So many traders look for a winning trading system not understanding that even after they find one that making a few crucial mistakes can turn a winning system into a losing one. Once you have a system that seems robust from historical data, chart studies, or back testing be careful not to make these crucial mistakes:

  1. Not honoring your original stops. Big losses make winning systems losing ones.
  2. Quit trading it during drawdowns. All systems have losing streaks, the key is to manage risk and stick to it until the system has time to play out with profits as the market becomes conducive to your system’s method.
  3. Lack of discipline, drifting from taking defined entries and exit signals to  your own opinions is hazardous.
  4. Trading too big, no system can survive huge positions sizing that makes the first string of losses the last.
  5. Style drift is deadly, slowly changing your trading system during active trades is not good. Research has to happen after hours when the market is closed and backtested before changes are made.
  6. If you can’t mentally and emotionally deal with the equity curve of your trading style then you can’t trade it long term. You can’t quite during losing streaks or get too excited during winning streaks.
  7. You have to believe that your method will work over the long term, confidence comes from research, backtesting, and homework.
  8. Don’t trade someone else’s system, build your own. Custom to fit who you are by using the principles that you believe in and work.
  9. Trading too big during losing streaks ruins the potential of winning, don’t try to get back the blood the market took from you instead try to stop the bleeding by trading smaller and smaller until a new winning streak emerges.
  10. Straying from the trading plan and making one big, bold, can’t miss trade and blow up all your previous profits. Don’t let greed make you do something stupid, stick to the plan.

In the long term discipline, consistency, and hard work leads to profits.