I’d like to share with readers a rather interesting CNBC segment on maintaining a level playing field for the average retail trader/investor.
Maria Bartiromo introduced the story (see CNBC video below) by Bob Pisani, which centers on a company called Equametrics, who specialize in bringing the power of automated trading used by banks and hedge funds to the retail investor.
Although I can attest to the success that comes with the discipline associated with automating a proven trading/investment strategy, I do not believe the average retail trader/investor has the time or tenacity to develop and implement such strategies successfully.
Despite being a huge proponent of electronic trading, do be advised that the custom algorithms that banks and hedge funds employ are not the off-the-shelf indicators that are commonly available by Equametrics or any other automated trading platform.
Basic off-the-shelf indicators like the MACD or 200-day Moving Average are great tools to garnish a quick snapshot of the current state of the market however; they fail miserably when translated into an automated/electronic trading strategy.
Trust me, after more than 5,000 hours of time, research, and real-time experience in developing, monitoring, and using automated trading strategies, I should know.
Insofar as advice for the average retail trader/investor considering Equametrics, I would provide the following:
- Canned (off-the-shelf) indicators do not work as automated investing strategies.
- Standard indicator inputs typically need modifications in combination with other input variables or custom indicators in order to produce profitable strategies over the long haul.
- The learning curve is enormous and impractical for the average retail trader/investor to undertake.
- At $99 - $250 per month for an education/execution platform is rather expensive, and for the majority, a losing proposition for all but the most tenacious and wealthy retail investors with plenty of time and money to blow.
- If you are committed and passionate about developing and using automated trading strategies, read some books and do a fair amount of due diligence prior to jumping right into shark infested waters.
- If you wish to gain the benefits of a disciplined electronic trading or investment strategy, find or follow one that has a proven and verifiable record of accomplishment.
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