Stop searching for the perfect trading system

Is there a perfect trading system?

Do you believe that the perfect Trading System really exists? A very easy to answer question indeed!

Yes, it is really a no brainer. In today’s world, especially in the online one (I mean the Internet), there are thousands of trading systems offered to potential clients. From the very beginner to the very professional, there is something for everyone.

And everybody is convinced to sell the “holy grail” system to you. It is astonishing what performances all these systems are able to deliver. From 50 – 1000% p.a. everything seems to be possible. How can that be? Haven’t we all learned that the market is rational and is always right?

Are there really perfect trading systems that can trick out the market and constantly deliver solid positive performance year on year? I clearly doubt and this with good reasons.

First of all do you know the difference between absolute and relative performance?

That’s important because lots of trading websites trying to attract clients with headlines such as 867% performance year to date should at least tell you, if this performance is on an absolute base or versus a predefined benchmark (relative base).

Let’s say you achieved a performance of 25% this year with your investments. You lean back in your chair and may say to yourself, “well my trading system or style is doing good”.

You are right, but if you have invested solely in the NASDAQ and you open your daily financial newspaper you will be interested to see that, believe it or not, the NASDAQ has performed 40% year to date.

So if you had simply bought the QQQ (NASDAQ ETF Tracker) and lean back you would have outperformed the overall market without even watching the market for only one single time! How comes that? Did my trading system failed, or what happened?

Of course my example is not the best and we had an extraordinary rally this year, but lets come to the point. Do I really have the perfect trading system, or what have these guys promised me?

Information is everything in our view. Before buying a Trading System got the necessary information. Don’t just go out there and buy the first trading system you see.

Be careful with performances as you might see in the ‘Disclaimer’ part a sentence that says, “Past performance is no guarantee for future performance”. So not to confuse you, but unfortunately a perfect trading system does not exist!

Although when everybody is trying to convince you that his system is perfect – it’s clearly not the case.

Every trading system has its good and bad times. It is important to feel confident with the system and not change it all the times. It’s bad for your time, your money and in the end for yourself.

So what is my advice:

If you want to buy a Trading System

  • Inform yourself and take your time!
  • Read the websites carefully and get an impression how serious the page looks like. (Some pages look like trash – how do you think are their products like?)
  • Think carefully how you would like to invest (stocks, options, bonds etc.)
  • Decide and rethink your trading style (if you like to watch screens and stock movements for hours, then not every trading system is suitable for you)
  • Be careful when somebody offers you a very technical and complicated system (you maybe won’t understand it and having afterwards a hard time to use it)
  • Most trading systems, which are successful, are easy to understand and use
  • Avoid systems which are going to promise you above average performance permanently
  • Avoid systems, which are too high, priced. Between $50-$250 is fine – but not more
  • Find out if they offer you a refund, if you aren’t satisfied with the product
  • Read the offers carefully and don’t hesitate to ask questions (even if they are silly…)
  • In asking questions you see how helpful and fast the promised service is
  • Most trading systems offer only the method, but not the screening parameters – avoid these systems as you might have a tough time to find suitable investments!
  • Most serious Trading System offers you a free Newsletter service or a free course to make yourself comfortable with the method and style.

You cannot buy the perfect Trading System, with the simple reason, that it doesn’t exist!

What you can do is getting information and taking into account above-mentioned points. Again, there are no “free lunch” trading system. Until today, I am losing money on some trades but my winner trades by far outpace the looser trades. Proper risk management is the key and of course discipline.

I wish you lots of successful trades and please, don’t do the same mistakes lots of new traders do in let you blending by amateurs offers that just want to have your money and offers you “trash”. So never forget, a perfect trading system simply doesn’t exist.