Let’s
get into our favorite part of trading…creating your own trading system!
If you do a simple search in Google for “Forex trading systems” you'll find many many many people out there who claim to have the “Holy Grail” system that you can purchase for “only” a few thousand dollars.
If you do a simple search in Google for “Forex trading systems” you'll find many many many people out there who claim to have the “Holy Grail” system that you can purchase for “only” a few thousand dollars.
These
systems supposedly make thousands of pips a week and never lose. They will show
you supposed “results” of their perfect system and it will make your eyeballs
turn into dollar signs as you sit there and say to yourself, “Wow I can make
all this money if I just give this guy $3,000. Besides, if his system making
thousands of pips a week, I’ll be able to make my money back in no time.”
Slowww
down cowboy. There are some things you should know before you give them your
credit card number and make that impulse buy.
The
truth is that many of these systems DO in fact work. The problem is that
traders lack the discipline to follow the rules that go along with the system.
The
second truth (there's such thing as a second truth?) is that instead of paying
thousands of dollars to buy a system, you can spend your time developing your
own system for free, and use that money you were going to spend as capital for
your trading account.
The
third truth is that creating systems is not even that difficult. What is
difficult is following the rules that you set when you do develop your system.
There
are many articles that sell systems, but we haven’t seen any that teach you how
to create your own system. This lesson will guide you through the steps you
need to take to develop a system that is right for you. At the end of the
lesson, we will give you an example of a system that we trade just so we can
show you how awesome we are! (Insert evil laugh here.)
Goals of your trading system
I know
you’re saying, “DUH, my goal of my trading system is to make a billion
dollars!” While that is a wonderful goal, it’s not exactly the kind of
goal that will make you a successful trader.
When
developing your system, you want to achieve 2 very important goals:
- Your system should be able to identify trends as early as possible.
- Your system should be able to avoid you from whipsaws.
If you
can accomplish those two things with your trading system, we GUARANTEE you will
be successful. The hard part about those goals is that they contradict each
other. If you have a system in which its sole purpose is to catch trends early,
then you will probably get faked out many times.
On the
other hand, if you have a system in which its sole purpose is to avoid
whipsaws, then you will be late on many trades and will also probably miss out
on a lot of trades.
Your
task, when developing your system, is to find a compromise between the two
goals. Find a way to identify trends early, but also find ways that will help
you distinguish the fake signals from the real ones.
Always
remember these two goals when you create your system. They will make you
a lot of money!