Copyright (c) 2009 Scott Cole
I’ve participated in a variety of trading and investing newsgroups and forums on the internet over the years, and it never ceases to amaze me how little attention is paid to risk management. Whether they trade stocks, Forex, commodities, futures, or other instruments, most amateur traders continue to focus only on trading entries.
In my experience, most questions posed by inexperienced investors focus on finding the next hot stock or the best trading system for trading stocks, forex or commodities. They are all hoping to catch a few big winners just by scouring the internet for some hot tips. Or, they think there may be a hot trading system out there that will make them a millionaire in no time. Or, if they are focused on short-term trading, they are hoping to learn that one trading system that will give them 90% winners, and profits month after month.
Therefore, the financial industry continues to prey on these attitudes with countless books and trading systems. The brokerage houses want you to open an account so they can sell you the latest and greatest ideas in the stock market, while padding their accounts with your commissions. The discount brokers will sell you on the idea that you can make big profits just by using their trading platforms and using a couple technical indicators.
And, of course, the biggest fraud is put on by professional money managers, who promise consistent profits to unaware investors. We have just realized the biggest fraud of all, with a potential $50 billion Ponzi scheme run by formerly reputable money manager Bernie Madoff.
Because he was so well known on Wall Street, Madoff was able to convince hundreds of investors that he could be profitable every month. All the while, he was simply soliciting new money to pay off the original and oldest investors. There have been plenty of examples like this, but the Madoff scam is clearly the biggest fraud of all time.
The bottom line is, there is no such thing as the Holy Grail of trading! There is no one trading method or system that will generate huge returns for anyone, year after year. History is wrought with hundreds of examples of trading legends who made it big, then crashed and burned.
The best traders go through periods of underperformance, and they accept this, because they know, that in the long run, their trading methods will provide strong returns. However, they don’t expect to make 100% on their money every year, and they don’t expect to make money every day, every week, or even every month. Very few are capable of such returns, and those that are, will not share their strategies with the public!
Professional traders are also not worried about having a trading system that is right 100% of the time. They know that this is impossible. All they are concerned with is finding an EDGE that, over time, will be profitable. On the other hand, most amateur traders are worried about being RIGHT all the time, rather than being profitable. They can’t stand the thought of having a losing trade. Professional traders know that losing trades are part of the game.
One thing all of the best traders DO have in common, however, is that they know how to manage risk! Because they know that the markets can turn on them at any time, they are more focused on managing the risk in their portfolios, rather than on specific entries and exits in their trading models.
Most amateur traders can not seem to get past the idea that the initial trade entry, or stock selection, is the NOT the most important part of any trading model. It is what you do AFTER you enter a trade that is more important. And even more important than knowing when to exit a position is learning how to manage your risk.
One popular concept in the trading world is the idea of minimizing your risk to 1% or 2% of the equity in your account on any given trade. For example, if you have $100,000 in your account, then you would only risk $1,000 or $2,000 on any particular trade. If you want to buy XYZ stock at $20, and you have determined that you will exit the trade if it goes down to $19, then you will trade no more than 2,000 shares.
This is a good start, but is not the end of managing your risk. You can limit your risk to 1% if you like, but if you do not have the discipline to stick to your trading rules, and you take trades that you should not, you will still lose, and lose quickly! That is just one example of not controlling your risk. The following is a list of do’s and don’ts when it comes to managing risk.
1. Do not over trade. This can mean risking too much on any one position, or trading too much, simply for the thrill. With that in mind, once you have developed the entry and exit rules for your system, STICK to them! Don’t take trades that are not signaled just because you feel the need to trade!
2. Don’t trade markets that are highly correlated at the same time, unless you are doing some sort of spread trade by buying one market and shorting the other. Also beware of markets that are inversely correlated. For instance, if the Japanese Yen is going up while the Nikkei index is going down, don’t buy the Yen and short the Nikkei! You are simply doubling your bet!
3. Don’t add to positions when the markets become more volatile! Some trading systems look to capitalize on long term trends and will pyramid positions to achieve greater profits. Only the skilled trader should attempt this, because normally when trends are in place for a while, the volatility tends to increase.
4. If the volatility in your trading position increases dramatically, consider exiting some of your position.
5. Don’t begin hoping that one position will turn into a big winner. You must check your emotions at the door when you enter your trading room. Never marry yourself to a position. If you have a profitable strategy, it is many trades over time that will bring those profits, not one big winner.
