(1) Any strategy you build will be determined by your beliefs about the market and the objectives you’re trying to achieve. Therefore, your beliefs and objectives are the starting point of the system design and build process and it’s from these you will determine your Key Idea.

(2) Therefore, your Key Idea is your working hypothesis or your explanation of what the foundations of your system are and how it will work.

(3) One of the most famous Key Idea’s was declared by the Turtle Traders, specifically Richard Dennis. Being trend traders they acknowledged that every trend, without fail, was preceded by a breakout.

(4) From that start point they used a standard channel breakout to enter and they also had what they called a ‘fail safe’ breakout entry which absolutely guaranteed they’d capture every new trend.

(5) The Key Idea of Warren Buffett is that you should buy a great company at a cheap price. From this Key Idea he built specific rules and guidelines about how to actually go about doing that.

(6) The Beliefs of many of the worlds great traders can be found in various texts, such as the Market Wizards series by Jack Schwager. Examples: – Markets only trends 30% of the time – The big money is made in the big trends – Buying value is a safe strategy – Stops get hunted

(7) Your objectives are also very important in the design process. In many instances I often hear, “I want to make as much money as possible”. Well, we all do, but that’s a very one dimensional view of the world and of the process of designing a trading system.

(8) Indeed, there is much research to suggest extremely successful traders view profits as a by-product and not the main goal. Many successful traders are passionate about the markets and it’s that passion, not the want of profits, that enable them to succeed.

(9) Taking a more holistic view, objectives encompass many other dimensions, such as your personal risk tolerance and your lifestyle factors. If you’re a family man & has system that requires you to sit in front of a screen for 15-hours a day, it’s probably not a realistic goal.

(10) So your objectives must be broader than just profitability. They must be aligned with your Beliefs. They must be aligned with realistic expectations and they must be aligned with your lifestyle.