A Simple trading system is first and most important founding stone for survival in any-ones trading career. Its opposite a Complex trading system leads to loss of focus – which is a sure shot way to lose everything. Value of a simple system can never be overemphasized, unfortunately this is overlooked and quickly forgotten. A graduating trader would be learning new skills and tempted to follow more complex system utilized by so called “gurus”, not understanding those rules are for that guru, here its worth mentioning countless traders have destroyed their life by blindly following techniques from gurus.
By the term “Simple trading system” here I don’t mean something stupid or discovered by a newbie. A Simple trading system is one which is based on strong principles, time tested, evolved from your experience but most importantly free from any complexities, things that leads to too much pressure buildup on the mind, clogs the perception, things that lead to luck factor play, require intuition or form a gray areas in decision making.
It’s necessary to understand that damage done by any trading system that are more Complex in nature are numerous, first – you tend to forget them, and because mind is tired always trying to keep them in front, you also forget other more important items like news, crucial dates, chart events etc, you become unable to perform simple chart observation, cannot judge simple trends, because a loaded mind is not powerful and agile enough. You may regularly find yourself in situations not able to decide what to do and end up in frustration.
Depending on how many rules you can remember and apply without failing in live markets is your – Simple trading system. A veteran or someone with superb memory, one who lives in present state of mind can incorporate 20 variables to watch and adjust his thought process quickly, but think before copying anything like that, is going to help you?
A simple trading system can be mixture of 3-4 items, as an example below.
- Take entry only when indicators or algorithm gives signal
- What times in trading session you take those signal or ignore
- What does trading data from exchange portal say ?
So like that based on above simple rules you can quickly reject or take a trade without having to regret or frustrate. Once you have successfully developed your simple trading system, stick to that and don’t change them frequently.