Anyone looking for long-term success in the stock market needs one thing above all else — a reliable trading system.
Without a system, you’re throwing darts … hoping that trades work in your favor instead of knowing that they’re perfect for you.
If this sounds familiar, it’s not too late to adjust your trading. But if you don’t act fast, it could be soon. Take it from me…
When starting as a trader, I didn’t have a system. I joined obscure message boards and followed faceless gurus into sketchy trades on worthless companies.
These were the dark ages of my career. I made a lot of losing trades that I would never make today.
It wasn’t until I joined Tim Sykes’ Trading Challenge that I learned how important having a system really is.
Sykes was clear about what kinds of setups he wanted to trade and knew exactly how he wanted to trade them. He still is to this day. And he has millions of dollars in the bank because of it.
It was so obvious, why hadn’t I figured it out before? If you figure out a trading system that works for you, the sky’s the limit.
Today, I’ll show you the three steps to doing just that…
Step #1: Know Thyself
Before building your trading system, you’ve gotta take a long, hard look in the mirror…
As a trader, it’s critical to understand your strengths. And it’s even more important to understand your weaknesses.
In other words, you must ‘know thyself.’
Be honest … What trades do you win the most on? And what trades cause you the most trouble?
By figuring this out, you can build a system that maximizes your strengths and minimizes your weaknesses.
Maybe you’re excellent at swing trading, but not so good at day trading. Or vice versa.
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Every trader is unique. A system that works for one trader might not work for the next. Personality, account size, risk tolerance, and many other factors go into this.
Identify your strengths and weaknesses to determine the type of system that’s right for you.
Then, it’s time to test it…
Step #2: Test Your System
Once you’ve figured out your strengths and weaknesses, you need to identify actionable trading strategies that play into your strong points.
This is where many traders make a mistake — by immediately attempting to live-trade their system. This is a mistake.
Instead, you should start with paper trading setups that fit into your potential system.
Paper trading allows you to try out a wide variety of strategies, setups, and patterns without risking a dime.
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Once you’ve begun paper trading, start tracking your trades religiously.
This means backtesting — going through the data, trade by trade, applying your predefined rules, and recording the outcomes.
Keep a trading journal to track each trade’s entry and exit points, profits or losses, and any relevant observations.
Then, eventually, you’ll need to start testing your system in the actual stock market with real money.
And unless you’re a robot, you’ll probably find that your emotions are much harder to control with real financial risk on the line.
When you’re risking your hard-earned money, the stakes are higher…
But this is exactly the environment you need to get comfortable in to make it as a trader.
If you can string a few early wins together with your system, you may be onto something.
From there, you must…
Step #3: Stay Disciplined
Developing a consistently profitable trading system is no cakewalk — but executing it with discipline is the true test.
You only need to look at r/WallStreetBets for a few minutes to see hundreds of clueless idiots rambling on about their incredible trading strategies…
But how many of these clowns can deliver consistent returns, year after year, and prove it?
The answer: very few.
This is why you can’t call it a day after simply developing a strategy. You’ve gotta execute it consistently.
The setups aren’t going to trade themselves … there’s still a lot of work ahead for you. This is where discipline becomes so important…
As mentioned earlier, emotion quickly becomes many traders’ biggest enemy.
Some people can do incredible technical analysis, but once they start actively trading, it’s a disaster. They become emotional wrecks who inevitably fail.
In the end, it’s all about discipline. Ask yourself the following questions before every potential trade:
- Does the setup check all the boxes on ‘The 5-Item Checklist’?
- Does it fit into your system?
- What’s your price target and stop-loss level?
- Do you have a clear entry and exit strategy?
Then, it’s time to take the first step towards becoming a successful intraday trader and join us in the Daily Income Trader System today.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade