This is Why You've NEVER Found A PROFITABLE TRADING System

Are you still struggling to find a reliable system with an edge you can trust? Perhaps you're fed up with systems that don't live up to the promises and end in nothing more than drawdown in your account. Well, hopefully in this video I can show you how to get a system that actually works and makes money for you. Welcome back, everyone. This is lesson four in the high performance trading series and I hope you enjoy the lessons so far. In this video we're going to explore finding a system you can trust. But we're going to start with a game and these are the rules. We're going to toss a coin and every time it comes up tails, you lose $10. But every time it comes up heads, you win $30. And we're going to keep doing that on repeat. Would you play that game? Of course you would. It's a license to print money. And you would want to spin that coin again and again as often as possible for as long as possible. Right. And you wouldn't care that you'll lose $10 for every tails because you're making $30 for every heads. Okay, what we've just proved there is, number one, you're not afraid of losses. Number two, you wouldn't need any discipline to stick to the rules of the game. Far from it. You would probably be excited and enthusiastic to play. Now, trading is very similar to that game. Profitable trading systems have some kind of edge whereby you win more money than you lose. So why can't you stick to the trading system with the same ease you could stick to the coin toss game? Well, ultimately it comes down to the fact that you don't trust the trading system and that's what we're going to get to the bottom of. Let's quickly look at the symptoms you experience as a consequence of your mistrust of a system which I should stress is often subconscious. While it starts with hesitating to enter a trade when you get a signal, which of course leads to under trading, which, which is something we talked about in the previous lesson. But under trading leads to poor results because what inevitably happens is you take a couple of losses and you begin to have doubts. So you stay out of the next trade, which of course would have been a winner. So you pluck up the courage and you take the next signal and that loses. So you don't hesitate and you miss the next one, which would have been a winner. So rather than taking every trade and allowing your edge to play out, you've randomly selected some but not others. And that has a Very negative impact on your results, which then fuels and adds to your mistrust of the system. The frustration you're now feeling makes you much more prone to mistakes like taking profit early or moving stops. All of which makes your results even worse, which leads you to distrust the system even more. Until finally you you're convinced the system is junk and you go looking for another one, a better one. And the cycle repeats. Jumping from one system to another, or system hopping, is the one thing all struggling traders have in common. It's a universal problem. But why would you distrust the system in the first place? Three main reasons. The first reason is it's very likely you've been stung at least once in the past. When we're new to trading, we are inexperienced and we are a bit naive. And so it's easy to fall victim to some stammer telling us that if we just copy a system, we can make $500 every day with no effort. Once we realize that's not true, we're a bit wearier and more suspicious. And quite rightly so. The vast majority of system sellers are total con artists selling junk. But the problem is, we tend to see what we expect to see. So even if you find a legitimate system from a honest vendor or just one from on the forums, by going into it with some skepticism and suspicion, you are going to be on the lookout for any faults, and you'll be much quicker and more likely to override the system at the first sign of doubt. And of course, that leads to mistakes, which harms the results, which confirms your suspicions, and the vicious cycle repeats itself. A second reason you distrust your system is the most common, the most harmful, and the least talked about or understood. It's the lack of understanding of probabilities. Trading a system is like running a casino. Casinos have no idea which individual spin of the wheel or roll of the dice is going to result in a profit or loss. But they do know that as long as they keep playing the game, their edge will balance out and they'll make money in the long run. But we as traders find it nearly impossible to think like that, because we don't understand probabilities, even something as simple as a coin flip. We all know the odds on a single coin toss is 50 50. It has an equal chance of landing on heads or tails. But as I showed in the previous lesson, when it comes to understanding the odds beyond a single turn, most people are clueless. If you toss the coin 10 times in a row, most people instinctively think that the odds are 50, 50 of getting exactly five heads and five tails, but the odds are less than 25%. So if someone plays that game that I proposed at the start of a video and they expect to win every other turn, or at least five out of the next 10 turns, they're gonna think I'm using a trick coin. When they lose 8 out of the first 10 spins, the results won't match their expectations. But getting a string of losses in a series of coin flips is a guaranteed consequence of random distribution. And if we're confused with the odds of something as simple as a coin flip, you can understand the problems with a trading system where most people don't even know what their edge is. To start with, we may have a system with a 50% win rate where each win is three times bigger than a loss, in which case we've got a license to print money. But even so, with those odds, we are guaranteed at some point to get 10 losses in a row simply from random distribution. And it may be the first ten trades we take. Now, funnily enough, we're also guaranteed to get a string of 10 wins in a row at some point, purely due to random distribution. Also, and you can be absolutely certain that after 10 wins in a row, we would all, if we're honest, attribute it to our amazing skill, Whereas after a string of losses, we would blame the system and be more likely to abandon it. The truth is, both results are nothing more than a factor of how probabilities work. But if we're anxiously waiting for or expecting to see our edge play out in the short term, we're going to incorrectly attribute a small cluster of random losses to system failure. Now, the next four lessons in the series will help you understand how your brain deals with probability. So rest assured, there is help on the horizon. The third reason for distrusting your system is thanks to treating systems as though they are decision makers. All systems and the tools and indicators they employ are merely there to assist you in making a decision. But ultimately, the final decision must be made by you. Imagine you're the CEO of a large organization. You may have advisors, board members, and experts to advise and assist. But even if they are all in agreement, your job, as the person in overall charge, is to make your own assessment and make the final decision. If that decision turns out to be wrong, it's easy to blame the advice you received. That's what people do with systems. Trading systems are like advisors, but they only advise on what is likely to happen, not what will happen. They advise what is likely to be the best course of action not not what will be the best course of action. Understanding this subtle difference defines whether you are likely to be taking responsibility for your decisions and getting better at them, or absolving yourself of responsibility and blaming everything on the system and therefore never improving at trading. And with that said, it's time to face an uncomfortable truth. System hopping. Abandoning one system in search of a better one is a universal problem that affects every single trader at some point. It's understandable for brand new traders who in their naivety, get sucked into adverts that promise the earth. But even experienced traders who eventually find a reputable system with an edge and a track record are still unable to stick to it. And the uncomfortable truth is, in a high performance activity, which trading is, it's easier to blame or change the tools or rather than change how we work. The one thing that separates elite professionals from amateurs in all activities, not just trading, is that professionals know that the tools of the job are only a small part of the key to success. The best frying pan in the world wants earn you into the next Gordon Ramsay. You can fill your kitchen with the most professional knives and cooking pots, but they won't improve your ability to select the best ingredients to make fantastic meals. Your trading system is just a tool. In many ways, trading systems are like weight loss diets. A diet is just a set of rules and there are literally thousands of them. And they all work, they all have an edge. And that edge is you consume fewer calories than you burn. That is mathematically guaranteed to give you results. Some diets are obviously better than others and they can vary greatly in their methodology. But you can't argue with the mathematical edge from any of them. They all work if you follow the rules. However, we all know someone who may or may not be ourselves, who has gone on a diet, failed to lose weight and said that diet didn't work. For me, the diet is just a set of rules. It's not going to ensure you stick to it day in and day out. In order to do that, we have to learn how we form judgments and make decisions and how those decisions in influence our actions. We need to understand what's going on when we decide to temporarily override the diet and cheat. And why do we feel guilty after we've done that? And how can we have better control over the processes between decisions and actions? Without knowing how you make decisions and their relationship with actions, it's easy to assume the reason you didn't have success losing weight is because the diet didn't work. The similarity between diets and trading systems is very strong. There are thousands of profitable trading systems with mathematically robust edges. Finding a system that generates profits is not difficult, but your success or failure with a trading system really comes down to how you make decisions and how you act on those decisions. A good trader will make money with any system. Someone who can't trade won't make money ever, even if they handed the holy grail on a silver platter. The trader makes money, not the system. That's why I have such success with my clients. I teach them to trade. I don't teach them to copy a system. When I finished working with them, we have designed the system uniquely tailored to suit their personality. But more importantly, we both know that they can trade and will always be able to make money, no matter what and under any conditions with any system. It's a very different approach from most people just desperately looking for the latest and greatest indicator. Part two of this course the next four lessons are going to dive deep into decision systems and how you make decisions. We will cover how your different decision systems are activated in different scenarios, your defensive and intuitive decision mechanisms, how your decision making systems have developed over the years, and why they're so effective under certain situations. And finally, I'll show you how to apply various tools and strategies to help you improve your decision making processes whilst trading. So there's lots to look forward to. If you've enjoyed this lesson, please like, comment and share. And if you're not a subscriber, please consider becoming one. You might even want to sign up to my newsletter. Thanks for watching. I'll see you next time.