6. Absolutely, positively know where you will exit a position BEFORE you enter a new trade!
7. Absolutely, positively know how you will trail your stops on your positions!
8. If you are having a bad trading day, trading week, or trading month, TAKE A BREAK! When have not taken a break for a long time, our trading judgment can become clouded, and we begin to break Rule #1. Once you find yourself breaking that rule, it is time to step away from the trading desk for a while.
9. If you are on a losing streak, and your equity has declined, reduce your risk!
10. Finally, when you do take some profits, take them out of your trading account and diversify your investments! Even though you may have a diversified portfolio traded by your trading system, you still should invest in completely different markets, such as real estate, bonds, art, commodities, or even another business.
Once you learn the importance of risk management, you will be one big step closer to becoming a profitable trader.
The Importance of Risk Management in Trading
March 10th, 2010Trading Systems – The Little Know Truth About All Trading Systems – Must Read
March 9th, 2010
I have often said that I could give everyone my trading systems and it would do them no good. Let me give you an example, I can show you a trading system that picks the direction of the market correctly 60% of the time. On winning trades that system shows a profit twice as large as the average losing trade. Now in anybody’s books that is a great system. If all this is a bit over your head, or you’re looking for a solid day trading strategy, I suggest you join me on one of my live webinars by visiting this site. But wait, there’s more. . . That system gives traders an average of 13 trades a day. Again on average the system produces between $800 and $1000 (net after all costs) each week off a single contract. WOW! That’s a great system! I can hear you say “Gimme, Gimme, and Gimme!” Who wouldn’t?Let me tell a couple of other things about the winning trading system. The system can produce a run of 7 losing trades in a row in any given month. Now let’s deal with this, that is 7 losing trades in a row, how do you think you are going to feel after 7 losing trades in a row?It’s hard to take the next trade after 3 losing trades but this is systems trading, you must take every trade! If you don’t take all trades you will not be in line for the run of 10 winning trades; which also happens once a month. It is hard to keep trading during a run of losses and after each successive losing trade it gets harder. One of the comforts of this trading system is that the losing trades are small and it is important to understand that keeping losing trades to a bare minimum is the most important step in becoming a profitable trader. When designing trading systems I always seek to limit the average losing trade over a large number of trades. If we can set a limit on the size of losing trades we don’t have to worry about losing trades anymore. We know what size our losing trade is going to be in advance so if our trade turns into a loser it will never be an unexpected amount. Certainty of return as determined by these rules helps to create confidence in the trader. It helps to have a broad vision of time and activity. Smart traders know that they are not going to lose all their money in one trade, nor are they going to make a retirement fortune on one trade. It helps to think of the next trade as the first one of the next one-hundred trades. Going back to our trading system, that system will produce an average of 13 trades a day or 65 trades a week. As the system picks the market direction correctly 60% of the time that is about 8 winning trades a day or 40 winning trades a week. Unfortunately they don’t all come at the same time. It also means that on average 5 losing trades a day or 25 losing trades a week. Traders must understand that no matter how hard you try you cannot tell which trades are going to be winners before you take the trade. Trading is about taking a position and then managing your risk. Taking a position means buy or selling according to your signal, if you buy into a market you expect the market to rise and if you sell into a market you expect the market to fall, pretty simple really. Opening a position is the easy part. Exiting a position is a little more complicated not that we worry about a trade turning bad because if it does we get out very quickly. It is the profit-taking that complicates matters. The question is always “Where will I take my profit?” Keep in mind that you must keep your losing trades limited to the pre-set value and never take a loss greater than that which is set. Having preset loss limits enables us to look at ways of maximising our profitable trades. I recommend clients have a minimum profit expectation of twice the average loss value before taking in a trade. Trading a system requires a trader to take all trades. It is easier when you know in advance that any loss will be limited to a known amount so that there is no ‘surprise’ factor. It is a matter of taking a position and then managing the correct exit. If you would like to learn more about this trading system, and more importantly the mindset and conviction to follow it through, then visit us at http://www. EliteTradersWebinars. com. au and sign up for our free webinar.
