How to choose a trading system to fit you?
Today I want to address the answer to a question that is asked very rarely but is critical to long-term performance. This question has the following form:
What is the best system for me?
Imagine that you have a system that is easy to understand and use. You spend no more than half of the month in the market, and during this time you earn enough to not only cover your monthly expenses, but you will also be able to allocate more capital to further trades and to increase your positions. You spend up to 2 weeks a month on trading. You can use the rest of the time for whatever you want, such as relaxing, visiting family and friends, whatever interests you!
Most beginner traders I have met want to learn a system that will allow them to make money as quickly as possible. Preferably very fast and very much. BUT instead of achieving their goal, they become providers of capital to the market. This is the result of this very approach.
I want you to realize that there is a whole industry: books, system providers, analysts, media - that knows how to lure a newcomer into the market and extract money from him. To do this, they use simple tricks - they target your greed: "you can make a lot of money, very quickly, here's the recipe, here's the magic indicator, here's the fantastic system that will make you rich very quickly, the Holy Grail"... and so on.
I want you to realize that novice traders are lured into a trap by the fact that someone has used the way their mind sets goals to manipulate them.
Today we will use a similar mind mechanism, but for a completely different purpose. Let's break it down...
You work two weeks a month, which gives you 10 trading days, the rest is spent on other activities.
Your total monthly costs are... (X)
Let's assume that you want to "earn a living," i.e. cover your monthly costs, but also save some money and increase your trading capital (Y).
So, by a simple calculation we find out that you should make a profit every month on the market (W): W = X + Y
Now consider, how much is 'X' and 'Y' for you?
The amount of money marked 'W' will be our benchmark: you need a system that will give you exactly that much or more per month. You need a system that will allow you to do it in 10 trading days or less (as we planned).
10 trading days you can do 20-30 trades, because 3 trades a day is really a lot! It's important that they are good, well-prepared - only then they have a chance to bring you the expected result. Regardless of the system, probably/average 10-12 of them will be profitable, the rest will be loss-making or will reach or close to breakeven.
Most traders, after making these simple calculations, change the way they view their system, change their perspective, this means that they begin to see the system as what it should be: a good tool to achieve their own goals. They calm down, they know what they are looking for, and they know that they have the basis for a realistic plan to achieve their goals. They are less susceptible to primitive manipulations based on greed - to which we are susceptible until we become adults.
The basis for changing our view of gains - as a necessary result of actions and losses - as an indelible effect of the system. And at the end of this part of the lesson, let's directly answer the question... So which system should you choose? - The one that will help you achieve your goals.
Let's now go to the story...
John likes to drive fast and participates in street racing. Adrenaline, risk, quick decisions, control over himself and the car in narrow streets is what he likes. Charles is a phlegmatic, he likes to think everything through, he doesn't like to make hasty (read quick) decisions. He prefers when events unfold calmly and he has time to think about how best to react to them.
John and Charles are two different people with different temperaments. Let's consider what systems will work best for them and why?
What trading systems are best and why?
1. Imagine now that we have a super great scalping system. It can produce excellent results as shown by the statements (account results) of people who play with it. It gives several signals a day, the position itself lasts from a few to several minutes. Such trading requires concentration, quick analysis of the situation, ability to make quick decisions.
Who do you think is more likely to consistently make money with this system? The active John or the phlegmatic Charles
The answer is John, the system is more suited to what is natural to him and what he likes. Karol will not find himself in situations of making dozens of quick decisions a day. That is, he can force himself very, very hard and even get results, but it will be hard for him because his mind and psyche function in a different mode.
2. Now we have a second great system: long-term, where we hold positions for weeks or even months. Here we have a very long time to decide on the entry, including what size we will enter. Here Charles, on the other hand, may have a definite advantage, this is the time scale he likes and is mentally prepared for such a mode of operation. For John, on the other hand, it can be an ordeal, not enough that nothing happens, in addition, when the system enters at a loss it sits there for two weeks and "you can go crazy."
A colleague who made his money from scalping told me that once when he entered a long position (by accident, he entered a scalp but there was a big move so he left the position) the situation destroyed him mentally. From scalping he had a habit of constantly controlling the position so for nearly a month he slept only on weekends. He made excellent money on the position, but the experience so exhausted him mentally that he told himself never again, this money is not worth his damaged psyche.
