There are two primary steps you must take to really get the most out of your trading system. After all, the reason that you entered trading is to make money, so it only makes sense to maximize the effectiveness of your trading system, right?
The first thing you must do is to have a clear and written trading system, preferably a proven one.
If you have not yet reached the point in your trading career where you enjoy regular and consistent profits, it is best if the decision points are defined in purely technical manner, as any judgment calls (discretion) allow for errors that cost you money through losses. These discretionary points often simply serve as invitations for your emotions to come into play and affect your decision-making.
In trading, your goal is consistent profits, so the more consistent you do what you do, the more consistent your results. Consistency is one of the greatest benefits of having a well-systemized trading method, but you must take it one step further to really get the most out of it.
If you want to trade comfortably and consistently, with a high level of confidence, then you absolutely must have a solid strategy and system – and the process to know that they’re both solid.
It’s that simple.
Click here to address this issue with your trading and start getting better results
The second matter to tend to is confirming just ‘how good’ your trading system is.
Many traders over the years have developed and published very profitable trading systems that do actually work. Yet many hundreds of traders have taken those same systems and not even come close to the creator’s success. How can this be?
There are specific reasons why famous traders can create systems that work, but others can’t emulate their success.
First of all, the creator back tested and refined the system during its development. That back testing built a level of confidence in the system so that when it came time to put money on the line, they could have the discipline to follow the system, particularly during drawdown spells.
Secondly, the backtesting allowed the trader to practice with the system that they had developed, thus improving their competence with it and their proficiency.
Thirdly, many “followers” only concentrate on making money and not on execution, so they miss the critical metrics that make the bottom line what it is. Every trading system has certain performance aspects to it. These aspects have a direct impact on its profitability, and most of all predictability.
The system creators kept their primary focus on the metrics, while the followers that don’t make money with the system may not even know that these metrics exist, let alone what to look for.
Fourthly the creators make money with their trading system because they back test and analyze their system’s performance regularly, plus they track specific metrics over time. The goals of consistency and continuous improvement necessitate this practice.
While better than doing nothing at all, some traders will occasionally back test their trading system, but they usually do so in an insufficient manner. Most only look at profit for the period back tested and miss out on the valuable information found in the proper metrics.
Recording and tracking the performance of your trading system is absolutely essential to truly maximizing your profits.
The First 2 Steps
If you wish to truly get the most out of your trading system, first make sure that you have properly documented your trading system in a manner which lends itself to being traded consistently. The second step is to test your system and analyze the metrics, so that you know what to realistically expect from your system, and then track those metrics on an on-going basis to really maximize your profits and consistency.
Knowing how to tell how “Trade-Able” as trading system is and knowing how to properly confirm how good your trading system is both take skill and know-how. Backtesting is one thing, while knowing how to properly sample, analyze and then understand the metrics for useful data goes beyond just a quick check for profitability. Being a complete trader means having good tools (like your system for example) but also knowing how to know.
The Common But Missed Obstacle – Discovered
Over the last several years of helping traders successfully work through issues like hesitation, being unable to enter trades, being unable to stay in trades, and a host of other very painful problems, I found that 98.2% of the time, a primary root cause of their issues was the fact that they were trying to trade with a trading system that had weaknesses or flaws that they weren’t aware of.
If you want to trade comfortably and consistently, with a high level of confidence, then you absolutely must have a solid strategy and system – and the process to know that they’re both solid.
This is Successful Trading 101 stuff here and if you choose to just keep buying system after system (for $2,000 or $3,000 a pop), you’re likely to keep getting the same results you have been – because like my clients before they worked with me, they were lacking the skill set to be able to recognize a good system (versus strategy) and fix it if it had issues.
You can have a different, and much better future.
