By ProfessionalTradingSystems.com

In this article I am going to share my personal educational process I`ve gone through to become a successful mechanical Forex trader. At the beginning of my trading career I was Elliott Wave practitioner – I was counting waves and placing trades based on a subjective interpretation of 13 different chart patterns presumably visible on all markets and timeframes. I had some moderate success but noting special and to be proud of.

After some time I decided to try a mechanical system bought from one famous trader and gave it a try. In the next 2 years I was comparing my Elliott Wave performance to my automated trading results. Clearly and by far my algo style did produce some excellent results so I decided to commit fully of becoming a mechanical trader who can create trading systems by himself.

I thought that best way to do that is to purchase some trading systems available for sale in Internet and then to compare the concepts behind their creation. I bought a few systems from different vendors and within different price range.  Because I wanted to educate myself I was looking for vendors who reveal all trading rules of offered automated systems. I was not interested in just buying some blackbox software which will trade instead of me because it would have been no educational element it them. I didn’t care if strategy code was included in the package or not.

So after a purchase I was scrutinizing trading rule by trading rule in order to see what difference it makes to the performance and then I was observing its application to the real time results. By this process I have learned what works and what doesn’t. Countless hours of optimization I`ve spent on every system and then comparing real time results with expected ones based on backtests.

After I had some experience with lots of systems I was able to figure out what makes a system with good potential of future success and what makes a system good backtest performer and poor real time doer.

I`ve done this simply by observing which system is doing better and which is doing worse real time and what are the difference between them in terms of  backtesting length, concept sophistication and so other metrics like profit factor, average trade length ect . It was clear to me for example that more added inputs to a system makes it do better in backtest but in real time conditions it just fails. We called it this curvefitting or overfitting.

Now my main purpose when creating a mechanical system is to keep its trading rules as simple as possible. I am not willing trade a system with too many rules. Fewer rules makes it much more harder to a trader to overfit  it.

I think that having an experience with good and poor trading systems which have been already developed by experienced traders is the fastest way to learn how to be a successful mechanical trader.  I`ve done it this way and it should work for every one willing to put some work in order to be profitable Forex trader.

Article by Professional Trading Systems –  Forex Mechanical and Automated Systems