On the other hand, a long-term trader, after training in scalping, said that it's not for him, because "on the minutiae is pure chaos, nothing here gets to me."
As you can see from these two examples - depending on what you are used to and what mode your brain is comfortable with - you will have the best results with a system that is tailored to your temperament, risk appetite and decision-making mode.
By playing with other systems you can achieve success, but it will require you to work and change within yourself. I have seen situations where Charles, forced by life to change, was able to quickly mobilize and change his mode of work, thinking. He was able to learn new things quite quickly and did well in the new situation.
Was it the discovery (out of necessity) of new talents far removed from what he knew, or was he simply malleable enough that he had to find himself, and tried for so long until he found himself? I don't know, many times working with people I have seen how they can mobilize incredibly when needed. Based on this, I can say that most of us have reserves, possibilities and abilities that we are completely unaware of.
The rocks are changing. Systems that worked a year ago don't work today, systems we know today won't work tomorrow or a year from now. Trading requires following the changes. Take the example of Charles and John, two people who play with a scalping system.
Of the two, John is likely to see changes sooner. Charles, struggling with himself and his natural inclinations will be more preoccupied with himself, it just won't reach him as quickly that something has changed.
Our main brain mode will either help or hinder us from noticing market changes. Charles will adjust more slowly, that is, the same system in his hands will have more losses than John, who will adjust smoothly to the changing situation.
Summary
1. We have some main mode of mind and psyche and some systems will suit us better and others will not. It's worth trying different approaches to see what we'll feel most comfortable with and where we'll get good results most easily.
2. It's worth trying different things, including extreme ones - from scalping to long-term trading.
Also because short- and medium-term traders, when successful, usually move to longer terms, also because their systems don't work like they used to, as entering with larger positions starts to affect the markets (here Forex is an exception, due to the liquidity and depth of the markets).
3.When trying different things, be aware that it will require you to learn new habits and find your way into other ways of thinking. That is, work not only on learning the system, but also on yourself.
As a result, you will become more flexible and responsive to change, expanding the number of your mental tools with which you perceive, analyze and understand markets.
It's also a step toward being one of the top earners.
Great Trader, if you liked this article give it a boost 🚀 and drop a comment! I read all of them. Have questions, let me know in a comment
What is the best system for me?
Imagine that you have a system that is easy to understand and use. You spend no more than half of the month in the market, and during this time you earn enough to not only cover your monthly expenses, but you will also be able to allocate more capital to further trades and to increase your positions. You spend up to 2 weeks a month on trading. You can use the rest of the time for whatever you want, such as relaxing, visiting family and friends, whatever interests you!
Most beginner traders I have met want to learn a system that will allow them to make money as quickly as possible. Preferably very fast and very much. BUT instead of achieving their goal, they become providers of capital to the market. This is the result of this very approach.
I want you to realize that there is a whole industry: books, system providers, analysts, media - that knows how to lure a newcomer into the market and extract money from him. To do this, they use simple tricks - they target your greed: "you can make a lot of money, very quickly, here's the recipe, here's the magic indicator, here's the fantastic system that will make you rich very quickly, the Holy Grail"... and so on.
I want you to realize that novice traders are lured into a trap by the fact that someone has used the way their mind sets goals to manipulate them.
Today we will use a similar mind mechanism, but for a completely different purpose. Let's break it down...
You work two weeks a month, which gives you 10 trading days, the rest is spent on other activities.
Your total monthly costs are... (X)
Let's assume that you want to "earn a living," i.e. cover your monthly costs, but also save some money and increase your trading capital (Y).
So, by a simple calculation we find out that you should make a profit every month on the market (W): W = X + Y
Now consider, how much is 'X' and 'Y' for you?
The amount of money marked 'W' will be our benchmark: you need a system that will give you exactly that much or more per month. You need a system that will allow you to do it in 10 trading days or less (as we planned).
10 trading days you can do 20-30 trades, because 3 trades a day is really a lot! It's important that they are good, well-prepared - only then they have a chance to bring you the expected result. Regardless of the system, probably/average 10-12 of them will be profitable, the rest will be loss-making or will reach or close to breakeven.
Most traders, after making these simple calculations, change the way they view their system, change their perspective, this means that they begin to see the system as what it should be: a good tool to achieve their own goals. They calm down, they know what they are looking for, and they know that they have the basis for a realistic plan to achieve their goals. They are less susceptible to primitive manipulations based on greed - to which we are susceptible until we become adults.
