The Fatal Mistakes of System hopping: Risks and Consequences

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The Trading Fatal Mistake of System Hopping

The common fatal mistake for traders is to become a system hopper. What I mean by this is that they go from one system to the next, not giving a system enough time to work out. After all, most systems will take losses occasionally, and unfortunately, it’s likely that the beginning trader would be prone to abandoning a system after a loss or two. There are literally thousands of systems available on the Internet for free that traders can choose from. Quite often, they’ll find a system on a trading forum that seems to do well, but once they get a couple of losses, they abandon ship. However, some of the longest surviving systems do work over time, but the trader won’t allow the statistical probability to work itself out.

By choosing from one system to the other, you are introducing a variable that isn’t necessary. If you know a system averages a gain of 11% a year, then you need to trust that will eventually be the truth. If you go from one system to another, you are not giving the underlying and original system the time necessary to make those gains. After all, gains won’t necessarily come one after another, sometimes you will have a bad week or possibly even a bad month. However, by switching the system this doesn’t give you the opportunity to have those winning weeks and months that statistically should happen. Professional traders know this, so they recognize that mechanical systems that have proven themselves in the past, will eventually prove themselves again.