Last Updated on November 21, 2020 by Oddmund Groette
Once in awhile, I receive e-mails from readers wondering how they can get ideas to test. In order to find profitable strategies, you need to test a lot. Looking at my history I guess about 19 of 20 ideas are useless. Even worse, those 1 in 20 potential profitable ones, many turns out to be unprofitable in live trading! Knowing this I can say a lot of potential traders will lose patience/interest quite quickly. Trading is tedious work. However, I believe trading should be a little bit boring to make money.
I test several strategies every day across ETFs and stocks.I have big limitations in my lack of programming skills so for the most part I test in Excel. However, doing it the old-fashioned way I believe I find/spot patterns that are hard to see when programming and testing on thousands of stocks.
Anyway, here is my list of important factors:
- Experience. Nothing can substitute that. I test a lot more now than i used to, simply because I know more. Still, it’s becoming increasingly difficult. The markets are in my opinion getting more random and efficient.
- Live trading. You have to trade to get ideas. Look at stocks. Pull up charts to get ideas. What happens after a bigger than average volume? What happens in utility stocks after big moves in oil?
- Think outside the box. You have to be creative.
- Read blogs and search on the internet. But never trade anything unless you have tested it yourself.