I have followed an array of trading systems and have even spent some time developing some of my own but I'm unable to decide on a single system. This is hampering the growth on my account and I would like to know what to look for when I want to decide on a strategy.
FetteredChinos
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trade them all at the same time?? would minimise drawdown
Nadine said:
Can tell you about two books which were both basically written to answer that exact question. One is "Trade Your Way To Financial Freedom" by Van K. Tharp and the other is "Beyond Technical Analysis" by Tushar S. Chande. They are not books that present or recommend systems. They are books that tell you exactly what to look for (and how) when you want to decide on a strategy. I have also found Mason Malmuth's book "Gambling Theory And Other Topics" extremely useful in this regard.
trendie
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Nadine,
I know exactly how you feel !!
I am reading and using Fibonacci-ratios.
And also Gann.
And a couple of my own strategies.
The problem you may be feeling is when you are following one system, and then you have a drawdown. And you say to yourself, "if only I had been following that other strategy, I would have made a profit".
But, follow Fettered-Chinos advice, and trade your 3 or 4 favourite systems in parallel.
This is what I am doing !! ( mainly MAs, Fibs, CCi, and 2 of my own ).
What you will find, is that they will have their ups and downs.
But, over an extended period of time, they tend towards the same amount of profit !!
Then, you can prove to yourself that any system can work, as long as you get out of your system the "grass is greener with another system" mind-block.
Then you can settle on a system that suits your personality.
Hope this helps, and good luck.
I know exactly how you feel !!
I am reading and using Fibonacci-ratios.
And also Gann.
And a couple of my own strategies.
The problem you may be feeling is when you are following one system, and then you have a drawdown. And you say to yourself, "if only I had been following that other strategy, I would have made a profit".
But, follow Fettered-Chinos advice, and trade your 3 or 4 favourite systems in parallel.
This is what I am doing !! ( mainly MAs, Fibs, CCi, and 2 of my own ).
What you will find, is that they will have their ups and downs.
But, over an extended period of time, they tend towards the same amount of profit !!
Then, you can prove to yourself that any system can work, as long as you get out of your system the "grass is greener with another system" mind-block.
Then you can settle on a system that suits your personality.
Hope this helps, and good luck.
TheBramble
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If there isn't one which is a clear winner, ditch them all.Nadine said:
In essence, pick the one which consistently provides most profit with the least drawdown.
And keep on trying/inventing new systems because no systems works all the time, forever.
It's an on-going process of discovery and research.
TWI
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Also when you find one the quest does not stop because systems stop working. I have seen systems that produced real and consistent profits for 5 years and historically showed good performance since year dot only to break down in 1998 and give a nightmare ever since. That is why it is important to use a system that you understand inside out and not some black box that you do not understand.
If you are looking for a trend following, longer term system then I would try to diversify across quite a few markets, this way the system will give you the edge on your entries and the diversification should mean you have a high enough proportion of winners to ensure that any good money management methodology will keep you on the plus side. IMHO the system is less important than the money management and I would be sure that whatever system you use devotes plenty of resource to it.
if you wish to concentrate on one market I would think about intra-day breakout trading, and again, use something simple to give you an edge on entries then a good money management methodology.
The answer to your question that you are probably looking for is unfortunately as elusive as the building and execution of the perfect system.
If you are looking for a trend following, longer term system then I would try to diversify across quite a few markets, this way the system will give you the edge on your entries and the diversification should mean you have a high enough proportion of winners to ensure that any good money management methodology will keep you on the plus side. IMHO the system is less important than the money management and I would be sure that whatever system you use devotes plenty of resource to it.
if you wish to concentrate on one market I would think about intra-day breakout trading, and again, use something simple to give you an edge on entries then a good money management methodology.
The answer to your question that you are probably looking for is unfortunately as elusive as the building and execution of the perfect system.
Trading System
Well, firstly you will need to assess as to what your expectations are and how you would like to achieve them. This will mostly be determined by your initial capital and risk management model. After you have established this you will need to start working on your strategy based on your risk management, account size and most of all, your own personality and psychological issues. I checked out www.forextradersa.com and learned quite a lot.
Well, firstly you will need to assess as to what your expectations are and how you would like to achieve them. This will mostly be determined by your initial capital and risk management model. After you have established this you will need to start working on your strategy based on your risk management, account size and most of all, your own personality and psychological issues. I checked out www.forextradersa.com and learned quite a lot.
