Feb 09

When “One Size Fits All” Just Doesn’t Fit

I’m a fairly recent addition to Twitter and StockTwits, and I must say I’ve really enjoyed connecting with other traders through these avenues.   In my town people are pretty hard to come by, let alone people who trade so these new connections have been a bit of a lifeline for me.

One thing that has intrigued me in meeting all these new traders is that some people  feel compelled to teach me all about their systems.   I really enjoy hearing about how others trade and have gleaned some great ideas from other traders methodology, but mostly, their systems aren’t for me.

I can totally understand why they are excited – it is a really cool feeling knowing you have an amazingly profitable system in your hot little hand, and that quite shortly you could buy New Zealand if you wanted to.

Unfortunately the fact is that systems are not just about being profitable; they are also about being tradeable.  And what is tradeable for one trader is, quite simply, a disaster just waiting to happen for another.

So what does a tradeable system look like?

There are a number of stars that need to align before a system will be tradeable for its owner and the quirky thing is that these stars will be different for everyone.  A tradeable system has certain benchmarks that make it perfectly suited to its owner, and these include –

  • It fits with their lifestyle.
  • It fits with their goals.
  • It fits with their psychology.
  • It has a positive expectancy, so that it will be profitable overall.

It really is a matter of being extremely clear about what you are trying to achieve, and knowing your own limits and strengths so they can be used in your system to their best advantage.

It’s not enough to have the goal of ‘getting rich’, or ‘making money’, and buying a black box system that will do all the work for you.  Sure, these systems might be profitable, but the chances are high that it won’t mesh with at least one of the four benchmarks above.

It’s made all the trickier by the fact that those benchmarks have lots of little sub-headings that also need to be met!

Over the next few days, I will be having a look at some specific factors that come under these benchmarks to help get a clearer understanding of exactly what is required to make our systems a perfect fit.  Stay tuned!