As a beginner trader, one of the first trading systems I tested was based on moving averages, RSI, and Fibonacci levels.

I eventually found the system to be unprofitable (for me, at least), so I moved on and looked for new systems to test.

To this day, more than 10 years later, I continue to test systems on a regular basis.

The difference is that now, I have a much better understanding of the market than I did when I first started out.

Why is this important?

Because now I can take one look at any trading system and have a pretty good idea of its potential for success.

By testing countless failed systems in the past, I learned to identify the characteristics of winning systems compared to losing systems.

In other words, by figuring out why some systems didn’t work, I was able to design systems that did.

How To Design A Winning System

There’s a slow way, and a fast way.

The slow way is to try to figure everything out from scratch.

The fast way is to learn from the mistakes of unprofitable systems.

This is why I often encourage new traders to experiment with a variety of trading systems, especially those that are offered free on the internet.

Of course, most of them don’t work in the long run, but that’s not the point.

The point is to observe how they fail, in order to understand why they fail.

That’s the first crucial step.

You Learn More From Failure Than Success

If you’re serious about being an independent trader, there’s no way around this. You have to try out all the ways those trading systems don’t work, in order to figure out what does work.

And as you learn more about what works (and what doesn’t work), you’ll begin to understand what you need to build a winning system.

Make It Your Own

So keep on looking for new trading methods and test them out. Take them apart and put them back together in combinations that make sense to you. Have fun with it.

Remember that every time you learn why something doesn’t work, you’re one step closer to finding something that does.

In my experience, winning systems are often born from losing ones, so don’t blindly discard the systems that don’t work… they have much to teach you.