The Best Trading System For You

In previous post, we discussed the components & the importance of a trading system.

There are many trading systems / strategies around. No trading system is right for everybody. Often we heard that one trading system is working very well for some people. They can trade for a living with that, and even have made them millions. However, it is also very possible that the very same system can lead others to lose money. Why? Because although people learn exactly the same system even in every component of it, there is always one component that is different – the trader itself, with his personality & emotions.

So, now the question is: Which trading system / strategy is the best for you? The answer is it’s the trading system that best suits you! The one that you’re most comfortable with.

I remember an interview with Trader X by Stocktickr quite some time ago. Here is a part of the interview:

StockTickr: What single lesson did you learn along the way that helped you the most in your trading?
Trader-X: I learned to pick a style of trading and stick to it. I think most traders and prospective traders get lost by jumping from strategy to strategy and timeframe to timeframe. If something does not work one day, they are looking for something completely new. Pretty soon they have burned through a few dozen strategies (or different ways to trade) and have not made any money.
So I learned to pick a style of trading (or strategy) and stick to it. And I am always studying, learning, and refining it. …..

StockTickr: What advice can you offer traders who are just starting out?
Trader-X:
* Don’t jump from strategy to strategy, timeframe to timeframe - pick something and stick with it! That does not mean you cannot refine it - you SHOULD constantly refine and improve what you do. But that is different from changing things completely.
* Don’t try to copy someone - even me! Read, study, and learn. And then apply it to your trading. Tweak it, and make it your own.

Dr. Van K. Tharp in his book Trade Your Way to Financial Freedom also mentioned that the search for the Holy Grail is actually an “internal search”.

If you don’t know who you are, the stock market is an expensive place to find out.
- George Goodman

So, in order to find the best trading system for you, it’s crucial to know yourself first. Do take inventory of yourself: your objectives, personality, strengths, weaknesses, limits, emotions, risk appetite & tolerance, etc. Then pick a trading system / strategy that best fits you. Adjust the system and make it yourself. Stick to it and from there, always refine and improve your system along the way.

Don’t forget that the most important aspects of your trading system are positive expectancy (average gains higher than average losses), position sizing (money management), risk management, and self management (yourself, your psychology, fear & greed, emotions, discipline, etc.). Work harder on that. Yes, the key is HARD WORK & DETERMINATION. With hard work and determination, you could create the best trading system, the holy grails for yourself.

Related Posts:
* Why Being Right In Your Trading Does Not Necessarily Mean Making Money
* The Psychological Need To Be Right vs. Making Money
* The Real Purpose Of Trading