Mastering the Art of System Trading: The Path to Financial Freedom
by Robert Buran
Embracing the Art of System Trading
Why is it so difficult for individuals to embrace the art of system trading? As someone who’s been in this field for years, I often find myself wondering why some find it hard to understand the importance of trading the system. Could it be a misinterpretation, or perhaps a simple reluctance to put in the years of consistent work at home necessary to amass a fortune? Whatever the case, I assure you, the path to financial freedom is indeed real and feasible.
The Paradox of System Trading
On the surface, following a trading system seems to be the simplest task a trader can undertake. Yet, it proves to be an almost insurmountable challenge for most. It’s a paradox I’ve observed over time in my interactions with hundreds of traders – both novices and experts. Sadly, very few can effectively master the discipline of system trading.
As a former psychologist, I have a natural curiosity about the underlying psychology of trading. (Please see: Investment Strategies: Understanding the Psychology of Successful Stock Investors) Why is it that even the most intelligent individuals struggle with system trading? Unfortunately, a concrete explanation still eludes me.
The Appeal of System Trading
Why do I advocate for system trading so strongly? My trading activities, which I post several times a day on this website, coupled with daily video trading wrap-ups, offer a glimpse into my journey. Yes, there are good days and bad days, as in any venture. However, the overall returns, which consistently outperform most professional traders, are a testament to the efficacy of system trading.
The system I’ve employed has shown its resilience for over thirty years. It has proven successful across accounts of various sizes, ranging from $6,000 to $6,000,000. I firmly believe that anyone armed with a modest capital of 5 to 20 thousand dollars has the potential to earn hundreds of thousands, even millions of dollars, if they commit to system trading for several years.
Exploring Trading Systems
While I do offer my system for sale (see Automated Stock Trading Software), I recognize it isn’t the only viable system available. There are a multitude of strategies for the discerning trader – a hundred ways to skin this cat, so to speak. It’s a topic I’ve explored in several of my articles, including Simple Stock Trading, offering readers a multitude of ideas.
However, a critical aspect to remember is the importance of consistency. Once you select a system, dedication to it is paramount, possibly for years. This is the discipline I adhered to, and it has led to considerable financial success. This is the same path I recommend if your goal is to accumulate wealth.
A Guideline for System Trading Success
To gain maximum value from system trading and ultimately join the ranks of the wealthy, I offer these specific recommendations:
- Setup a Trading Account: In 2023, it’s easier than ever. Open a trading account with TradeStation Securities, with an initial capital of five to twenty thousand dollars. Learn how to utilize their software effectively. With the current provision of free software and commission-free stock trading, the opportunities are far more favorable than they were four decades ago when I first got started.
- Commitment to Trading: Dedicate nearly eight hours a day to sit in front of your computer, each day that the markets are open. Plan to sustain this routine for a span of five to eight years.
- Adhere to the System: Follow your system religiously. When the computer signals to buy, you buy. When it says sell, you sell. For optimal efficiency, consider automating your system.
- Maintain Trading Records: Keeping careful trading records is essential. It allows you to track your progress on a day-to-day basis.
- Timely Tax Payments: It’s vital to maintain your legal and financial obligations. Pay your taxes on time.
Theoretically, the worst-case scenario predicts you could become a millionaire in eight years. A lucrative reward for five to eight years of dedicated work.
Why Traders May Fail to Follow the System
Despite the potential for immense earnings, why do some individuals fail to trade the system effectively? Why is it so challenging for many to follow a simple system for several years and accumulate wealth?
Drawing from my background as a psychologist and trader, as well as my interactions with hundreds of traders, I’ve identified four common pitfalls that often lead to failure:
- Boredom: Contrary to popular belief, professional trading is not always a thrill ride. In fact, markets move sideways approximately 85% of the time, which isn’t particularly exciting. Furthermore, around 70% of my profits stem from just 5% of my trades. Like fishing, trading requires patience. However, many who gravitate towards trading are thrill-seekers and quickly become disenchanted with this reality. Check out my article on the role of boredom in trading for more insights.
- Desire for Change: System trading demands consistency. You need to repeat the same actions day in, day out, for several years. Most individuals, perhaps out of boredom or the innate desire for stimulation, struggle with this concept. They often resort to switching trading systems, which unfortunately often accelerates losses. Despite the evident success of my decades-old trading methods, some traders feel compelled to seek out new systems, erroneously perceiving my consistency as intellectual stagnation.
3.Negative Life Events: The prospect of working from home, making trades as prompted by your computer may seem attractive at first glance. However, trading can incite emotional turbulence, leading to depression, anxiety, strained relationships, and even despair. Full-time trading can induce feelings of isolation and disrupt family dynamics. Even a dramatic increase in wealth can place stress on relationships and challenge your stability and consistency. Having substantial wealth can bring changes, not always for the better.
4.Negative Psychiatric Programming: Running a website and selling trading advice and software has helped mitigate my sense of isolation, but it has also brought me into contact with an array of unique individuals.
Allow me to share examples of two traders I’ve interacted with, who failed to effectively trade the system:
- Hobo John was literally homeless and called me
Hobo John frequently from phone booths. Twenty years ago he put together a few thousand dollars, probably selling drugs, and paid me $1150 for my trading package and used the balance to open a trading account. What he got from my trading materials was that if you invested in the stock market you would get rich. The guy bought one mini stock index contract and held onto it until all his money was gone. I was almost happy when that happened because he had been calling me every day from a phone booth to report on the progressive decline of his account. If you are going to buy my system you are going to need a shelter to trade from and a computer!
- Millionaire Mike had all the family money anybody could want and had never put in an
Millionaire Mike honest day of work in his life. He hardly knew how to turn on a computer and could not follow my system if his life depended on it. He lost large amounts of money on a daily basis and this did not seem to bother him at all. He talked to me like I was his best friend and, like Hobo John, called me daily to cheerfully report on his losses. His marriage was in trouble and curiously he would tell me about buying gold and burying it on public land to keep it from his wife. The phone calls ended mercifully with his divorce.
Sadly, some people seem drawn to trading as a form of self-punishment, a kind of a subconscious desire to lose money.
In conclusion, there are numerous reasons why people struggle to follow a trading system, sitting in front of a computer at home, for several years to earn their millions. Depending on your perspective, trading the system can seem either straightforward or nearly impossible.
However, if you believe you have the necessary qualities and can avoid the pitfalls I’ve described, I strongly recommend giving system trading a go. With the right mindset and resilience, anybody should be able to successfully trade the system.