Mechanical Investing – Best Hope For Average Investor
Mechanical stock investing involves following a pre-determined set of criteria for determining when to buy or sell a stock. This type of investing has several advantages for the beginner as well as the average investor.
Probably the biggest advantage of mechanical stock investing is that emotions are removed from the equation. The number one reason most investors fail at stock investing is because of greed and fear. Here is a typical example you may even have found yourself in.
An investors sees everyone else cashing in big on certain stocks. The investors wants some of those big gains too so greed takes over. 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 he will lose all his money, the investor exits the stock right as it reaches the bottom of it’s correction and makes a big run to the upside. All these problems with fear and greed are solved with mechanical stock investing systems.
Another big advantage is that you can go back in history and test the system through market downturns and uptrends. Once you know the mechanical trading system has been proven profitable, only then do you invest your money. No more blindly putting money on stocks and hoping for the best.