| At some point, if they last long enough, | | | | we could all invest in. That way the |
| all traders discover that successful | | | | vendor can ensure that we all receive |
| trading is not the inevitable result of | | | | the full potential of his system without |
| a good trading strategy or system. If | | | | any effort on our part, without us |
| all we needed was a good system or | | | | having to overcome the bigger challenge |
| indicator we would all be successful | | | | of implementing the system ourselves. |
| traders. Yet clearly we are not, far | | | | Presumably for every client who learns |
| from it, there are very few traders | | | | the system only a few manage to |
| making their living consistently from | | | | implement it successfully, with the fund |
| the markets. | | | | option every client gets the full |
| Technical analysis is a vast and well | | | | benefit of the system; so why not start |
| researched subject. Many minds have | | | | a fund, a much better way to share the |
| poured their heart and soul into | | | | fruits of his good fortune. The other |
| searching for the holy grail of trading: | | | | question that is frequently asked is why |
| the system, strategy or indicator that | | | | doesn't the vendor display the full |
| will yield to them unlimited wealth and | | | | results of trading the system? Instead |
| glory. Yet with all this depth of | | | | we get comments like '97points this |
| knowledge readily available, trading | | | | morning, thanks a $ grand!' from a |
| profits remain as elusive as ever. If we | | | | satisfied punter. In order to evaluate |
| were to take a scientific approach to | | | | the effectiveness of any system we need |
| evaluating technical analysis we would | | | | to be able to see the results of every |
| have to conclude that it is of limited | | | | trade, over a significant period of |
| value. | | | | time, so we can compute the necessary |
| System vendors though, will continue to | | | | statistics. |
| exploit our desire to believe that there | | | | To develop these skills we need to get |
| really is some secret knowledge that | | | | our feet dirty, plunge into the markets |
| will enable us to transform into super | | | | and have experiences. These experiences |
| traders as soon as we expose ourselves | | | | are all good; they are the feedback we |
| to their secrets. It is a very tempting | | | | need to gauge our current state of |
| fable to believe in, it offers an answer | | | | development. |
| to our prayers and our problems, it | | | | Without feedback we have no means of |
| engages our ego (how great to conquer | | | | progressing. When I first started to |
| the markets and escape the drudgery of | | | | play tennis I did not go straight into a |
| work etc.) and it allows us, briefly, to | | | | competitive game and try to win, I |
| relinquish the painful self-doubt that | | | | started by learning the basic skills of |
| we are unconsciously fighting. | | | | tennis, the forehand, the backhand and |
| The system vendors flatter and deceive | | | | the serve. As a novice it was normal, |
| us in the same way that street sellers | | | | expected even, for me to hit the ball |
| sell exclusive, stolen perfume, which is | | | | repeatedly in the net or hit it sailing |
| usually no more than bottled water. We | | | | out; this just indicated that I needed |
| are easily deceived when we are told | | | | to work on these shots. Imagine taking |
| exactly what we want to hear. | | | | this approach to trading. |
| Let us pretend that a system vendor | | | | Lots of losing trades is to be expected |
| really has a system that works as they | | | | for the novice trader, it is the first |
| claim. Let us also assume that his cup | | | | feedback, which reinforces the fact that |
| truly does 'runneth over' and he | | | | the first skill of trading is to cut |
| sincerely wishes to share his knowledge | | | | losses short. A novice tennis player |
| as a way of repaying his good fortune; | | | | needs to learn to control the ball so |
| and finally let us assume that he | | | | that it lands in the court; the novice |
| charges a fee, not for his own gain, but | | | | trader needs to learn to control his |
| to ensure that his clients really take | | | | losses. This is how we learn; it is a |
| him seriously. Assuming all this, does | | | | constant cycle of trade -- feedback -- |
| it make sense to make his knowledge | | | | adjust. So what are the practical steps |
| available in a book or a seminar? | | | | for going about the business of |
| We all have discovered that trading is | | | | developing trading skills? |
| not easy and one of its biggest | | | | As a novice it is helpful to trade a |
| challenges is following our signals, be | | | | simple, logical system. This appears to |
| they based on an indicator or our | | | | contradict the stance I took against |
| intuition. It is so easy to doubt our | | | | system vendors above, but what I am |
| signal when the moment to act arrives, | | | | talking about here is a systematic way |
| we hesitate and the opportunity is gone. | | | | of having a view of the market. My |
| So having learnt our hero's strategy we | | | | objection to the system vendors is that |
| then have to become adept at | | | | they maintain that their system is all |
| implementing it, which brings with it a | | | | that is required to be successful, |
| whole host of problems that only become | | | | whereas in reality it is the ability to |
| apparent as we attempt to execute the | | | | implement a system or strategy that |
| system. Now the issues that get in the | | | | determines success. As your trading |
| way of implementing a strategy are not | | | | skills evolve, your ability to read the |
| issues that any system vendor can | | | | market will evolve; but until then you |
| resolve in a book or a weekend. | | | | will have no valuable opinion, so a |
| In fact the system vendor would have it | | | | simple, logical system will give you a |
| that all our previous problems with | | | | reason to buy or sell. |
| trading result from not having a good | | | | In attempting to trade these systems two |
| enough strategy, which of course is a | | | | things will happen; firstly you will |
| problem he can easily solve for us. The | | | | find out the issues you have that you |
| basic premise of the system vendor is | | | | need to resolve in order to progress as |
| that all the psychological issues in | | | | a trader; and secondly in the course of |
| trading, in fact all the problems we | | | | trading the system you will start to |
| have in trading, are a consequence of | | | | make observations and distinctions that |
| not having a really good system or | | | | will enable you to be more discerning |
| strategy. This I do not believe, it is | | | | about picking trades. The issues that |
| like claiming that we could all play | | | | you will come up against will be the |
| golf like Tiger Woods if we had a | | | | feelings that arise that will prevent |
| certain set of golf clubs, or that we | | | | you from executing your system |
| could achieve the same level of success | | | | flawlessly. You will need to neutralise |
| as Pete Sampras if we used the latest | | | | these feelings so that you are no longer |
| racket. | | | | a victim to them. |
| We all need golf clubs to play golf or a | | | | I believe that to have some sort of |
| tennis racket to play tennis, no | | | | support while developing as a trader is |
| question; but they do not determine our | | | | vitally important. A trading coach, for |
| success. Tiger Woods would still be a | | | | want of a better phrase, will help you |
| great golfer even if he was handicapped | | | | to navigate when you feel lost, and will |
| by playing with antiquated clubs, but no | | | | give you an objective perspective when |
| novice golfer is going to be transformed | | | | you are wallowing in doubt and |
| into Tiger Woods simply by buying the | | | | uncertainty. As a novice floor trader I |
| right equipment. | | | | found the support of my backer essential |
| If the system vendor has perfected the | | | | in developing trading discipline. |
| perfect trading system and if he has | | | | Support does not have to come from a |
| developed the skill to successfully | | | | professional coach, two traders could |
| implement this system, surely the most | | | | support each other, or a novice trader |
| effective method to share his good | | | | could seek out a mentor. |
| fortune would be to create a fund that | | | | |