Trading Is a Thinking-Mans Game: WRONG!

Part 14 in the Mental Fitness for Futures TradersSeries
by Norman Hallett, former CTA/Trader

Most traders move from trading system to trading
system, over time, until they find one that suits
them& one that is comfortable to run, and tests
well over (back-tested, then real) time.

Some traders never stop looking for the right
system. THAT is a problem.

There are many systems that can generate nice
profits over time. To settle on a trading system
thats right for you:

First, you have to believe in the process by which
the system generates trades. Who was Fibonnaci,
how did he arrive at his methodology? Does it
make SENSE to you?

Maybe youre a visual sort of person and you are
drawn to Candlestick charting. Take the time to
understand why the patters mean reversaland
not just accept the picture. Go deep.

Choose a guru that you will need to trust 100%.
If you choose to take your trades from a guru,
understand where his or her godliness is coming
from. This can be a dangerous choice in that
you are giving up control to another. Choose wisely!

Second, whatever system you decide to go with,
Back-test it. In todays modern world of software,
theres no excuse not to run all the back data
you can through your system and see what the
results would have been.

Although back-testing is no proof of future
performance, at least you can see the logic
of your system at work.

Third, test your system in the real time. Take
a VERY small amount of risk capital and trade live.

This could be the most valuable phase. Although
you wont have fully-investedemotions tugging
at you, you will feel something, and you can learn
to control your emotions as you allow your system
to do its work.

The bottom line to all of this is that if you don't
have TOTAL CONFIDENCE in your system before
you start trading it, you will doubt your systems
ability to perform with every losing streak.

Thinking about your system and its validity
while you are trading it will spell doom. Do all
your thinking in the pick a system stage.

Now, when the trading day is over, you should
be reviewing your trades, but not your system.
Did I follow my system correctly? Did I weaken
in my resolve to follow my system? How can
I (not my system) improve?

Nobody is saying that you should be sticking to
a system that is losing in real time. What I'm
saying is you should only judge your system over
the long term & not on a daily or even a weekly

THINK long and hard about what speculation is
and whether it fits your investment objectives.

THINK about the system you are choosing and
why its right for you.

THINK about the results you get from your
back-testing and your real-time testing of your system.

are trading your system.

This is why I am a huge proponent of mental
training for traders. Unless you can control
yourself, you can never control your system.

In order to control yourself and your emotions,
you have to believe totally in your trading system.

Do the work!


Then dont think!

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