What Makes A Good Trading System?

• February 3, 2005
• Steve Primo

I am
constantly asked what makes a good trading system. Should I look for
a strategy that consistently makes small profits, or one that hits a home run
once a year? Should I really worry about the method’s components and how it was
constructed, or just stick with it as long as it’s making money? Because in the
end, it’s really just about making money, right?

Well, yes and no to all of the above. There are several elements that go into
devising a successful trading system, and all should at least try to address
these questions. The key is in knowing the right components to focus on, and
then constructing a method around them. At the

Swing Trading College there are 7 main benchmarks that we rely on when
trading systematically. They are:

1.     
Profit Factor

2.     
Drawdowns

3.     
Percentage of Trades Correct

4.     
Consistency

5.     
Total Net Profits

6.     
Non-Optimization

7.     
Positive Rising Equity Curve

Each
of these categories must reach a specific level in order to meet our standards
for trading. All our students are taught strategies that have already been fully
researched and back tested to meet the above requirements.

In
my next column I will go into full detail about the benchmark we feel is the
most important and one you should rely on the most when deciding which system to
trade — Profit Factor.

Good
luck and good trading.

Steven Primo

P.S. Join me for an intense 14-week swing trading program in which I’ll cover
six statistically-backed systems.

Click here for the details.