The basis for changing our view of gains - as a necessary result of actions and losses - as an indelible effect of the system. And at the end of this part of the lesson, let's directly answer the question... So which system should you choose? - The one that will help you achieve your goals.
Let's now go to the story...
John likes to drive fast and participates in street racing. Adrenaline, risk, quick decisions, control over himself and the car in narrow streets is what he likes. Charles is a phlegmatic, he likes to think everything through, he doesn't like to make hasty (read quick) decisions. He prefers when events unfold calmly and he has time to think about how best to react to them.
John and Charles are two different people with different temperaments. Let's consider what systems will work best for them and why?
What trading systems are best and why?
1. Imagine now that we have a super great scalping system. It can produce excellent results as shown by the statements (account results) of people who play with it. It gives several signals a day, the position itself lasts from a few to several minutes. Such trading requires concentration, quick analysis of the situation, ability to make quick decisions.
Who do you think is more likely to consistently make money with this system? The active John or the phlegmatic Charles
The answer is John, the system is more suited to what is natural to him and what he likes. Karol will not find himself in situations of making dozens of quick decisions a day. That is, he can force himself very, very hard and even get results, but it will be hard for him because his mind and psyche function in a different mode.
2. Now we have a second great system: long-term, where we hold positions for weeks or even months. Here we have a very long time to decide on the entry, including what size we will enter. Here Charles, on the other hand, may have a definite advantage, this is the time scale he likes and is mentally prepared for such a mode of operation. For John, on the other hand, it can be an ordeal, not enough that nothing happens, in addition, when the system enters at a loss it sits there for two weeks and "you can go crazy."
A colleague who made his money from scalping told me that once when he entered a long position (by accident, he entered a scalp but there was a big move so he left the position) the situation destroyed him mentally. From scalping he had a habit of constantly controlling the position so for nearly a month he slept only on weekends. He made excellent money on the position, but the experience so exhausted him mentally that he told himself never again, this money is not worth his damaged psyche.
On the other hand, a long-term trader, after training in scalping, said that it's not for him, because "on the minutiae is pure chaos, nothing here gets to me."
As you can see from these two examples - depending on what you are used to and what mode your brain is comfortable with - you will have the best results with a system that is tailored to your temperament, risk appetite and decision-making mode.
By playing with other systems you can achieve success, but it will require you to work and change within yourself. I have seen situations where Charles, forced by life to change, was able to quickly mobilize and change his mode of work, thinking. He was able to learn new things quite quickly and did well in the new situation.
Was it the discovery (out of necessity) of new talents far removed from what he knew, or was he simply malleable enough that he had to find himself, and tried for so long until he found himself? I don't know, many times working with people I have seen how they can mobilize incredibly when needed. Based on this, I can say that most of us have reserves, possibilities and abilities that we are completely unaware of.
The rocks are changing. Systems that worked a year ago don't work today, systems we know today won't work tomorrow or a year from now. Trading requires following the changes. Take the example of Charles and John, two people who play with a scalping system.
Of the two, John is likely to see changes sooner. Charles, struggling with himself and his natural inclinations will be more preoccupied with himself, it just won't reach him as quickly that something has changed.
Our main brain mode will either help or hinder us from noticing market changes. Charles will adjust more slowly, that is, the same system in his hands will have more losses than John, who will adjust smoothly to the changing situation.
Summary
1. We have some main mode of mind and psyche and some systems will suit us better and others will not. It's worth trying different approaches to see what we'll feel most comfortable with and where we'll get good results most easily.
2. It's worth trying different things, including extreme ones - from scalping to long-term trading.
Also because short- and medium-term traders, when successful, usually move to longer terms, also because their systems don't work like they used to, as entering with larger positions starts to affect the markets (here Forex is an exception, due to the liquidity and depth of the markets).
3.When trying different things, be aware that it will require you to learn new habits and find your way into other ways of thinking. That is, work not only on learning the system, but also on yourself.
As a result, you will become more flexible and responsive to change, expanding the number of your mental tools with which you perceive, analyze and understand markets.
It's also a step toward being one of the top earners.
Great Trader, if you liked this article give it a boost 🚀 and drop a comment! I read all of them. Have questions, let me know in a comment
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