Dear Financial Voice Reader,

Dear Financial Voice Reader,
How many stocks does a financial TV channel mention in a day? Easily 100. With so much markets information how do you avoid stock ideas overload? Or perhaps you have the opposite problem  - can’t get enough good ideas?
The mathematician will tell you that just because you throw eight consecutive ‘heads’ still means there is only a 50% chance of ‘heads’ on the next coin toss. The systems trader, however, will tell you that stock price patterns reflect the sum of market psychology and sentiment which regularly repeats itself in price patterns.
But there is more to trading than getting buy and sell signals. Should you bin all your investment magazines and entrust your money to a website? First consider these pointers from an old hand:
Is it too good to be true, after all, many sites only charge subscribers $100 annually and even have a money-back guarantee?  So test the signals on paper over the money-back period. What proportion of the signals worked? If three out of five worked – it is too few to tell.
More importantly, did you follow them? Many net traders lose money, not because of their stock picks, but because their lifestyles do not permit active monitoring. For them longer term investing, not these market timing sites are the only recourse.
The best system is not the most profitable one on back-testing, but the one you are most likely to follow. So consider the number of winning trades to losses, the number of consecutive losing trades, the largest single losing trade, the drop in trading capital from peak to trough.
Because are you really going to follow a system that promises 100% returns but along the way you face 10 consecutive losing trades and lose half your capital?
And before you get too excited about the spectacular historic returns, remember many of these sites are coy about mentioning commissions costs, slippage (the difference in share price between when you get the signal and the price you can actually trade in the market) -  and the spread between the bid and the ask price as well as stamp duty.
Only by treating their trading like a business private investor traders discover whether they should hang up their mouses. The harsh reality for many is they should.
Start-up costs are the first to consider, including computer costs. Let’s assume you spent £1200 on hardware and assume that it’s lifetime is 3 years, the cost attributable for this year is £400.
Clearly, too few online traders have the trading capital to overcome costs and consequently need improbable returns to make any profit.
Even if you could average a Buffet-like 24% annual return on your £20,000 portfolio, you’re still not being well compensated. Imagine that you want to spend 6 hours a week researching and monitoring your positions. If you then eke an astounding £2000 profit after all costs, you are ‘being paid’ £6 per hour for your time. Better off working at McDonalds!