In my last post I started having a chat about why I think it’s important to have a trading system that fits us perfectly, and why a “one size fits all” black box type approach generally won’t work for most traders.
An important fact that is ignored by the salespeople who flog trading systems is that we, as the Trader, are an integral part of our system. In the same way we would not expect a Ralph Lauren Bali knock-off to fit like a custom-made original, so we should not expect an off-the-shelf trading system to do the job of something that’s been created specifically for us to trade.
Some newer traders might be wondering where they can find someone to design them a system – and to those traders I say “You’re it!” This is not something you can easily outsource, because it takes a good working knowledge of the trader and their individual foibles.
If you don’t have the time or the inclination, unfortunately you’ll be doomed to settle for shonky seams and a gaping waistband for the rest of your trading days. Although I bet, after a few months of putting up with your ill-fitting, chafing system you’ll start scrutinising it and picking at the seams to make it just that bit more comfortable. And before you know it, Whola! You’re a designer, about to turn your trading system into something worthy of the catwalk!
Finding out if your trading system is Couture, or K-Mart.
Every trader wants to have an enormously profitable trading system or methodology. And if you have one, that’s great! It may seem from first impressions that you’re there; your balance sheet tells you that you’ve made it and the world is your oyster – but is it?
It is possible that a profitable system is entirely wrong for its trader. I know that sounds like crazy talk, but I believe you really need to look at the big picture to find out how successful your system is.
Imagine that I do have a highly profitable system. Yippee! Unfortunately, I also have a husband who never sees me, I’m 20 kg overweight because I’ve neglected my health and I’m snappy and hideous to my kids because I’ve been up all night trading E-minis on the Russell. (this is imaginary, don’t forget – I’m actually very nice to my kids. Mostly.)
Is that what I want my life to look like? Of course not! Even though I’m making money trading, the cost in other areas is far too high. My profitable trading system is a Bali knock-off.
So, is your system is fitting you like a glove, or are your flabby bits more noticeable than they should be?
The Muffin-Top Test
1. Am I happy, on the whole?
2. Do I trade calmly and without undue stress?
3. Do I have time to do the things that are important to me?
4. Do I have time to do things that are important to significant people in my life?
5. Are my husband/wife/kids happy and thriving?
6. Is life fun?
7. Do I sleep well?
8. Are my results consistent with what I would expect my system to produce?
9. Am I on track to achieve my financial goals?
If you’ve answered ‘Yes’ to those questions, that’s great! It looks like you’ve got a well-fitting system. And if you’ve answered no to some of them that’s okay too – you’ll just have to wait for my next post!