Thursday, August 13, 2015

The Right Trading System



Consistency that goes with profitability is 
what makes a good trading system.

So what then is the right trading system?




The amazing thing about almost every market is that there are
 certain fundamental but different trading systems that co-exist 
and compliment or even kill each other to form this unique and
 dynamic environment. Like a desert filled with creepies trying to 
outsmart and eat one another for survival.





Like animals, every trader is different. And the only way for us to
 be able to maximize our kills in the market is if we focus on 
developing our strengths rather than our weaknesses. 
Or hunt when the environment is in favor to our physique.

It's a simple matter of common sense. If you are a day trader and
 you have a day job that restricts you to check the markets, 
then don't trade! 

If you're a trend follower, then don't buy stocks 
that are counter trending.

If you bought because of techs, don't go holding 
because of the 'fundamentals' of the stock.


Another common mistake traders make is experimenting or using 
a fine tuned system on trade setups that don't exactly fit.



"Braces with wheels! Awesome invention doc!"

For example, a player who buys for the bounce. The trader buys at
 the lows, and the position matures to a whopping +20%. 
BUT the trader decides to HOLD it for "long term" 
because his entry price was the perfect long term price.

A shift in play has occurred and in a few months all his gains 
get eaten up by the downtrend.


...And the trader now becomes an "Investor"


Remember the FNI boys?




Always stick to your strengths. 

Do not be what you are not.

Trading systems are ways of life. I say ways of life because there 
is no one system that is consistent in all kinds of market sentiments.
 There will always be a system that will thrive or starve 
for each season.



-------------------------


Did you notice the leopard on the first image of this post? 
If you didn't, that's how it is with trading systems. 
You won't see it if you don't look hard enough.



------------------------------



Yep. And by the time you checked and continued reading this post, 
your port just got slaughtered by a fundie on a sell rampage.

Let's continue....


A system will most likely be profitable if it is used by a big chunk
 of players who have the 'controlling' funds in a certain market.
 And yes market anomalies and deviations will pop up from time
 to time. You'd see multiple ceiling plays or super plays like CAL
 (IPO craze) and MBC (Multiple Ceilings). 

But you don't see them sustained over a longer period of time.

Like the bunch of people you see in FB who post about their port
 snapshots and open to public trading performance 'diaries' when
 they get lucky. Then a few months later you won't find a 
single trace of their presence.


#PABEBEpamore.


That's why it is important to study and trade popular patterns 
that the market has deemed worthy of existence.

They aren't there just for show.


-------------------------


One common misconception about trading systems is that 
it is an overnight experience. Well, it's not.

It's not a holy grail that you find and when you start using it, 
you become instantly rich.




All those sleepless nights of charting and backtesting. 
All the stress filled days of test trading. The discipline 
you nurtured. The persistence despite your losses. 
The passion. Your principles and character.
Your dreams of the future.

All these make up that holy grail. 
All these make up a successful trading system.

So if you still haven't found your system, go 
get your shit together and Beast mode ON!





12 comments:

  1. as always...inspiring!!!

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  2. Good read. Keep it up. This is just one of the few blogs I read.

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  3. Great post, as always Boss Zee! - Drakon

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  4. Great article, Thanks for your great information, the content is quiet interesting. I will be waiting for your next post.

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  5. Makes a lot of sense. Thanks for sharing.

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  6. thanks for sharing, Sir.

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  7. Napahanap tuloy ako sa leopard. Tsk! Tsk!. "FNI"- mapait na alaala ng nakalipas (lol).

    Beast mode "on" always.

    ReplyDelete