How to learn a trading system?

Beginner Questions
1

Basics for traders

When learning a trading system, it’s important to have the rules written down on an ongoing basis (under the guidance of a teacher), a “cheat sheet” and examples (a lot!) so that you have everything ready to go when the time comes to actually trade. Then, train on demo account and when you mastered the rules, only then move to live market.

This may seem simple and trivial but these are necessary basics, like the foundation of a large pyramid, which you have to build yourself. And the pyramid is big. It is worth reworking everything several times. As you experience different things, as new topics come out.

What it is to “have a trading strategy”

Let’s start with what it is to “have a trading system” — it’s a sequence of correctly executed trades, 50–100 trades strictly according to the rules of the system. Only after such a number of correctly (!) executed trades, you can say that you trade the system and have a positive result on your account.

Please, pay attention to the dynamics of your emotions, because at this point they work against you. Especially hope. How does this work in the market? I send money into a market and hope to… make more money. The market goes against me, but as long as I don’t close the trade at SL, I haven’t lost. And if so, what do traders do? They move the SL! It goes from a small loss to a big one.

Experienced traders cope with hope by accepting uncertainty in the market — once it is this way, once it is that way. They keep an eye on the strategy rules and honor the SL, and know that with a good system they will come out ahead at the end of the month anyway. They distance themselves from emotions. Because the value of the system is proved after a series of repetitions, and not on the basis of individual trades. They know that SL today is not necessarily a loss at the end of the week or month. There is no point in getting attached to either profits or losses.

How to upgrade from demo to live?

In the real market (live) things will be different, because the perception of risk is different, because there is already real money. Even with a micro account and with a good and well mastered system.

It will be much easier if you have made on demo account a lot of examples/entries, let’s say about 500+. With such preparation it should be easier for you, because the principles of the system should already be very well mastered. You know how your system works.

Nevertheless, hesitations and doubts are bound to arise. Demo is carefree. In live it’s rational. Or at least it should. Be prepared. Find out what may be waiting for you and learn effective techniques for dealing with emotions in trading. Take your time and beware of greed.

2

demo is important there is no way to deny , but the main problem is when we trade in a real account the experience we take from demo actually not works . this is real.

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Don’t agree - you don’t need a teacher in any way to develop a strategy and learn it. This sentence smell like some preparation for selling a product :slight_smile:

Don’t agree - no number of correctly executed trades will guarantee a positive result on account. Trading a system barely shows, if it CAN be profitable at all. Profitability depends firstly on the strategy, then on its execution. Not the way around. (even the perfectly executed losing strategy will lose)

500+? How have you came up with this number? Have you ever traded 500+ trades of single strategy on demo (doubt here) :slight_smile: Trading D1 charts it would take trading one trade per day for two years to meet this “requirement”. This leads to either overtrading or trading extreme fast charts, which is not to be advised for target audience of such post.

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For a beginner trader I’d recommend a D1 time-frame strategy which is a s simple and objective as possible, that takes 2 days to learn, plus a day to explore the broker’s platform. Then 6-8 weeks demo trading to highlight how the strategy works in different market conditions and to throw up the common trader mistakes.

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Demo trading is the best way to discover any trading system; it takes time but end of the day it works! Basically, there is no shortcut way to discover any good trading system!

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Don’t agree - you don’t need a teacher in any way to develop a strategy and learn it.

Obviously it is not mandatory. You can work on your own, and you can get part of the work ready from someone who already has it done. Exactly like with furniture from Ikea - you can try it yourself, but you can use the instructions :slight_smile: I know many self-taught people who do well. It took them years of work and effort, but they succeeded.

There is no reason to be offensive to any of the options, because none is the only right one. I present the most effective option in my opinion.

If something else works for you, great! Keep working on it :slight_smile:

“Don’t agree - no number of correctly executed trades will guarantee a positive result on account.”

If you don’t stick to the rules of the system (strategy, because to me it’s synonyms) then you can’t say you have any system. You are based on chance, randomness. This is not trading, but pure gambling.

Without having a system you are unable to track what went wrong and why. And behind that, you have no idea which part of your decision-making process you should improve. You are not able to assess whether what you performed in the market was correct.

And one more thing, there are no guarantees in the market. There are only probabilities.

“500+? How have you came up with this number?”

It just looks so scary. For example, in scalping you can do it in a few days. Piamiding also allows for this in the very short term. But ok, you are right that many strategies do not allow it. Nevertheless, no one claims that you have to make this number in a week, because why should you? It is even unjustified for a number of reasons (eg. seasonal fluctuations in the market, learning curve, etc, etc, etc.).

Keep in mind that, one does not become a trader in a weekend or two. Trading is a profession. The average trader needs 2-3 years of regular (!) work to become profitable, so there is time to train. 150 setups in a year, is it really such a big problem? I know it’s not.

At the end of the day, only you decide how well prepared you will be. A colleague of mine says “the market will accept any amount of money” and the trader’s only opponent is himself.

Have a great weekend!

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the demo is really good for all kinds of traders, even though most of the traders dont believe the importance of this trading place at all.

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Absolutely, I also have the same experience! I used my demo account initially more than a year, I started from indicator based trading then Price Action trading! in addition, right now I working on my own trading mistakes!

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My demo account helped me a lot to discover my own trading system; actually I had no mentor so it takes such a long time to create my own trading system! And frankly, there is no end point of learning!

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To be very honest, it’s really important to have a selected trading strategy! If you are trading without a trading strategy, then you’ll lose your momentum so quickly!

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11

Traders should develop their own trading strategy depending on their preferences and personality. Backtesting the strategy is also a crucial part in the process. This helps in getting an edge on a trading strategy.

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You can learn forex trading from a variety of sources. The internet is brimming with the best forex trading theories and articles. There are also some good tutorials available. This will assist you in theoretically learning to trade. It is recommended that you practise as much as possible in order to gain practical trading knowledge.

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13

I totally agree.

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Yes, without practice in any profession you cannot be good.

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That’s one of the trading keys. Another is strong psyche, specially prepared for trading.

16

Very true :blush:

17

I agree in principle, but I suggest there are only two strategies at the heart of trading -

  • buy because prices have been rising and you think they are going to continue
    or
  • buy because prices have been falling and you think they are going to reverse
18

That’s the rub. Do you just grab one out of thin air? I think most noobs would say that’s one of the hardest things to figure out in the beginning. What’s my first strategy or system.