Three problems and profitability | stockbee


Three problems and profitability

The three most common problems when it comes to trading profitably are:
  1. Ignorance
  2. Inhibitors
  3. Inertia
Ignorance problems can be solved by acquiring knowledge. These are easiest problems to fix. If I don't understand something, I need a strategy to overcome my ignorance. It might be reading, attending courses/training program, researching .

For example many users of Telechart do not know how to use many functionality. That is easily fixable problem.Same is true of say IBD methodology. Many people are ignorant of how say EPS or RS rating is calculated. Or I want to lose weight but I don't know how.

If you overcome your ignorance problem, you might encounter next set of problem.

Inhibitors are things which inhibit us from acting on our knowledge. I know IBD 200 works and how it works and it can be profitable, but I do not have time to input the 200 stocks. Or I know how I can make money trading Double Trouble, but i do not have software to do this for me.
I want to lose weight , but my job commitments do not give me time to go to gym.

All inhibitors kind of problem require innovation . A little innovation and resourcefulness can solve most inhibitors kind of issues. If A route or scan does not work, you find B route or plan B. When faced with constrains, you have to innovate.

If you are motivated enough trader, you will find solving the ignorance and inhibitors problem is not very difficult. The third set of problem is the most difficult to solve.

Inertia is lack of action on what we know and inability to act on overcoming inhibitors. Inertia makes most people stick to their current orbit of success or performance. You can spend years living suboptimal life and wasting your potential if inertia is your problem.

Inertia problems have one simple solution. A kick in the ass.


market operator said...

A little off topic to the thread, but I remember you mentioning Zacks research with their focus on earnings. I looked through their website and they have a Zack's Ranking system that seems somewhat similar to an IBD type system (although not sure how much of a role Relative Strength plays) The returns since 1988 investing in top Zack's ranked stocks have been fairly impressive. I was wondering if you have ever looked at applying similar rules to your IBD system on Zacks ranking? In addition they have a number of fundamental screeners that also backtested well, perhaps applying a Break-Out rule to these stocks would yield very strong returns as well?

Pradeep Bonde said...

Zacks ranking is based on analyst estimates trends, it gives more weight to future earnings,and earnings surprises.
The theory is that analyst earnings trend are predictor of future price growth in stock. IBD is based on actual earnings trends.
Both systems have merits and negatives.
I have tested Zacks ranking and screens, they also do well. But you have to again develop your own methods using their ranking.