Online Trading
March 8th, 2010
Daily Market Commentary for March 31, 2009 Major U. S. indices hosted another positive trading session today amidst moderate trading volume creating a variety of action for those involved in online trading. (read more at Millennium-Traders. Com)http://www. millennium-traders. com/news/newscommentary. aspxEconomic data released today:ICSC-Goldman Store Sales:For week of March 28, chain store sales posted an increase 1. 1% week-on-week and a decrease by 0. 2% year-on-year for the best readings since the new year. Sales were strong even after taking into account effects surrounding Easter, which falls three weeks later this year. The report still sees full month sales flat to down 1%. Redbook:Redbook shows a 0. 6% year-on-year rate being the best rate since the end of last December. Warm weather had a positive affect in the week. S&P Case-Shiller HPI:January shows steepening rates of price contraction, at -2. 5% for the composite 10 index and -2. 8% for the composite 20. Year-on-year rates of decline deepened at -19. 4% for the 10 index and -19. 0% for the 20 index. Developments in the housing sector are being monitored on a month-to-month basis given new efforts to limit foreclosures and the ongoing drop in mortgage rates. Data confirms that home-price contraction was deepening at the outset of the year. NAPM-Chicago:U. S. Chicago Purchasing Management adjusted March Index 31. 4 versus February 34. 2; U. S. Chicago Purchasing Management March Prices Paid Index 34. 1 versus February 37. 8; U. S. Chicago Purchasing Management March Supplier Deliveries 48. 4 versus February 51. 0; U. S. Chicago Purchasing Management March Employment Index 28. 1 versus February 25. 2; U. S. Chicago Purchasing Management March New Orders Index 30. 9 versus February 30. 6. Consumer Confidence:U. S. Conference Board March Consumer Confidence came in at 26. 0 versus February reading of 25. 3; U. S. Conference Board March Present Situation Index came in at 21. 5 versus February reading of 22. 3; U. S. Conference Board March Expectations Index came in at 28. 9 versus February reading of 27. 3. March consumer confidence index remained relatively unchanged in March. February’s reading was 25. 3, revised up slightly from the originally reported 25. 0. The present situation index for March fell to 21. 5 from February’s upwardly revised 22. 3, while the expectations index increased to 28. 9, from the prior month’s 27. 3. It was originally reported at 27. 5. Consumers referring to business conditions as “bad” rose to 51. 1% of the survey from 50. 5% during February. Consumers calling conditions “good” moved lower to 6. 8%, from 7% previous month. The Conference Board found increased concerns about hiring with those calling jobs “hard to get” rising to 48. 7% of from 46. 9% during February. Those deeming jobs as “plentiful” remained unchanged at 4. 6%. At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U. S. stock indices ended the trading session on the world markets as well as the emerging markets including the stock market closing bell price:DOW (Dow Jones Industrial Average) gain of 86. 90 points to end the trading session at 7,608. 92NYSE (New York Stock Exchange) gain of 79. 93 points to end the trading session at 4,978. 98National Association of Securities Dealers Automated Quotations (NASDAQ) gain of 26. 79 points to end the trading session at 1,528. 59S&P 500 (SPX) gain of 10. 34 points to end the trading session at 797. 87BEL 20 (BEL20) gain of 48. 30 points to end the trading session at 1,748. 74CAC 40 (CAC40) gain of 88 points to end the trading session at 2,807. 34FTSE100 (UKX100) triple digit gain of 163. 23 points to end the trading session at 3,762. 91NIKKEI 225 (NIK/O) triple digit loss of 126. 55 points to end the trading session at 8,109. 53New York Stock Exchange (NYSE) stock market indicators for the trading session today:Advanced stock prices 2,034, declined stock prices 663, unchanged stock prices 521, stock prices hitting new highs 10 and stock prices hitting new lows 15. NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: Ingersoll-Rand Company Limited (NYSE: IR) stock price shed 0. 18 points on the trading session, high on the trading session $14. 20, low on the trading session $13. 25, with a closing stock price at $13. 80; State Street (NYSE: STT) stock price gained 2. 80 points on the trading session, high on the trading session $31. 71, low on the trading session $28. 90, with a closing stock price at $30. 78; Watson Pharmaceuticals (NYSE: WPI) stock price gained 2. 52 points on the trading session, high on the trading session $32. 95, low on the trading session $28. 84, with a closing stock price at $31. 36; Deutsche Bank AG (NYSE: DB) stock price gained 3. 02 points on the trading session, high on the trading session $41. 46, low on the trading session $38. 88, with a closing stock price at $40. 42. National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators for the trading session today:Advanced stock prices 1,917, declined stock prices 893, unchanged stock prices 139, stock prices hitting new highs 13 and stock prices hitting new lows 15. NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: TBS International (NasdaqGS: TBSI) stock price gained 0. 84 points on the trading session, high on the trading session $8. 19, low on the trading session $7. 29, with a closing stock price at $7. 