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Brian McAboy
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Brian McAboy brings a refreshing new perspective to trader development. Traders gain significant advantage through the proven and time-tested principles and good practices that Brian is uniquely positioned to provide because of his years of experience in the fields of Trading, Quality... More
My company:
InsideOutTrading.com
My blog:
Inside Out Trading
  • Make Your Trading System Easy To Stick To, The Simple And Correct Way

    Did you know that regardless of how good the strategy or method you have, there are specific qualities and characteristics of your trading system itself that directly and indirectly affect your mental and emotional state? The manner in which your trading system is put together could be making it difficult for you to trade it well, to stay disciplined and comfortably be consistent.

    Most traders mistakenly presume that for all intensive purposes, a system is a system, and the only difference between any two is the set of components such as specific rules or indicators selected for use. They then blame themselves for lacking the discipline to stick to the system, never thinking to challenge the system in the way it is constructed.

    An age-old problem for many traders is that they haven't documented their system. Either that or what they do have documented is not what they actually use in their trading. It is well-known that consistency 101 includes documenting your trading system yet still many trade while having skipped this crucial task. When asked why, many reply that they find it too difficult a task, even with relatively simple systems.

    Odd as it may sound, the reason that for their difficulty often lies in their understand of what a trading system actually is. In a poll conducted among reasonably experienced traders, the vast majority defined a trading system as the set of rules and indicators one uses to identify, enter and exit trades. When asked for the visual that comes to mind when they think of a trading system, images of computer screens, charts, and numbers are the most frequent response.

    It appears that most traders have a mental concept of a trading system as though it's a computer program or highly complex machine. No wonder they have difficulty documenting their system. Part of this difficulty likely stems from the term itself. The way it is commonly used implies the connotation of being very mechanistic.

    Trading however is an activity, a process. The simple truth is that a 'trading system' is a 'systemized' method for executing a strategy. It is a set of instructions that walks you through the process of your trading.

    When approached from this conceptualization, it now become much easier to document your system, because now instead of trying to be a computer programmer, you can simply write down "what you do". This is the first step in having a user-friendly and highly trade-able system.

    While there are eleven different qualities that make for a good system, the most important three are,

    1. Complete. The system must be complete and not skip steps.

    2. Clear. Vague terms make a system difficult to follow.

    3. Simple. Many traders have over-complicated their system to the point of overwhelm. Keep it simple for success.

    Consistent results only come when you can be consistent in your trading. To illustrate the importance of properly documenting your system, simply reflect on the question, "If you can't put it down on paper, how can you expect to do it consistently?"

    Having a successful and sustainable trading business requires a solid understanding of the factors that affect your mental and emotional state. Fortunately, most are practical matters as discussed here, rather than 'psychological'. Your trading system is at the center of your trading business and has a very significant impact on your ability to execute.

    Most traders make the mistake of blaming themselves when often a primary problem lies with their system. This article covered just one aspect of the psychology of trading systems, which is within the larger topic of trading as your business. To gain further understanding, watch the free video presentation about the 2 learning curves traders face at http://tradingasyourbusiness.com/

    Sep 20 4:19 PM | Link | Comment!
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