Trading With An Edge (Part 2)
As I stated in my previous column, without a
proper edge to your trading strategy, one is simply stumbling in the dark for
answers. Even with 16 years of sustained trading success under my belt, I sunk
right back down to the ranks of beginner when I decided to go out on my own. The
trading edge that I possessed on the floor was extremely effective due to the
knowledge I was privy to, but once I left the Exchange I had to start all over
again. Why? Because there was no way to quantify what had worked so successful
for me in the past.
What
I was searching for (and what I believe most new traders need) was a method that
laid out a clear, concise set of rules that were simple and easy to follow. I
needed a strategy to take the emotion out of my trading while at the same time
instilled confidence in me to trust and follow the plan. Enter model-driven
systematic trading.
Because of the way systematic trading is structured, practically every trading
decision you make is automatically generated by a set of clearly defined
rules. You no longer have to guess about whether to take the trade or not,
what you entry price should be, where your protective stop should be placed, or
how many shares to trade. With substantial amounts of research to back up and
verify the results, systematic trading methods are able to answer all of these
questions prior to the trade even taking place. The rewards of a model-driven
plan are not only the profits your system will generate, but also the trust you
will have in it when the going gets tough.
But
having a trading edge does not guarantee success. You must be disciplined in
order to complete the process. Think of the last time your strategy had a
larger-than-normal series of losing trades. Were you following the rules that
had been carefully designed through research and back testing, or was your
trading purely discretionary? Were you taking all the signals and exiting at the
proper targets, or were you simply sitting on the sidelines and waiting for the
very best prices? Were your placing your stops at their proper placement, or did
you decide to yield to your emotions and get in or out too early? If you weren’t
following all the rules to perfection, you may as well have been trading with
discretion because you were adding subjectivity into the mix. You see, even
though systematic trading gives you an edge, you can just as easily lose money
with it. The edge not only lies in the system, but in its execution as well.
The
14-week Swing-Trading course I will be teaching gives you a clear and
concise plan that has been verified by years of research. I will be teaching you
a new way of trading that is defined by easy-to-follow rules. You will have the
mindset of a professional trader by the end of the course.
Good
luck and good trading,
Steven Primo   Â
stevep@tradingmarkets.com