|  AUG 1993

Developing A Trading System by Curtis Arnold

Developing A Trading System by Curtis Arnold Successful trading is built upon using a dependable trading method. What is a good trading method? It is simply a set of rules that cover the important aspects of trading, such as trend identification, entry and exit plans. Here, trader and author Curtis Arnold provides guidelines for developing your own trading method. Wether you develop your own trading system or buy a commercially available one, you will want to be sure that your system is compatible with your lifestyle. Does the system require you to monitor the market intraday? If so, will you need to purchase quotation equipment? Are you prepared to monitor the market intraday? Would it interfere with your current occupation or lifestyle? Let's assume that you have decided against a short-term trading system and have, instead, decided to go with a longer-term system that only requires you to make decisions in the evening after the markets have closed. How will you get your price quotes? Have you factored in the expense? What will you do if you are away on a business trip or vacation? Is your account size large enough to take all the trades that the system signals? Will you be able to financially weather the worst drawdown that the system is likely to experience? Are you psychologically prepared to stick to the system throughout adversity or, like so many, are you simply going to ""try the system out"" and then abandon it if it doesn't quickly make money? It is not worth trading a system unless you are committed to it. Otherwise, you will fall into the same trap that so many others do. You will abandon the system at the worst possible time and have to start all over, this time with less capital. It is critical to do your homework before hand. Make sure that you have thoroughly tested your system or approach to the best of your ability. Answer the questions that I have posed and be certain that you are both adequately capitalized and psychologically prepared to trade your system.

by Curtis Arnold