33; Acorda Therapeutics (NasdaqGS: ACOR) stock price shed 5. 09 points on the trading session, high on the trading session $20. 98, low on the trading session $19. 10, with a closing stock price at $19. 81; First Solar (NasdaqGS: FSLR) stock price shed 4. 06 points on the trading session, high on the trading session $140. 02, low on the trading session $129. 78, with a closing stock price at $132. 70. Market trends on the American Stock Exchange (AMEX) and stock market indicators for the trading session today:Advanced stock prices 350, declined stock prices 175, unchanged stock prices 113, stock prices hitting new highs 3 and stock prices hitting new lows 7. Chicago Board of Trade Futures Market for the day, at time of this posting:E-mini S&P 500 (ES) June 09: End of trading session price 790. 50; Change for the trading session 6. 25E-mini NASDAQ-100 (NQ) June 09: End of trading session price 1,227. 50; Change for the trading session 4. 75E-mini DOW $5 (YM) June 09: End of trading session price 7,518; Change for the trading session 38E-mini S&P MidCap 400 (MF) June 09: End of trading session price 482. 20; Change for the trading session 3. 10World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:Euro 0. 7540 to U. S. Dollars 1. 3263Japanese Yen 98. 890 to U. S. Dollars 0. 0101British Pound 0. 6979 to U. S. Dollars 1. 4329Canadian Dollar 1. 2609 to U. S. Dollars 0. 7931Swiss Franc 1. 1387 to U. S. Dollars 0. 8782COMMODITY MARKETS:Energy Sector – Nymex:Light Crude (May 09) gained $1. 49 on the trading session for a closing price of $49. 90 per barrel ($US per barrel)Heating Oil (May 09) gained $0. 02 on the trading session for a closing price of $1. 36 a gallon ($US per gallon)Natural Gas (May 09) gained $0. 04 on the trading session for a closing price of $3. 78 per million BTU ($US per mmbtu. )Unleaded Gas (April 09) gained $0. 03 on the trading session for a closing price of $1. 42 a gallon ($US per gallon) Metals Markets – Comex:Gold (June 09) gained $7. 30 on the trading session for a closing price of $925. 00 ($US per Troy ounce)Silver (May 09) shed $0. 05 on the trading session for a closing price of $12. 99 ($US per Troy ounce)Platinum (July 09) gained $8. 00 on the trading session for a closing price of $1,128. 80 ($US per Troy ounce)Copper (May 09) gained $0. 08 on the trading session for a closing price of $1. 84 ($US per pound) Livestock and Meat Markets – Chicago Mercantile Exchange (cents per lb. ):Lean Hogs (June 09) gained 1. 43 on the trading session for a closing price of 72. 40Pork Bellies (May 09) gained 2. 80 on the trading session for a closing price of 86. 55Live Cattle (June 09) gained 1. 63 on the trading session for a closing price of 81. 70Feeder Cattle (May 09) gained 1. 20 on the trading session for a closing price of 94. 25 Other Commodities – Chicago Board of Trade (cents per bushel):Corn (May 09) gained 18. 50 on the trading session for a closing price of 404. 75Soybeans (May 09) gained 47. 50 on the trading session for a closing price of 951. 50BOND MARKET:2 year Bond Closing price 100 4/32, change 4/32, Yield 0. 80, Yield change -0. 045 year Bond closing price of 100 12/32, change 8/32, Yield 1. 67, Yield change -0. 0510 year Bond closing price 100 9/32, change 9/32, Yield 2. 68, Yield change -0. 0830 year Bond closing price 99 5/32, change 1, Yield 3. 54, Yield change -0. 07Thanks for readingMillennium-Traders. Comhttp://www. millennium-traders. com
Forex Trading Secrets Exposed – 3 Lessons From Professional Forex Traders on Forex Trading
March 8th, 2010
Almost 90% of the part time traders that I know of want to become full time forex traders in the near future. And they hope to be professional traders one day. That is the dream for most forex traders. What about you? In order to survive in the forex trading world and make lots of money from the forex market consistently, being a normal forex trader is not good enough – you’ll need to become a professional forex trader. So just what are the secrets that professional forex traders have that enable them to make lots of money trading forex? I once had a conversation with a friend of mine, who is a professional trader. He shared with me the 3 secrets that make professional traders like him very rich: Secret #1 – Professional traders are not geniuses- they simply follow a simple forex trading system You see it correctly, they are not any smarter than you nor do they possess of any god-like foresight in forex trading. I dare to say this because I know some professional forex traders who seem to know nothing in this world and clumsy in doing other stuffs but can do extremely well in forex trading. Why is that so? It’s simply because they have a successful forex trading system which gives them good forex trading signals. It helps them trade consistently. What they have to do is to repeat the consistency just by following the trading system. That’s about all. And let me tell you a little more secret, professional traders use simple forex trading systems instead complicated, as what most people thought. Secret #2 – Learn to work smart, not hard Do you think that you should learn how to trade forex the hard way and gain all the knowledge before you can be successful? Do you think you can master the forex market if you combine all the strategies taught by every forex trading experts? If your answer is yes, you are wrong. In other businesses, you may get rewarded for all the efforts and time you have put