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By Brian McAboy
There are a number of bad assumptions that are commonly held about trading systems. These create false-confidence that leads many good people to go ahead and trade thinking that they are okay when they are not. Because they are unaware that they are operating on erroneous information, they are only setting themselves up for considerable frustration and disappointment.
A primary issue is that when you operate on incorrect information, your misdirected resources, time and money become greatly regretted waste. You wind up in the cycle of act-fail-blame-regroup-act, and so on, with little to no progress realized.
Understand, these assumptions are rarely if ever stated out loud, but they are there. You can tell by watching what people DO. In this article, well take a look at the top bad assumptions trader make and the truth behind these matters, so that you can attend to them if they have impacted your trading.
Bad Assumption #1: I can expect to trade consistently even though I havent documented my trading system.
Fact: Most traders know that they should document their system, but they havent done it. Why? The primary reason that most traders havent documented their system is that they cant, they honestly dont know how.
The Problem: If you cant even write it down, how in heck do you expect to be able to DO it consistently?
Bad Assumption #2: that an idea for a system is the same as a system
Fact: Many traders realize when they finally do sit down to document their system, that they dont really even have a system. They have an idea for a system, but the two are NOT the same.
The Problem: Consistent results come from systemization, and so how can you expect consistent results from your trading if you dont really even have a system?
Bad Assumption #3: Since a system is created by someone that is successful, then it must be a good system.
Fact: There are several assumptions made regarding trading systems created by others. First, that its a good system. Second, that they know what made them successful (many dont). Third, that because they are successful that they know how to properly and effectively show others how to be successful.
The Problem: even if the above assumptions about system creators are true, that doesnt mean that what theyre doing will be a good fit for you. Odds in this situation are slim if you are dependent on their say-so without the know-how of your own to discern the truth.
Bad Assumption #4: When it comes to trading systems, I know all I need to know. All I need is a good one and Ill be okay.
Fact: Many traders think they know what makes for a good system, but they dont. Successful trading is much more than simply acquiring a system and following it. Trading is a skilled-occupation and a real profession. It requires certain know-how, the most primary of which is how to know to clearly determine just how good a system is.
The Problem: Just because a system is profitable, doesnt mean that it will be a good fit for you. Most traders dont even know what makes a system good or not. There are several qualities in addition to being based on a sound strategy that determine just how good a system is. If you dont know how to tell if a system is good enough, how will you know if it is right for you?
Bad Assumption #5: My system is fine. The problem is me I just cant seem to stick to it.
Fact: Two big issues here. Most traders have experienced successes in their lives, thus demonstrating that they do indeed have sufficient discipline to achieve goals. The issue is NOT a lack of discipline, but one of self-sabotage.
There are 5 different reasons your subconscious has to sabotage your success and keep you from enjoying the success you consciously desire. The first of which is aligning your level of success with who you are. If you dont have the skills and understanding to be a self-sufficient, skilled and proficient trader, your subconscious knows and will keep bringing your success back down to the deserved level.
The second big issue is the underlying reality here is that your system is NOT 100%, that there probably ARE problems with your system. Holes, vague spots, or contradictions or other deficiencies that cause you to hesitate or feel anxious and make mistakes you just dont know how to recognize them.
The Problem: Beating yourself up for not being able to stick to a system that has issues only leaves you feeling bad. It does NOT fix the problem of the system itself, nor does it give your subconscious any reason to allow you to enjoy success. Continuing with this course of action only perpetuates the cycle of self-sabotage.
In this article, weve taken a look at a handful of the bad assumptions commonly held by traders and how they cause you to misdirect your resources, thus wasting considerable time, energy and money. Additionally, theyll leave you continuously frustrated and disappointed, never really getting closer to your goals.
Achieving success in trading requires operating with good information, and then becoming a knowing, skilled and proficient trader through proper training, so that your subconscious supports your success instead of sabotaging it.
About the Author: Do you have doubts about your
forex trading system
? Do you want more confidence in your trading? Register for this complimentary video presentation at
insideouttrading.com/go/assumptions/
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