As a noob, how should I trade a system before moving on? Obviously if it’s profitable, no need to change. But what if it’s consistently unprofitable? Move on to something new or make tweaks? I’ve come across a couple systems that are completely laid out for me, with everything spelled out.
I get that systems like the ones I’ve come across aren’t guaranteed to make me money, but when is enough enough?
I read somewhere that you gotta take into consideration the kind of market you’re trading in - whether it’s a trending / consolidating one? Something like that. Are you currently trying out a new system?
Yup, you got me figured out!
Just started a journal.
The market is not consistent and that is a major challenge for retail traders. Some trading methods e.g. moving average crossovers/ rejects, work well in a trending market; others like weekly pivot levels reversals work fine in a ranging market.
Your job as a trader is to determine the current phase of the market as well as the high impact fundamentals driving the market so you get an edge when trading.
As for me, the best solution would be backtesting of the strategy with different variations of rules (values). Sometimes the idea is great, but it is necessary to make minor changes to make it profitable. First of all, pay attention to the risk-reward ratio. Of course, entry and exit points are important too, but most of the strategies underperform just due to the mistakes with risk managements. The most efficient way to backtest is to use special software like Forex Tester, as it would be easy to use it even for newbie traders. For sure, experiencesd traders coould create their own algorithm, but in such case they would need to download historical data on their own. It is important to have access to at least 3 years of historical data to get the results that would be reliable enough.
Mechanical “systems” are for gamblers. For example, most trend following systems/set-ups have you entering the trend when it is almost at a major support or resistance level, then have you exit worse than break-even. Or worse yet, they’ll have you entering right at a trend line break out so you are stuck in a 10 pip trading range for three days.
You’ll find that most systems will be okay 30-40% of the time as long as the exact conditions the system was designed for are met. The problem is, if you try to operate that trend following system in a primarily ranging marking, you will eventually lose a lot of money, and then give up. You will be trying to find another “system.”
The better way is to have the training and experience to trade any time of day, in any market, with any instrument, under all conditions. This will take hundreds of hours of study and practice. It takes reading and studying. It may even take several hundred or even thousands of dollars to get the right education. But it is well worth it.
You will know how to trade trends: breakouts, tight channels, broad channels. You’ll know when to enter during a trading range. You’ll be skilled at reversals. you’ll know which currency pairs are moving and which ones are flat. In other words, you will be able to adjust as market conditions dictate, rather than have an inflexible, mechanical system do the trading for you.
The best thing I ever did was drop the “systems” and “secret set-ups,” and instead, invest my time and money (not a huge amount of money) into learning price action trading.
All the best to you as you pursue your trading career.
Thank you both for the feedback.
I’ve been thinking about the back test option, I’ll give this a look.
Right, I think the more specific your system, the harder it will be to adapt to the current market environment. And just like you said, that means another system or systems.
Care to share which route you went here for learning price action trading?
Thanks for the comments!
A trader friend once told me that you should have two systems - one for a ranging market and another for a trending market. But yeah I suppose that doesn’t cover all market conditions either…
Thanks for your input. If you were a hands off trader and wanted to devise a system for each cycle in the market, I suppose you could. After all, the mega-computers that are trading against each other are doing just that. The point I would have to make there is that those computers the institutions are using have more data than we can gain in three lifetimes. The only edge we have against them is our intuition.
Just a thought.
Oh yeah for sure. I feel like algos and systems backed with tons of data are behind smaller timeframe movements and flash crashes which is why trading 1D and 1W timeframes is more reasonable at least in my mind. Perhaps intuition can work in longer time frames. 
Although sometimes I feel like what really is intuition vs. data centers worth of history.
So do you trade a system at all, in the practical sense of the word?
No, just what ever I see on the chart at the time. I have rules for certain situations, but pretty flexible. For example, if I see a higher low major trend reversal with confirmation, I’ll just take it. I have a maximum risk, but profit will depend on tech levels. Make sense?
