Nice post by Dom Perignon about using complicated systems...
Avoid Complicated Trading Systems!
And here's why:
Many "gurus" want you to believe that "complicated is better".
They tell you that you need to study trading for many months, buy their proprietary trading indicators, software and courses and that you should expect to lose money in the first few months of trading anyhow!
I used to believe these "gurus" and have been there and done that.
I bought all these complicated systems that took me weeks to understand, installed all these indicators and software programs on my computer and wasted countless hours reading books, watching videos and even attending "live workshops."
Here's The Really Good News:
After years of trial and error (and lots of losses), I have found that all you need toget reliable trading signals with a "positive risk-to-reward ratio" are three (3) indicators.
And these indicators are available to everybody for free!
Here they are:
• Moving Average Convergence / Divergence (MACD)
The MACD gives you an "early warning signal" so that you know whether the market is more likely to go up or down.
• Bollinger Bands
When used in the right way and with the right settings, Bollinger Bands shows you EXACTLY when you enter and when to exit a trade.
• Relative Strength Index (RSI)
The RSI measures the STRENGTH of a trend and acts as a filter to remove "false" breakouts in the markets.
I have combined these three indicators into my Simple Strategy.
Introducing "The Simple Strategy"
The Simple Strategy is my favorite day trading strategy for the following reasons:
• Clear Entry Rules
When trading “The Simple Strategy”, there’s no second-guessing. As you will see, the entry rules are based on indicators - and it’s black and white. Either the MACD is above the zero line or it isn’t. And either the RSI is above 70 or it isn’t. The entries are easy to identify and to execute. That’s why this strategy is called “The Simple Strategy”
• Clear Exit Rules
When trading “The Simple Strategy” you’ll know when to exit even before you enter the trade. So, you know exactly how much you risk on any given trade which is essential for precision position sizing and money management. Plus, you can put the trade on auto-pilot once you are filled on your entry order. This reduces the trade management to a minimum. And Many traders fail because they over-manage their trades. Using the exit rules of “The Simple Strategy” you won’t run into the risk of over-managing your trades. It’s like the “Showtime Rotisserie” - You set it, and forget it
• Take advantage of small intraday trends
Trends are short-lived. The times when you could enter the market in the morning and exit the market in the afternoon are over. These days the markets can turn around on a dime. Low trading commissions and computerized trading have destroyed the nice and long intraday trends. However, with “The Simple Strategy” you can take advantage of the small intraday trends that we are seeing in today’s markets since we are only trying to capture 15% of the average daily range. More about this later.
• You don’t need a sophisticated trading software
As you will see, you only need a charting software with “basic” charting capabilities: Your charting software needs to be able to plot RANGE BARS, BOLLINGER BANDS, MACD and RSI. More than 90% of the charting software packages that are available today have these capabilities. There’s no need to buy any proprietary indicators or expensive charting software!
• Easy To Learn And Understand
"The Simple Strategy" has its name for a reason: You can learn it in less than 60 minutes and trade it right away. This makes it the perfect trading strategy for beginners!
In short: “The Simple Strategy” can greatly simplify your trading.
And here's why:
Many "gurus" want you to believe that "complicated is better".
They tell you that you need to study trading for many months, buy their proprietary trading indicators, software and courses and that you should expect to lose money in the first few months of trading anyhow!
I used to believe these "gurus" and have been there and done that.
I bought all these complicated systems that took me weeks to understand, installed all these indicators and software programs on my computer and wasted countless hours reading books, watching videos and even attending "live workshops."
Here's The Really Good News:
After years of trial and error (and lots of losses), I have found that all you need toget reliable trading signals with a "positive risk-to-reward ratio" are three (3) indicators.
And these indicators are available to everybody for free!
Here they are:
• Moving Average Convergence / Divergence (MACD)
The MACD gives you an "early warning signal" so that you know whether the market is more likely to go up or down.
• Bollinger Bands
When used in the right way and with the right settings, Bollinger Bands shows you EXACTLY when you enter and when to exit a trade.
• Relative Strength Index (RSI)
The RSI measures the STRENGTH of a trend and acts as a filter to remove "false" breakouts in the markets.
I have combined these three indicators into my Simple Strategy.
Introducing "The Simple Strategy"
The Simple Strategy is my favorite day trading strategy for the following reasons:
• Clear Entry Rules
When trading “The Simple Strategy”, there’s no second-guessing. As you will see, the entry rules are based on indicators - and it’s black and white. Either the MACD is above the zero line or it isn’t. And either the RSI is above 70 or it isn’t. The entries are easy to identify and to execute. That’s why this strategy is called “The Simple Strategy”
• Clear Exit Rules
When trading “The Simple Strategy” you’ll know when to exit even before you enter the trade. So, you know exactly how much you risk on any given trade which is essential for precision position sizing and money management. Plus, you can put the trade on auto-pilot once you are filled on your entry order. This reduces the trade management to a minimum. And Many traders fail because they over-manage their trades. Using the exit rules of “The Simple Strategy” you won’t run into the risk of over-managing your trades. It’s like the “Showtime Rotisserie” - You set it, and forget it
• Take advantage of small intraday trends
Trends are short-lived. The times when you could enter the market in the morning and exit the market in the afternoon are over. These days the markets can turn around on a dime. Low trading commissions and computerized trading have destroyed the nice and long intraday trends. However, with “The Simple Strategy” you can take advantage of the small intraday trends that we are seeing in today’s markets since we are only trying to capture 15% of the average daily range. More about this later.
• You don’t need a sophisticated trading software
As you will see, you only need a charting software with “basic” charting capabilities: Your charting software needs to be able to plot RANGE BARS, BOLLINGER BANDS, MACD and RSI. More than 90% of the charting software packages that are available today have these capabilities. There’s no need to buy any proprietary indicators or expensive charting software!
• Easy To Learn And Understand
"The Simple Strategy" has its name for a reason: You can learn it in less than 60 minutes and trade it right away. This makes it the perfect trading strategy for beginners!
In short: “The Simple Strategy” can greatly simplify your trading.
