HOW IT ALL BEGAN
Welcome! I’m Steve Thorson, the founder and developer of TacticalTrading.com. This is my story…
In 1992, I had the privilege of meeting Pete Allen, a remarkable aerospace engineer, university professor, and visionary. Pete dedicated his later years to developing the fundamental mathematical principles that underpin my Tactical Trading system. What I learned from Pete was truly exhilarating. He had devised a mathematically perfect solution for succeeding in the stock market. In the subsequent years, Pete and I joined forces to transform his theory into a tangible reality. Through live trading at my investment firm, Emerald Capital Management*, we refined and perfected the system, incorporating valuable real world insights along the way.
Tragically, Pete passed away in 2002, leaving me as the foremost authority on this system with an unparalleled understanding of the mathematics behind his groundbreaking work. It is gratifying to know that Pete’s legacy continues to thrive within the investment community.
I began my journey in stock investing during the early 1980s when technological resources were limited. Desktop computers existed but were slow and had limited storage capacity compared to today’s standards. The internet was not yet accessible, but I could connect via a modem to various stock market data services to gather fundamental information about stocks. However, this form of research came at a substantial cost, sometimes reaching nearly $100 for information on a single company. As a result, conducting fundamental research to construct a diversified stock portfolio seemed unattainable. I needed to find an alternative approach.
Having always found charting stocks enjoyable, I discovered that collecting price and volume data was more cost-effective than obtaining fundamental data. This led me to become a student of technical analysis, which involved interpreting a stock’s price chart to make informed buying and selling decisions. This methodology proved successful for me, and I dedicated myself to mastering the numerous indicators, moving averages, oscillators, and other tools at my disposal.
Prior to meeting Pete, I had recently departed from my role as a retail stockbroker at a prominent brokerage firm to establish my own money management and investment advisory. I aimed to leave the “selling” aspect to brokers and focus on what truly fascinated me: portfolio management. The next step was determining the most reliable and profitable approach to managing clients’ funds.
Consequently, I devoted significant time over several years to studying nearly every conceivable method of stock selection and portfolio optimization. With a solid understanding of technical analysis, I delved into the teachings of renowned fundamental investors such as Benjamin Graham and Warren Buffet. I explored concepts like Modern Portfolio Theory, as pioneered by Harry Markowitz and William Sharpe. I also dabbled in artificial intelligence, neural networks, fuzzy logic, expert systems, and other forms of “black box” investing. Finally, I encountered quantitative analysis and factor modeling, which I found to offer the most objective approach to stock selection. To this day, these methods serve as the foundation for my research and portfolio construction.
Throughout my quest for superior investment techniques, I discovered that there were countless methods for choosing stocks, resulting in the common refrain of “buy, hold, and hope.” However, one critical component was missing: the potential for profit depended entirely on the stock’s price rising. If the stock simply moved sideways or even declined slightly, no profit would materialize, and there would be a missed opportunity for generating returns on invested capital.
Fortunately, my esteemed friend and business partner, Pete, had developed a flawless mathematical algorithm that effectively managed stock positions. With this new position management system, buying a stock meant no longer relying on hope for upward movement.
The mathematical “machine” would operate to generate a predictable profit on a stock position, regardless of the analysis method used to identify the stock or the direction it moved—up, down, or sideways.
It may seem unbelievable, but Pete and I discovered a way to make it a reality.
My application of this brilliant mathematical algorithm I call “Tactical Trading”.
– Steve Thorson
Founder, TacticalTrading.com
*Emerald Capital Management was dissolved in 2013 as I pursued other business interests. Therefore, neither I nor any individuals associated with this site are licensed investment advisors. Any information provided on TacticalTrading.com is strictly for informational and educational purposes and should not be construed as investment advice.