Why Be Systematic
Trading requires skill and risk management. The math behind risk management is not difficult. It only needs plus, minus, multiply and divide. And still, most people do not make money in the market.
What is the root cause of this?
Psychology. Trading is a much bigger psychological game than people realise. The media, the experts on the news channel, a company's earnings report, a friend's hot take: so many external signals start bothering your decision making that it becomes difficult to stay sane.
The task of staying sane becomes even harder when you are already sitting in a loss-making position. Your emotions take over the decision making, and people end up losing a lot of money, and a lot of sleep with it.
And losses are only half the problem. People have a habit of fighting with the market when they lose. And when they win, they tend to trade more, get careless, and give the winnings right back.
It is very difficult to take emotions out of trading. Even when you have a strategy in mind, executing it in the moment is the hard part.
The solution to this is systematic trading.
Systematic trading is a set of pre-defined rules that you create for yourself outside market hours, when no position is open and no emotion is running. During market hours, you only execute those rules. You are not making decisions inside a trade, because inside a trade is exactly where people make mistakes.
In this course we will learn to:
- 01Create these systems
- 02Evaluate these systems
- 03Practise executing them in real life
I am really excited to see you in the next lesson.