It is relatively simple to create a profitable system for trading forex, stocks, or commodities on paper, but it is not easy to successfully implement the system once it is created. While the primary forces underlying market behavior are fear and greed, the primary cause of unprofitable trading is IMPATIENCE, which may very well be a subset of both fear and greed.

A profitable trading system requires three basic elements and three fundamental characteristics. The basic elements are a strategy for entering positions, a strategy for protecting positions from unacceptably large losses, and a strategy for exiting positions with a profit. The fundamental characteristics of a profitable trading system are that winning trades are on average larger than losing trades, that the number of winning trades is larger than the number of losing trades, and that the frequency of trading signals is high enough to keep the attention of the trader focused on trading. (Of course, there can be successful variations on these fundamentals: for example, a system that produces 95% winners could have the average win much smaller than the average loss and still be profitable).

Once a profitable trading system is created, the trader