Trading Psychology - Why systematic trading is important?
When a person is new to trading, they dont have any strategy or system to trade. They trade randomly. After getting experience one learns the importance of following a system in their trading. A system is nothing but a simple set of rules for entry, exit, stop loss, money management and taking partial profits.
The rules are simple, but its not that easy to follow or execute as emotions get us in between. Thats why most people after giving a try in trading, quit. If you want to be profitable in trading you should follow your system properly. Before that you should back test your system atleast for 2 to 4 years to know the maximum draw down. This gives you the confidence to follow your system.
After entering a trade, if you want to break the rules, remember this, "The decisions we make in the middle of the trading have 50/50 probability of becoming right or wrong which will make us regret after the trade is over. But the back tested system is always right". Develop a system, back test it and follow it to be more profitable!!!
The rules are simple, but its not that easy to follow or execute as emotions get us in between. Thats why most people after giving a try in trading, quit. If you want to be profitable in trading you should follow your system properly. Before that you should back test your system atleast for 2 to 4 years to know the maximum draw down. This gives you the confidence to follow your system.
After entering a trade, if you want to break the rules, remember this, "The decisions we make in the middle of the trading have 50/50 probability of becoming right or wrong which will make us regret after the trade is over. But the back tested system is always right". Develop a system, back test it and follow it to be more profitable!!!
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