bottom of it’s correction and right before a big run to the upside. All these problems with fear and greed can be solved with mechanical stock investing systems.
The specific rules and criteria used in mechanical stock investing can vary widely depending on the investor’s preferences and goals. Some investors may focus on value investing, looking for stocks that are undervalued relative to their earnings or assets. Others may focus on momentum investing, looking for stocks with strong price trends or positive news and sentiment.
Another big advantage is that you can go back in history and test the system through market downturns and uptrends. Once you know the trading system has been proven profitable, only then do you invest your money.
Overall, the mechanical approach to investing can be a useful tool for investors looking to take a disciplined, systematic approach to the stock market and to avoid common trading mistakes. However, it is important to remember that no investment strategy is foolproof and that a great past performance does not guarantee future results.
Mechanical Trading Systems
Reviews of Mechanical Systems
Mechanical Investing Of Popular ETF’s
Mechanical Investing Of Index ETF’s
