How A Good Idea For A Trading System Can Totally Wreck Your Account

Today’s topic is about an often fatal mistake made by nearly all traders.

Unfortunately for most, it is a mistake perpetuated for years.

It is really a HUGE pitfall of trading.

In my opinion, it is also one of the most damaging.

 

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I say that because it has killed more trading accounts than any other single factor.

More than psychological issues.

More than the market moods changing.

More than anything.

Now listen up because this is one of the most important aspects of trading that almost NOBODY seems to get.

You see, everyone wants (and reasonably so) a ‘good system’ with which to trade.

Over the last several decades, there have been many good ideas for trading systems.

Quite a few have proven out to be sound strategies.

But see this is where the pitfall occurs

There is a HUGE difference between a ‘good idea for a system’ and a good system.

Think about it.

There are a LOT of good ideas for trading systems.

“Get in at the beginning of a trend and the ride it until it ends” is a good idea for a system.

Scalping is a good idea for a system.

Using Fibonacci levels to determine support and resistance levels is a good idea.

Gartley patterns, harmonic wave convergence, moving average crossovers, volume spread analysis.

The list goes on and on.

Last time I counted the general methods of trading, I stopped counting at 40.

That’s a bunch.

But where most traders get off into a wreck is trying to trade with really is only an idea for a system, not truly a system.

Not through any fault of their own, mind you.

They’re very sincere in what they’re doing.

Here’s where everyone gets hurt.

A good idea for a system does NOT equal a good system

If it did, then “Buy low, sell high” would be all you’d ever need.

The challenge is understanding the essence of what a system is and being able to get from “good idea for a system” to a workable, trade-able system that can be executed successfully and consistently.

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