Is there a perfect trading system to learn, apply and make money with on a consistent basis trading financial assets such as stocks?
This is a question that many novice traders ask and a question every professional trader knows the exact and unique answer — which is a negative one. You’ve seen thousands of e-books, physical books or reports and trading systems on how to make money online trading, but my personal experience is that there is not any perfect trading system. If there was, it would not be publicly available.
But does that mean it’s a waste of time to search for the perfect trading system?
Why the quest of the perfect trading system is a waste of time
My argument is that there is not any perfect trading system that over time can grow an account, have minimum risk, huge returns, and stress-free trading. With “perfect” as a desired feature, we mean a trading system that any trader can use with limited or basic knowledge of what the key drivers are that influence financial markets, choose the right market direction and make money.
There are thousands of trading gurus that want to sell you their trading systems, indicators or software, often at a discount price. The result is that many novice traders spend a lot of money as they get convinced that they have found the easy way to get rich quick by doing nothing.
They may end up putting a lot of debt on their credit cards, as it is tempting to try a few of these systems, especially when after some time they realize that the real results differ from their guaranteed promises. And many traders ask for a full refund, a very typical action which validates the motto, “there is no such thing as free lunch.”
Why the quest of a perfect trading system is an investment of time
When the time comes and many traders realize that all trading systems can fail if they do not stick to a solid risk-management plan, something unique can happen for the minority of traders who are determined to succeed and treat online trading as a real business and not a gambling experience.
I call this unique characteristic of the pursuit of independent thinking. Traders that want to succeed in making money consistently over a long period of time, realize that they must invest tons of time to judge, evaluate, monitor, test and back-test a lot of trading systems to find the one (or ones) that suit to their trading style and personality.
Successful traders take nothing for granted.
They strongly believe that the KISS method (keep it simple, stupid) is not a bad idea. Simplicity is not inferior to complexity.
I cannot mention a simplistic amount of time that is required for any trader to find the perfect trading system based on trials and errors. Spending hundreds or thousands of hours searching for the perfect trading system that is unique to each trader’s mentality, risk approach and philosophy is not a waste of time. It is an investment, which shows passion and dedication to make money trading using the odds in favor and not against.
Stavros Georgiadis, CFA is an Economist and a financial analyst of the US stock market and forex market. He is also a trader and has a stock market blog and investing newsletter.