So, you’ve got together some capital and you’ve started trading. Whether you’re position trading or financial spreadbetting, the reality is that the vast majority of traders wipe out or give up within their first year. Casualties include people from all professions and all walks of life. Really intelligent people, people you’d expect to be able to figure it out, haven’t.

Being smart isn’t enough, you need more. You need market skills. They’re not difficult to master. They’re elusive because they’re unintuitive, not obvious. They are also skills that you, with a little practise could master. They are no longer the esoteric domain of market wizardry.

There’s always risk in the financial markets. You will win, but you will also take some losses. No system is watertight, no trader is perfect. There are no guarantees (if you want one of those, buy a toaster).

Have a system or trading plan. As long as it wins more than 50% of the time (i.e. has a positive expectation), then you could make profits if you stick to it. The problem is that most people can’t stick to it.

Why do we have a plan? Because we’re human, and we’re emotional beings.~We’re human, and we’re not consistent. Our risk tolerance fluctuates by the hour and is dependent on our mood.

That’s why we need a system that makes calls independent of ourselves. If we know the system wins more than 50% of the time we can trust the system to deliver profits. That subjectivity is the way to win. Believe me, it’s hard enough to do this when your emotions get in the way.

There are a lot of trading systems out there, some good, some not so good. ~Trading systems out there are pretty good these days. The reality is that devising a very simple system with a positive expectation (that is, wins more than 50% of the time) is actually reasonably easy to do. Why so many traders fail is because they can’t stick to their systems, or have none at all!

If you’re developing a system, make sure you backtest it! It’s got to have a positive expectation (Right more than 50% of the time). Test it for your chosen market(s) and don’t assume it’ll always work. Keep testing it and it’ll pay you back with profits.

If you don’t have the time to back test you can buy a system. There are lots of very good systems out there, ready back tested for their target markets.

Once you have a system, follow it! Don’t second guess it no matter how much your emotions scream. Follow it and you’ll be on your way to making profits on the market.