into. But in forex trading, it’s the right forex trading tutorials and education that count and you are rewarded for being accurate and not so much for the effort you put in. You will be surprised to know that successful traders only follow a winning trading system blindly to build up their trading capital. Secret #3 – They possess determination, discipline, money management and mindset for success My professional forex trader friend once told me that he would leave everything aside just to concentrate on his forex trading. It’s his determination to succeed that made him overcome small losses and steep learning curves that he experienced in the beginning. He told me the problem with most traders is that they are too eager to trade and make money fast from the forex market. You need to have discipline to follow the rules of your forex trading system. Huge capital gains in forex are piled up over years and not days, there is no shortcut to riches. He manages his money so well that even 2 or 3 losses in a row will not affect his trading capital much. 1% or even 0. 5% of his capital margin per trade is what he is only willing to risk. Not everyone can be a professional trader in a short period of time as you need huge capital, but anyone can become successful in forex trading if you learn how to trade forex the professional way.
Blueprints of How To Trade For A Living
March 7th, 2010
Trading As A Business Trading in the financial markets, whether it be the Stock Market; the Commodities Market; the Futures Market; the Forex Market; or even the Options Market; is taking big risks on your hard-earned money. You have to treat trading as a serious business whether you are trading full-time or part-time if you are ever going to succeed and hold on to your profits in the long run. Yes, you heard me right. You have to plan and manage it like a brick and mortar business. There is no other way to succeed in trading or speculations if you are not going to give the due respect that Mr. Market deserves. If you don’t respect the Market, the market will not give you the reciprocal respect, in terms of taking money out of the markets and hold on to them. Once you have this proper mindset, we can move on to other important components that make up your trading business. Trading Plan The first thing you need to do before you start a business is to have a Business Plan. In this case, it is called a Trading Plan. Now, this is the place to set your Goals that you want to achieve. Be as specific as possible while being not to easily or impossible to achieve. Set yourself a goal that is challenging to you without it being too big a goal. Now, with your goal set, you have to break down this goal into smaller components of actions that will lead to achieving your goal eventually. This is your action plan. Be detail and realistic. If you are working full-time and you can’t always look at the market every minute, don’t put an action that requires you to monitor your trading positions every moment. You get the idea. Ok, you have set your plans, what next? Trading System In order to survive and prosper in the long run trading in the markets, you need to be consistent in your actions in the buying or selling of your market products, stocks as an example. You will also need a measure of what actions are right and which are mistakes. Believe me, without such a standardized and formalized measure, you will always think all your actions are right, even when you are losing money! That’s the default optimistic human nature in control. What you need can actually be found in a System. It is normally called a Trading System. A Trading System consists of Setup, Entry, Exit and Money Management strategies. A Setup is a definitive set of patterns, ratios or conditions that you are looking out for when trading. An Entry is the actual point where you are to “enter” into the markets, be it a “Buy” or a “Short Sell”. An Exit is as the label implies, the actually point or conditions when you should square-off/close your open trading positions. It could either be a profit-taking exit or a loss cutting exit. Money Management or more specifically called the Position Sizing strategies defines and answers the question of “how much” to buy or sell in entries or exits. Contrary to common beliefs, this is actually the most important component of a Trading System. It can determine whether you can make it your trading career. The importance of a Trading System cannot be emphasized more. You need a Trading System to perform consistently according to the changing markets as well as a guidance to tell you when your actions are right and when you are in great risk and danger. There are two ways that you can have a Trading System. You can either design it yourself if you have the vast amount of knowledge in the trading field required in designing your very own trading system which takes enormous effort and a long and tedious total commitment of your time, or you can order one such Professional Trading System that has been proven to have a win-rate of 71. 