Summary

This chapter developed a checklist for narrowing your trading beliefs. You should narrow your beliefs down to five or less to build effective trading systems around them.

This chapter also reviewed six major rules of the system design. A trading system with a positive expectation is likely to be profitable in the future. The number of rules in a system should be limited because in­creasing complexity often hurts performance. Relatively simple systems are likely to fare better in the future. The rules should be robust, so they will be profitable over long periods and over many markets. You should trade multiple contracts if possible because they allow you to make more profits when you are right. Risk control, money management, and port­folio design give you a smoother equity curve and are the keys to profit­ability. Lastly, a system should be mechanical to provide consistent, ob­jective decision making. You should follow the six major rules to build superior systems that are consistent with your trading beliefs.

 

 

Chapter

Foundations of System Design

The best system provides instant gratification and constant satisfaction.