Introduction to Systematic Trading

Trading is simple but it is not easy.  In order to be a successful trader, all you need to do is follow these steps:

  1. Find a stock that is trending.
  2. Determine a suitable entry point.
  3. Enter a buy order, along with a stop loss that controls the amount of money you are willing to lose.
  4. Hold on to the stock until the trend ends, at which time you sell and bank your profits. 

If this is all that is required to be a successful trader, then why do over 90% of traders lose money in the stock market? According to successful traders, here are the main reasons that the average trader is not successful:

  1. They do not have a written, systematic, rules- based, trading strategy that has been backtested to confirm that the strategy has a positive expectancy and will make money.
  2. Once they have a backtested the trading strategy, they do not consistently execute their trading plan day-in and day-out.

It’s really that simple. All you need to be successful is a systematic trading strategy, with a positive expectancy or an edge, and the discipline to follow it day-in and day-out.  

This is not a time-consuming process.  Once you have a written trading strategy, it only takes about 15-20 minutes a day to execute your daily routine. The power of this 15-20 daily routine has the potential to provide you with a lifetime of financial freedom. The key is that you must commit to this daily routine.  As with any new habit, the toughest part is the first 21 days.  If you can push through the first 21 days, that’s half the battle to developing a consistent routine. 

In the next section we will start Developing a Systematic Trading Strategy.

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