The Origin of Natural Selection Investing

You may be wondering how it came to be that I developed the Natural Selection Investment system. Although I have refined the system over the years, its origin was almost accidental. In my early years of trading, every weekend I would create watch-lists of positively trending stocks that I could swing trade. I kept these lists updated on a weekly basis to make sure that only the best stocks were maintained on the watch-list. Under-performers were discarded and new stocks were added to the watch-list as they were identified. I then used the revised list each week as my primary source for the upcoming weeks trades. I did this for months on end, never really thinking much about it because it was part of my weekly routine. Then one day I noticed that my trading software (freestockcharts.com) had been keeping track of my watch-list as if it was a portfolio of my holdings. When stocks were added, the software would record the entry date and then the rate of return was automatically tracked, so every stock in my watch-list had a rate of return that I could see. I began to scroll through the list and to my astonishment, I noticed that my entire watch-list was performing admirably. I began to realize that it had been a mistake to swing trade many of these stocks since they were all in a positive trend and were earning a higher rate of return than I was earning by trading them. The process of removing the stocks that were no longer fit to trade had been a process of survival of the fittest. I had been culling the weakest members of the herd. And thus, the natural selection portfolio was born! Upon realizing my good fortune with this simple observation. I immediately set out to refine the process of identifying the stages of trending stocks, refining my buy and sell signals, and the rest is history. This research is the basis of my current investment system. With that and mind, let's take a look at our trend indicators and our buys and sell signals.  NEXT

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