Systematic Traders: Keep It Simple–Here’s How

Let’s assume that after careful study you’ve devised a systematic method
that fits in nicely with your personal trading style. You know where to
get in, where to get out, where to place your stop, and how much capital to risk
per trade. You’ve even refined your system to the point of automating your
trading signals.

Yet
even though you may be disciplined in practicing all of your rules, you can
still fall prey to one significant oversight — KISS or “Keep It Simple Stupid.”
This is a trap which most first-timers fall into, thinking that “the more
complicated my system is, the more it increases my chances for success.” Nothing
could be further from the truth.

Let
me tell you a true story. I once met a man who told me he had devised a system
that could literally “trade anything in any time frame.” He showed me the
research where the system had generated profits all around. When I asked him to
explain how it worked, he said, “My system is too complicated to teach. It would
take months before you even began to understand the concept behind the rules.”
To make a long story short, within a year his magic system had blown up and this
man is no longer a trader/investor.

First of all, this was the most complicated trading system I had ever seen in my
life. It took a rocket scientist mentality just to enter an order. There were so
many variables involved, so many conditions placed upon conditions, that it was
a wonder how a trading signal ever got produced in the first place! I’m sure
that this gentleman had his best interests at heart and truly believed in his
methodology, but he got sucked into a false mindset that believes the more
intricate and complex a system is, the more valid it must be. In reality, the
exact opposite is true.

There is a danger in making your strategy overly complicated because the more
complex it is, the more difficult it will be to analyze, understand, and
eventually carry out. While you are trading in the market, the last thing you
need is to perform a ninety-nine-step process just in order to generate a buy or
sell signal.

In
the

TradingMarkets Professional Swing Trading College I will be teaching, all
the strategies involved come with a maximum of 4-6 rules to follow. The systems
are extremely profitable, with over 10 years research behind them, and
absolutely NO optimization involved.

Trading is difficult enough without having the intricacies of your own system
get in the way. Remember, it’s the easiest thing in the world to complicate your
life; it’s the hardest thing in the world to simplify it.

Good luck and good trading.

Steven Primo

stevep@tradingmarkets.com

PS
I am giving a multimedia presentation on systems trading and the
TradingMarkets Swing Trading College on Wednesday Jan 26 at 4:30 PM ET.

Click here to register.