The best thing anyone can do when starting out is to learn how a trend system works. You should try to trade a trend-following trading system for a while. (Check the homework box at the end of this section for details on how to get started on this.) Doing so will teach you one of the most important — though seemingly counterintuitive — concepts that a swing trader, long-term trader, or stock trader has to learn. That concept is to ride the trend, letting your profits get large when the market keeps going in your direction and cutting your losses short when the market trades against you.

Besides trading, a system (in this case, any system) teaches you to be disciplined — to have the ability to follow the trading signals, even when you think the market is going to do the opposite of what your system is signaling.

There are many trend-following systems to explore, but if you test one in a relatively short-term time frame, you will generate more signals and learn quicker. Trade small size or even in a paper-trading account while performing this task, as the objective is not to win any money but to learn to follow and execute a trading system flawlessly.

Homework: Trade, for example, a ten-period EMA-crossover system in a volatile instrument in a paper-trading account; your task is to execute flawlessly. Create a log sheet to enter the trades and the P&L.