9%, as tested by an internationally renowned third-party vendor as well as my own experience using it. Let’s take a look at what is required in designing such a Trading System mentioned above. System Development Firstly, you will need to determine how much time you are willing to spend researching the market as well as staring in front of your market price quotes. This will determine what type of trading styles you are comfortable in. Decide whether you are going to do Day Trading, which requires your involvement in the market every minute; Swing Trading, where your open trades last from a day to a few days; Position Trading, where your open trades last anything from a few days to a couple of weeks; Long-Term Investing/Speculating which has the most minimal time requirement where your trades can last from months to years. This is also the most difficult if you are going to watch the markets frequently and you are going to require huge amount of work and market data in order to test out your concepts. Personally, I prefer Position Trading as it fits my time and activity requirements. It keeps me busy enough yet at a relaxed pace while having ample data for constant refinements and testing of my concepts. I spoke of refinements of the Trading System. Yes, that is required especially for new initial Trading Systems. You need to go through a series of cycles of refinement and optimization of your newly developed Trading System whilst it is being tested in the markets in real life conditions, with your precious money at stake. I am getting ahead of myself here. Before we even think about refinements, there are many more things involved in designing and developing a Trading System. Let us go back to the discussion on System development. Once you have decided which Trading Style you are comfortable with, you will need to determine how you are going to carry such a style. There are basically 3 categories of Trading Methods. They are Technical Analysis, Fundamental Analysis and Intuitive or Mental Analysis. These methods can be used in purity or can also be used in combinations. Technical Analysis deals with Technical Charts and Graphs. There are numerous technical indicators out there for you to design your System. In fact, there are so many different formulas and variety that you may be overloaded initially. Nevertheless, if you spend enough time reading technical books and about these indicators, you will be able to discern them into various categories like Oscillators, Moving Averages, Trends, Patterns, and Divergences. Pick a number of these indicators to design your Trading System. Fundamental Analysis deals with the financial ratios of a company as well as the fundamental conditions of a company or market. You make use of such information in order to design a consistent and reliable Trading System. You put reality of the market situation aspect into you Trading System. Intuitive or Mental Analysis is the discretionary perspective of looking at the markets. You make your own judgment from your subconscious observations or your past experience and do not involve mechanical formulas or fixed visual patterns in your analysis. Though not all such intuitive insights can be formalized into your Trading System, there is no doubt it can be useful in designing your System. Once you have designed your Trading Strategies, choose a financial market that you are more interested in. It can be the Stock Market, the Index Futures Market, the Commodities Market, the Forex Market or the Options Market. For now, just pick one. You will have to go through the following steps before you can really confidently trade in your chosen market using your Trading System. Be sure to make refinements along the way. They are, 1) Paper Trading. Simulate your Trading System like you are trading it with real money. Test it out using trading software or manually keeping track of it using historical data. Refine your various System components until you are satisfied with the result, profit in this case. 2) Trade in small lots/amount. Once you have passed the Paper Trading step, you are more confident of your Trading System and you can start to actually trade very small amount of stocks or contracts in the market of your choice. Don’t worry about losing for now. Instead concentrate on executing your System properly and with discipline. Further refine your Trading System here again as you will start to see the flaws in your System. Make sure you test your System again after refinements. Once you are very confident that your Trading System will make you money consistently, proceed to the next Step. 3) Initial Actual Trading System trading in normal quantity indicated by your Money Management Strategies. Make sure you follow with strict discipline in the execution of your trades according to your Trading System. Be aware of the psychological challenges involved that are against your rules defined in your Trading System. This is another opportunity to refine your Trading System yet again. Until you are confident of your Trading System again, you should not rush to start your actual trading career. 4) Actual normal trading. Take control of your trading Psychology and adhere to strict discipline in trading your developed and refined Trading System. So, as you can see, very much is involved in the designing and development of a Trading System. I have personally spent 9 months just to design and develop the Natural Behavioural Cycle Trading System. I have also made numerous refinements on it over many years of actual experience trading it. I would suggest taking the easy way out and trying out this Proven 71. 9% win-rate Complete Trading System, where everything has been researched, designed, developed and tested for you here, http://www. howtotradeforaliving. com/order. php