Yea, absolutely. I just need more time on the charts, and on demo. I’m all over the place at the moment, looking for perfection…
Hate to say it, but there is no perfection when trading. In fact, it’s just one big ugly gray area! You have between a 40-60% chance of making money on any given trade. I know that doesn’t sound very reassuring, but stay positive. Your edge is always going to be excellent trade management.
More food for thought.
if you understand the proper use of renowned tools & indicators to analyse the chart, you wouldnt have to spend time testing.
just 3 months of practice is enough to get you started because those are not well known for nothing.
Well, with my newbie experience i can say price action analysis seems to set better with any pair and any timeframe. With it you’ll can get trend, reversal and range easier just looking the chart, despite needing time as much as practice in front of the charts. My trading ability just better then i went to study price action or naked trade, anyway, this is art! financial art to feel the candles
In my personal experience, while indicators can help to visualise info, I would never base my trading decision on indicators alone. There are so many different cases and ‘grey areas’ that you really need to think much more contextual and weigh in different scenarios of what can happen. I’m fully pro backtesting your strategy with historical charts, but doing it completely manually so you really learn to interpret the markets. If you have gathered a fair amount of paper trades on your historical charts and see that it is profitable, (eg on average have a 2:1 profit vs risk ratio, win 50% of the times, and have this as an average for 50-100 paper trades you did) you can start applying your strategy live. Document as much as you can from your findings and try to make your backtesting system as close to how it would look like for you when going live. Eg if chasing 4H candles and you can only trade in the evening for practical reasons, don’t take any paper trades at other time points even when you see there’s a good opportunity, because you wouldn’t be able to chase it live anyhow. And remember that every time you make a slight adaption to ypur strategy, eg include another indicator in your decision making, you should start your paper trading all over again because you will take trades you didnt before and vice versa. Good luck!
Hi,
If you know wy you take a trade at a given point of time your a machanical trader. A mecanical trading dont mean use only one strategy. Mechanical trading is a matter of plan of trading.
Allways keep thing simple. So your plan of trading should be backtested before start trading to keep your edge.
Yup, slowly realizing this. I just need to get more trades under my belt, watch the market. I appreciate the advice.
What tools are you using?
More art than science maybe? What do you think? Would explain what some see and others don’t.
Yea, my document game could be a lot better. What are you documenting other than the obvious trade details (entry, exit, TP, SL)?
Hey @dudebro, these are the kinds of questions that getting answers to becomes difficult to answer. So sorry this might be a bit too long for comfort 
I think the answer shouldn’t be how long you have tried the system, but by how much it has deviated from the norm when you developed it in the first instance. There are strategies that perform just at breakeven for a large part of the trading year but require just a few home runs to generate the profit target for the same year. The rest of the time the strategy might just be trading to PROTECT CAPITAL. Do you discard such systems because it’s done nothing but break even for six months?
Someone who just happens to COPY that PROFITABLE system would have gotten frustrated and binned it after three months, probably because he’s used to and expects his trading balance increasing every week
What I’m driving at is that the answers you will get from others will be based on THEIR OWN PERSPECTIVE, THEIR OWN experience and history with their own systems and not yours. So you are liable to fall into the bias of using other peoples timelines (or any other parameters for that matter) to judge your own system.
An example in case is @steveepperson’s personal opinion that mechanical trading is for gamblers. Is that true?
For him, yes but not necessarily for everyone. Staying away from Mechanical trading systems and focusing on pure price action keeps him profitable. However it just might be the other way around for you. Traders who have weaker Psychological strength to make real time market decisions in trading will fare better with mechanical systems as that’s basically part of what it deals with.
@happypip and @RoboPip have mechanical systems which have run profitably for multiple years on this platform. I don’t know if they would agree that their systems are a form of gambling.
So in a nutshell steve, find your trading system (mechanical or otherwise) and give it parameters outside of which you will have to make changes or say goodbye to it and move on.
These are just examples but a bit more digging within the BP community will give you more answers than you might expect.
Remember no system wins everytime (or every market session, day, month, quarter or even year). But as long as it makes money in the long run, it’s a keeper for me.
Hopefully you’ll eventually find something that works for you real soon buddy and come tell us about it all 