You use a system that has a greater chance of winning over losing.
This is wrong. There are many profitable systems which have sub-50% win rates. It’s the combination of win rate and winner/loser ratio which determines system expectancy, not just win rate.
You use a system that will work in different markets.
Markets do have differences. That means a system won’t necessarily work in two markets the same way. If you’re only trading one market, though, you only need a system which works for the one you trade. For example, I have a specific way I like to trade stocks which involves fundamentals combined with technicals. It does very well for me in the equity market, but I couldn’t use it in forex.
You use stops in your trading system.
Some very good systems don’t use stops. They would actually do worse if you included them. That’s something which needs to be tested out.
You are shown how to use larger time frames to give you heads up on trades in smaller time frames.
This is a definte non-requirement. I’m not saying it isn’t a good idea. I do it myself, but to say you have to do it is wrong.
The system teaches small draw downs.
Some very profitable systems have large drawdowns. Trend trading systems are a good example of that.
You have at least two indicators to confirm a trade signal.
Indicators are absolutely not required for trading – nevermind two of them.
You want to trade systematically; you need to take every trade in the direction of the trend.
This assumes the system performs best in the direction of the trend. Some systems are very good counter-trend approaches.
As anyone who has read much of my writing on this blog and other places will know, I’m not a big fan of absolute statements of the sort Pip Wrangler has made. They generally reflect a limited perspective on the market. As such, they are a disservice to new traders trying to find the way in the markets. The fact of the matter is there are tons of ways of trading successfully. You just need to find the one that works for you – and that probably isn’t going to be the one that works best for me.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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