Meet Harry
Harry just released his trading system on a popular Forex forum. Harry’s system works very well for him. He wins 8 in 10 trades with it and has made a lot of pips. He decided to release the system so he could help newbie’s make pips.
Meet the Newbies
The newbies just found Harry’s system. It’s the latest craze and everybody is trying it.
Is the system working for everybody though?
No it isn’t.
Why does Harry’s system work for him but not so well for others?
- He developed the system and it suits his personality.
- The system suits his skill set and makes use of his strengths.
- He knows the ins and outs and isn’t as rigid with the rules.
A trading system is just a tool. What makes it work is the trader behind the system. The trader dictates whether the system works or fails. When you take a tool that a trader custom builds and try to use it in your trading you will likely find it difficult.
Does this make you a bad trader?
No it simply means that you do not have the same skill set as the person who developed the system. It means that you need to develop a system that plays on your strengths and suits your personality.
Why should you develop your own method?
There is no one size fits all trading system. Over the past few weeks I have been asking newbie traders a question:
Q. What do you think is the single most important factor to a traders success?
Not surprisingly most newbies answer ‘a good trading system’. It is exactly this mindset that has newbies jumping around from forum to forum looking for the latest Holy Grail system. However, as I have already said there is no one size fits all system so searching forums for the latest and greatest only leads to failure.
To succeed in this market you need to develop your own trading method; a method that works for you and is suited to your personality. To be honest it is not just a simple process it does involve a lot of trial and error but at the end of the day it will make you successful. It is a whole lot better than wasting your time jumping from forum to forum.
Think about it this way. You can run off with the pack, trying ever new system posted on a forum, and always ending up back where you started. Or you can spend that time developing something that works for you; a method that is perfectly tailored to your personality and makes use of your strengths.
After all, 95% of traders fail. So if you run off with the pack and do what 95% of traders do it can only end one way.
In the next article, in this series, I will discuss the difference between a method and a system. I will also discuss the first steps in creating your own method.
{ 13 comments… read them below or add one }
I really like this article, thank you Nick!
I will be looking forward to your future articles. I want to learn from you as much as I can, and need to learn how to develop a method whereby I can Monitor it mainly only for 1 hour a night…. I know you are preparing advice for a longer term strategy as well.
Nice article Nick! This article is so true,but I wanted to add that I see many new traders that do not seek the basics of daily trading. Knowing when there is dangerous news looming, or what time each session ends or begins and how it may affect their trading. Most noobs don’t even know the direction of the major trend! There is so much basic information that a trader needs to know before they even think about a system or a method. I think anybody that has the drive to learn how to trade and are disciplined can suceed, but thinking of riches too soon can lead to disaster without proper knowledge, I urge all traders to understand this vital information before trading live! Nick and his friends are a big inspiration and are commended for their efforts.
Good Trading!
Vulcan
Hi, thanks for the article. I myself could probably do with some brushing up but I forwarded this to my wife because she is just starting to learn.
I really like the other articles that you have written because they make the concept of the complex, very easy to understand and follow.
Cheers, Keep up the good work,
Martin
So very true. I was a classic example of ‘following the pack’. It’s like the blind leading the blind. Since I started posting, and even started my own thread, I’ve chilled out to develop my own method. One that works for ME
Thanks for pumping out the articles Nick
Props
There are probably hundreds of thousands of trading systems that work. But most people when given such a system will not follow it. Why not? Because the system does not fit them. One of the secrets of successful trading is finding a system that fits you.
~Trade your way to Financial Freedom, by Van Tharp
Dear Nick,I believe the 129.83 low which was the lowest since 1995 has just been broken and the new low is now 128.75.price action is still tending lower and two possible scalp lines have just been added-128.75 and possibly 132.08.
What would you do if these two scalp line get broken this week even though you have made your weekly goal of 100 pips already?
pls comment!
Nick, Totally agree with what you say having been in the position myself. However, without looking at the various systems that are ‘out there’, I would have to say that I found it very difficult a) trying to develop my own system b) deciding what time frame to trade on and c)finding the opportunity to trade in the way I want. Without trying different systems to see how they work for the individual, I think it is extremely difficult to work out what you need. I would, however, always advocate at least paper trading in a live situation first and for as long as it takes to feel confident.
Thanks for the effort you put into these articles by the way, they are very useful and thought provoking!
Hey Nick,
This is an absolute pearl of wisdom hear. I must admit, I look at nearly every new method preached on the web. While I do not recommend doing that, I do think it helped me in one capacity. Seeing all of these gimmicks brought some common themes that allowed me to develop my own personal system. This is where the real money is made, just as you mentioned in this blog. This is also what I tell friends as well.
I would suggest everyone within ear-shot to also continue learning more about investing, even after you have found your system that works. Reason being is that you can always improve your system to meet the demands of an ever growing and altering market.
Happy Trading!
Great post Nick. I feel, your best.
I would add, that listening to advice from a person who is already successful helped me a lot. I don’t mean only reading about method and what to avoid, but actually taking note of every bad trade that was avoided and why! This gives some picture about advice in action and when to recognize a situation that can be avoided.
i think nick is right,sincerely i am one of those looking for holy grail that works but always on the wrong side,so i decide not to take anything unless what is good for me.
its a true fact i was also one of these kind of people…..then i created a method using elder-ray bull and bear indicators with 13EMA….and traded this method for the past 6 months ans it win in every 8 trades in 10….with a monthly return on capital of 75%-125% consistently…..
The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers.