A Good Trading Approach/System
A good trading system is a paramount prerequisite to having a successful trading outcome. There are several components to a quality trading system. First one must find a robust trading strategy. A robust strategy is a system that can follow multiple markets and market sectors such as (fuels, currencies, grains, bonds, meats and metals) with the exact same inputs. In other words the strategy that would trade gold is exactly the same as the strategy for trading crude oil, Euro currency and all other markets.
To trade a system with different inputs or strategies per market would be curve-fitting. A good strategy should not need to be tweaked or adjusted. If a strategy requires change, then it is obviously not a very successful trading strategy. Be leery of any system that needs to be changed on a constant basis.
Next a good system/strategy needs to have a way to measure its performance. In order to measure performance of a system a sample of data needs to be quite large. A system that can be tested ten or twenty years back with consistency is going to have a much better chance for success. Whereas, a system that can only be tested on just one or five years of data will have a much lower probability for success.
Finally clear and concise entry and exit points need to be shown for each trade. Successful systems should show you the exact price and time to enter and exit a market. A system that requires discretion from an inexperienced or novice trader is very unlikely to perform as well as a system the shows precise trading signals.
