Summary: Creating Your Own Mechanical Trading System

There are many systems out there that work, but many traders lack the discipline to follow the rules and as a result, still end up losing money.

Your trading system should attempt to accomplish 2 goals:

1. Be able to identify a trend as early as possible.
2. Be able to find ways to avoid whipsaws (confirm your trend).

If it is profitable, then you trade your system live on a demo account for at least 2 months. This will help you get an idea of how you would trade your system when the market is moving. It is a lot different trading live than manually backtesting.

Once you've demo traded your system for at least 2 months and you are still profitable, you are then ready to trade your system live with real money. However, you must always remember to stick to your rules no matter what!

There are 6 steps to developing your system:

1. Find your time frame.
2. Find indicators to help you identify trends early.
3. Find indicators to help you avoid whipsaws and confirm your trend.
4. Define your risk.
5. Define your entry and exit.
6. Write your trading system rules down and ALWAYS stick to those rules!

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