Very First Trading System

When I first mentioned to a friend that I want to write a book on electronic trading, his immediate reaction was "Who is going to buy your book?" and "What's so special about your book?" I fully understand his concern because there are already too many trading books available in the market, and they are all winning systems, otherwise they wouldn't be on the shelves. But I also notice that many losers remain losers after reading many good books and attended many trading courses, because they have problems doing the right things, even though they know exactly what the right things are. You can't send a sick soldier to do battle without curing him first, because no matter how good the weapons or strategies you provide him with, he won't be able to use them effectively.

Trading consists of two parts, part one is Prediction, and part two is Execution. Prediction is the easy part, with some knowledge in Technical Analysis, Fundamental Analysis or Market Analysis, most traders can make a reasonably good calculated guess of where the market is going; incidentally, many losers are also happened to be good analysts. Execution is a lot trickier; it's about when to enter the market? When to cut loss when the market is against you? When to add onto a good position when you are proven right? When to take profit? When to stop trading? These are the million dollar questions that most traders already know the answers but unfortunately many losers simply can't do it. This is what makes the difference between a winner and a loser, or a trader and an analyst. I know some good traders who can't read charts, but mainly rely on their execution skill to make money every week. On the other hand, there are so many good chartists who can't trade, and instead of working on their execution skill, they are continually searching for the ultimate winning systems, or trying to invent one, because they don't know how to correct their mistakes, so they look for an easy way out.

How often do you hear traders making these complaints?

• My prediction was so accurate but somehow I still lost money in trading.
• I knew the big move was coming but I couldn't catch it, by the time I caught it the market U-turned and caused me to cut loss, as if the market was against me on purpose.
• The market was so good today but I could not capitalize on it.
• The market was so bad today that I lost money on every single trade.
• I knew I should have cut my losses earlier but I waited too long.
• I couldn't keep my losses small because the market moved too fast.
• I took my profit too early; don't know why I make the same mistake every time.
• I rode my profit to a loss.
• The market moves too fast, those programmed traders are killing us.
• I should have stopped trading earlier but don't know why I kept on trading to lose more.
• Whenever I was right, my position was small and made very little; but whenever I was wrong, I always get caught with a huge position and a big loss.

These are the common Execution problems, they are like cancer cells - if left untreated, they can grow into a big problem.

This book covers both Prediction and Execution. On Prediction, I'll introduce my own tic chart reading that is very effective in predicting the Trend and its Reversal, which I think is very important, as the old saying goes: The Trend is your friend, you don't want to trade against the Trend. It also clearly highlights the Support and Resistance levels to facilitate the timing of Entry and Exit. And because it uses price actions instead of the derivatives of prices like indicators, it shows market behavior and sentiment through chart patterns and gives early signals without any time lag. I'll also cover some basic Fundamental Analysis and Market Analysis. But unlike most books on the shelves, I want to devote more time on Execution which I think is more important and more difficult to master due to the weaknesses in human nature. That' why some say 90% of the traders are losers, which is the bad news, but the good news is if you can change from being a loser to a winner, there is plenty of money on the table.

I always consider all the losers are like sick warriors, some know what's wrong with them, others don't have a clue, some illnesses are minor and some are chronic, some cure themselves but most of them need a doctor. I'd love to play doctor to them, diagnose their problems and prescribe medications or treatments, this book contains most of the common symptoms and recommended treatments, there is also a list of dos and don'ts to keep traders financially healthy. However, for those who require my personal attention may contact me at davchoo@gmail.com.

My advice to the losers are, don't give up, if other people can do it, so can you; find out your problems and face them head on, don't look for easy way out. When the bleeding stops, growth will follow.

You deserve congratulation, you know you have learned something useful and this is probably the best investment you have made.