Interview with Gary Stone - Better System Trader

Gary Stone has been trading the markets since 1989.

He has spent 1000’s of hours researching the market, stocks and technical analysis criteria to understand what worked and what didn’t, using his mathematics and computer science skills to come up with a way for the computer to do the analysis and heavy lifting.

His work has been widely referenced and quoted over the years, has been a guest speaker and has been featured on TV, Radio and Print, including Sky News, ABC Radio, Your Trading Edge, Switzer Daily and the ASX.

In todays chat we discuss market timing, why it works, the impact it can have on strategy performance and simple methods you can test for yourself. We also discuss the misinformation published by some fund managers, how simple techniques can be used to outperform them, the importance of perspective and how it can improve your trading and one of the key components to executing your trading plan correctly.

Time the market, not for the best days but to ensure you’re out for the worst – Gary Stone

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Topics discussed

The difference between amateur and professional traders
One of the key components to executing your trading plan correctly
Managed funds and the marketing information they publish
Market timing, why it works and how to do it correctly
The impact simple market timing techniques can have on strategy performance
Tips to handling drawdown
The importance of perspective and how it can improve your trading
Simple techniques you can use to outperform the majority of fund managers
The biggest lesson in trading
Simple but effective market timing techniques you can start using today

Resources mentioned in this episode

To learn more about Gary and his work, checkout his website Share Wealth Systems or his blog
Books:

NOTE: You can get “Trading in the Zone” as a FREE audiobook here

Other resources mentioned in the interview:
- Thought Leadership Research – check fund manager returns
- Marketing misinformation from the so-called investing professionals
- Here is a list of the market timing techniques Gary mentions in the chat

Quotes

The highest probability way of getting ahead in the market is to take the mechanical technical approach.

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Short-term random movements is probably one of the biggest things that affects people’s psychology.

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There is a huge benefit in stepping aside when the market risk looks like it’s going to get high.

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Big picture perspective helps me execute in the context of on a daily basis.

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Invest in an index ETF, reinvest the dividends, you’ll beat the majority of fund managers worldwide.

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Top tips from this episode

Time the market, not to ensure that you are in for the best days but to ensure that you are out for the worst days. Research has shown the best and worst days of the market are usually in close proximity to each other and if you end up missing both the best and the worst days your returns are far better than just being in the market all the time.
“Big picture perspective helps me execute on a daily basis”. When trading through difficult times, keep big picture perspective in mind.
82% of funds underperformed the S&P500 total return index over a 10 year period so if you want to beat the majority of fund managers worldwide just invest in an index ETF and reinvest the dividends. So simple but of course you could do even better with some simple market timing techniques.