Algorithmic Trading System – 6 How to improve your ability to make good decisions for your trading system


Hello and welcome to this video, it will help you to improve your algorithmic trading results in the next 12 months.


In the last video we have talked about what kind of advantage will help you to improve your results in a fraction of the time other traders need.


In this video we will talk about what will help you to really improve your ability to make good decisions for your trading system.


How do you decide if something is a good or a bad choice?


I don’t like to eat fish. 


I know that fish is healthy, but when I was a little boy I had to eat fish and had some fishbone in my throat.


I think my mother never learned how to properly remove the fishbone, so I learned that I don’t want to eat fish.


Today I eat tuna fish on my pizza and I could eat fish sticks if I had to, but I would never order fish in a restaurant.


I learned to avoid fish dishes because I had maybe half a dozen bad experiences with fish dishes.


For me that is okay, avoiding fish will not harm me, but in trading half a dozen trades do not really count. 


Actually I don’t consider anything below a thousand trades to be a significant test for a trading system.


If you would pick three days in July to choose what to wear in December, you would probably have a bad surprise.


If you would marry somebody based on just half a dozen days that you have spent together, I doubt that this will be a long relationship.


So why should you trade something that isn’t really proven?


Would you like to know how you can really prove a market advantage?


Maybe you have some idea about what could work.


For example most people think that the right entry signal is the most important thing that will make the difference between losses and profit.


But there are so many entry signals, so how should you find the right one?


Here is how I do it.


Whenever I try a new entry signal that is promising, I use the reversed signal to find out if I really found something that could give me a market advantage.


Let’s assume you do a backtest and the results are very promising.


You do 10 more backtests with different currency pairs and you still think that you found something that would give you a market advantage.


What do you think would be a good way to prove that it really works?


The answer is very simple, but almost nobody is doing it.


I think the reason is, that most people don’t know how to use an automated trading system.


For discretionary traders it is really a challenge, but with an algorithmic trading system you can do it in a few minutes.


And here is how…


You simply do the OPPOSITE!


Or in other words, you exchange buy and sell signals.


So why should you do that?


This answer is also simple.


You want to exchange buy and sell signals to prove that a reversed signal is a market  disadvantage.


If some entry is able to produce profits on a consistent basis, it should be possible to produce predictable losses on a consistent basis with a reverse entry.


But almost nobody is doing it!


It is easy to do with an automated system, you wouldn’t even need to invest 5 minutes to create a reverse entry.


You wouldn’t even need to invest 5 minutes to test the reverse entry and find out if you have really found something valuable.


So if you want to prove or disprove that something will give you a real market advantage, just do the opposite to prove a disadvantage!


This is as easy as it gets – but almost nobody is really doing it…


In this video we have talked about what will help you to really improve your ability to make good decisions for your trading system.


In the next video we will talk about the disadvantage of being a hope trader.