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Simple Techniques for Mastering The Best Trading Systems That Turns Big Profits
By David Jenyns
Once you've developed the best trading systems that accurately
reflects your goals, and can respond to any market situation with clear actions,
you are ready to take the next step in your trading. These are some principals
and techniques that I have found to be indispensable in my trading career. Once
you've begun using them, I'm sure you'll feel the same.
First, the best trading systems have only one market to trade in.
Real money is made by mastering your chosen market. Many traders fall into the
trap of thinking the more they trade, the more money they will make.
Unfortunately, this does not hold true.
In a similar vein to this, keep the best trading systems– really super
simple. Those same traders often complicate the best trading systems so much
that they become nearly impossible to trade. This is usually accomplished
through over optimization, adding far too many indicators. Instead, keep your
plan your best trading systems as streamlined as possible. That way, it will be
robust enough to trade across many market conditions. Through testing, I have
found that over optimizing a plan will make it perform better on historical
data. However, these plans usually trade worse in real time, thus taking away
the goal to having the best trading systems.
Once your best trading systems are up and running, document it. All
successful traders that I come in contact with document their plan – are my
plans really the best trading systems or do I need to take some complicated bugs
out of it? They have their exact trading methodology written down. The traders
who lose money don't have their trading methodology written down. You should
clearly write out your methodology. Why is it so important? When you sit down
and spell out how you perceive the market, you are accepting the fact that you
might be wrong. You are beginning to accept responsibility. With this acceptance
comes a renewed commitment and dedication to your system that will allow you out
last the markets fluctuations. This is a key element to keeping your plan the
best trading systems.
This next strategy is over-looked by almost every trader. However, it is one
of the most critical points to your success. You should back test your system.
Back testing a system involves applying the rules and conditions of the best
trading systems to historical data. With back testing you can determine how
profitable your system can be, and predict its win/loss ratio. These numbers
will not be 100% accurate, as price movements in the past are never repeated
perfectly. However, you can assume that similar patterns and trends will occur
over time, giving you invaluable insight into how the best trading systems will
perform.
Back testing will also give you the confidence you need to trade the best
trading systems . Confidence is often the hardest hurdle to overcome in any of
the best trading systems. So, whatever technical analysis criterion you use to
trade with, be it moving averages, candle sticks, volatility breakouts,
fibonacci retracements or any other of the best trading systems you have devised
you are going to need to back test it thoroughly.
Of course, you should also employ excellent money management rules. Despite
it's importance, money management still remains relatively unknown by many
traders and investors around the world. In fact, Dr. Van K. Tharp, a
world-renowned leader in professional trading coaches and consultants says:
"Perhaps the greatest secret to top trading and investing success is appropriate
money management."
I call it a "secret" because few people seem to understand it, including many
people who have written books on the topic. Some people call it risk control,
diversification, or how to "wisely" invest your money. However, the money
management formula that is the key to top trading and investing is simply
referred to as the algorithm.
It has taken me years to simplify these rules. Sure, it was a tough row to
hoe, but the rewards have been worth it. The good news is you don't have to go
down the same road I did. After countless clients asking for coaching on this
topic I decided to create a system that takes you through the process of
designing excellent money management rules step-by-step. I named it "Trading
Secrets Revealed". You can learn more about these secrets, by visiting:
http://www.trading-secrets-revealed.com
For my last point, let me draw some parallels between running a business and
trading. Most successful businesses keep statistics on everything from their
conversion rate to their average dollar sale. The reason a successful business
does this is to create a scorecard of where they are right now. They understand
you first must keep score before you can begin to improve that score. Trading is
exactly the same.
You should look at trading as a business. To do this you need to learn some
valuable statistics about your system. It's the only way you can improve
performance. How can you expect to improve something unless you know what it is
you are looking to improve? You need to know your R multiples, win to loss
ratios, expectancy, and other similar statistics. You can learn more about these
and other vital statistics by reading Trade Your Way to Financial Freedom by Dr.
Van Tharp.
With a back tested, robust and the best trading
systems you can possibly in your hands, and a good understanding
of money management and the market, you will maximize your trading potential.
Once you've applied these techniques, you will be surprised at how profitable
the best trading systems you designed will become. Enjoy your success. About the Author -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- David Jenyns is recognized as the leading expert when it comes to designing profitable trading systems.
His most recent course Trading Secrets Revealed is a step- by-step trading roadmap to having excellent money management. Learn how *you* can become one of his students. Click Here ==> http://www.trading-secrets-revealed.com
Receive David's free trading tips by signing up for his eZine at: ==> http://www.trading-secrets-revealed.com/pop.html -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
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