The system is always right! It's the user that fails!

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Why is it that some people are successful in trading the markets while others fail? Is it luck that determines if you're successful in earning big bucks? Is it the system or strategy that a person uses which determines their success? Simply put, I believe the strategy that a person employs will ultimately determine if they are consistent winners in the market.

Every system that exists on the internet will show YOU how to make money using it. Without a doubt, it will make money for you. The question is usually how much money will the system make for you? That's important but a discussion for another day. Anyways...... All the systems out there will show you how theirs has worked base on historical data or activity and then at the bottom of the page there would be a disclaimer clause that states ‘.. Historical data does not determine or guarantee future earnings....’

So why is it that these sites or page include this disclaimer clause?

The disclaimer clause is incorporated because they (the promoters of specific investing systems) know that they can't control one key element that is crucial to success. Human emotions!

Human emotions can easily become the keys to success or the root cause of failure in any business including trading. You can read all the stock investing books you want. You can buy every investing system in existence. However, if you can’t control your emotions, you can’t succeed in the markets. (I.E. LENNY DYkSTRA) Again, this is the reason for the disclaimers because human emotions can destroy even the best of investing systems.

Thus, my belief in forming a strategy that controls or manages these emotions. If human emotions are the biggest pitfalls to investing and you incorporate a strategy that manages that short fall you will ultimately gain a much higher probability of success.

In the market there are two emotions that every trader will experience; GREED and FEAR. When these emotions appear it's not how we eliminate them but rather how we act on them. These emotions force us to ACTION, thus how we act on it will determine the outcome.

All too often when we begin to see two or even three consecutive losses while trading we begin to express doubts in our ability to trade. When this happens we are entering a state of fear, that is, we fear losing more of our money and thus begin to doubt our current investing system. How do you react? Some bail way before they should and ultimately lose out on future gains. Others don't bail when all signs point towards that being the right decision. Your strategy in controlling your emotions and making an educated decision based on your system will always lead YOU to the correct choice for YOU and your financial plans. Having this strategy will lead you to make decisions based on logic as opposed to fear. Thus, making your decision to bail or hang in there an educated one.

On the flip side, when we begin to see consecutive gains we generally become over confident. We start believing, " WE CAN make a killing doing this!" Many start tweaking the system by putting more money in the market to leverage our earnings or by taking on more overall positions. In many cases this leads to deviating from the system as Greed has taken over our emotions. YOU MUST HAVE A strategy that enables you to overcome Greed. Whether that's a definitive selling points or a definitive amount of cash your willing to wager (IE $2000 per quarter) on the markets. YOU MUST understand yourself and take all possible precautions to dissuade yourself from throwing all of your eggs in one basket. Far, far, far to many people can't control this and as fast as gains appear they disappear even faster.

I personally put a set amount of cash into my E-Trade account for a six month period (I take long positions). I tell myself " I simply don't have any other funds for six months and no matter how good my gains are I don't have any other money to spend." After six months I re-evaluate my positions and move forward.

"The system is only as good as the person using it" is a saying that has been around for awhile and for good reason. IT's TRUE! The discipline to act on our fears and greedy emotions will determine our success in the markets. Thus, creating a strategy on how you will react to these emotions is PARAMOUNT to success. Starting to see a common theme? Your strategy should be on Discipline and how you will react to the highs and lows of investing. You need to understand your personal strengths and weaknesses and plan accordingly. You must have the discipline to follow your plan of action and overcome your greed and say, "I have reached my target. I should take profits now even though it may go higher." Vice versa "I have to take a position even though the market does not seem to be moving in my favor." when fear sits in.

NO matter how good the system, the only sure way to lasting success in the market depends on your strategy of overcoming personal emotions that follow the inevitable highs and lows of investing.