Do You Sacrifice Profits In Search Of A Simple, Mechanical E-Mini Trading System?

It’s not unusual for trading prospects to ask me to if I could teach them “a simple e-mini trading system they can learn quickly.” If your goal is to master trading by purchasing a canned e-mini trading system that has simple indicators and churns out money like an ATM you will be disappointed in this article. The point of this short discussion is to contrast simple trading systems and complex trading systems and hopefully find a middle point that satisfies the need for precise trading. It is my belief that trading is not a simple process and some level of sophistication (complexity) is essential. That statement does not imply that you need a super-computer to succeed, but you do need to have read more than a single do-it-yourself trading book and slap up a few of the recommended lagging oscillator and expect to prosper.Through experience every successful trader finds a methodology that isolates and measures variables of the trader’s choosing to identify potential profitable trades. A written plan is usually composed and specific guidelines are recorded for maximizing the trading strategy’s earning potential. As an aside, most of the great traders I have worked with were terrific with price action.I was browsing on the trading forums recently and came across a thread entitled, “How many e-mini trading systems have you purchased?” I was stupefied by the length of the thread and its contents. Most of the participants had purchased between 5 and 10 systems and paid upwards of $2,000, or more, for a trading system that they now had discarded. Most of the usual lagging indicator trading systems I recognized and they were the ones that use a couple of moving averages and a couple of generic indicators and promised success at an unattainably high percentage rate. A few of the participants disclosed their total expenditure on trading systems and those numbers ranged from $5,000 to $40,000.I haven’t found a system described above that works in varying market conditions. They all seem to work in a trending market, but who needs an e-mini trading system in a strong trend? Again, shortcuts in learning to trade usually result in disappointment. If you put the time in and learn to trade an effective trading strategy (and can control your emotions to any degree) you stand a much better chance of succeeding than any simple lagging indicator may provide.On the other hand, I have encountered systems that had so many indicators and rules that I was left bewildered. Most of these systems I encountered at the institutional trading level, never at the retail level. I suppose that with intensive study and some years of experience I could have succeeded. But is it really worth all the work to learn just one system? I don’t think so.Finding the balance of simplicity and complexity in your trading system is a balancing act that comes to fruition through experience and education.. I firmly believe that learning a specific rules-based mechanical trading system is futile. On the other hand, mastering a personal trading strategy is essential.Why not start with trend lines and support and resistance? Add an order flow program, volume indicator, an understanding of price action, and a momentum indicator and you have the beginnings of a trading system. As a trader, you have to develop a methodology that isolates and measures the important variables in your trading strategy and correlate the convergence between trading system components. If you can implement an effective trading strategy with the “old school” tools of trading previously mentioned you will have a coherent trading strategy that works in varying market. It will take a good deal of practice, experience, and chart time to perfect your trading strategy.In summary, if your mindset is to purchase a canned e-mini trading system in order to short-cut learning the fundamentals of trading may result in trading losses. Trading is about thinking and executing based upon price action, volume, order flow and support and resistance; you may even have some variables that work better for you; just make sure you can isolate and measure any variable. Finding a healthy coexistence between simplicity and complexity is the road to success.


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