How to determine the best trading methodology for you

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Trading systems have different accuracy rates and ratios between winners and losers.

Knowing these ahead of time might better help you determine which is most suitable for you – at least to start with.

A trend following model might have 30% winning percentage with winners being 3 times the size of the losers.

A particular chart reading model might have a 70% winning percentage, but a winner / loser ratio that is more like 1.5 to 1.

Both can have a positive expected value of a trade, so they can be worth following.

Also to consider are the transaction costs and clearing fees if one system is more active than another.

One might be a better fit for you although both are expected to make money.

In other words, you might have trouble following one over the other because of your emotional and psychological makeup.

Of course, knowledge of yourself first is the best way to evaluate trading rules when determining compatibility.

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