Why System Trading Fails: 90% Lose & How to Win

1. Introduction: Why Can’t You Win with System Trading (SysTrade)?

System trading (SysTrade) is a method that automatically executes trades based on pre-determined buying and selling rules. Because it is not swayed by emotions and follows the rules, many traders adopt SysTrade with the belief that it can lead to consistent wins.

However, in practice, many people find themselves facing the frustration of “not winning as they expected”—a reality that runs counter to their expectations.

Reasons Why Many Traders Who Adopt SysTrade Still Cannot Win

The question many SysTrade beginners grapple with is “why can’t I win?”.
Generally, it is said that about 90% of people using SysTrade are not making a profit.
So why are there so many traders who cannot win with system trading?

The reasons can be broadly summarized into the following four categories.

1. Overconfidence in backtest results
2. Unable to adapt to changes in market conditions
3. Weak capital management leading to large losses
4. Manually intervening in the system

By understanding these issues and taking appropriate measures, you can significantly improve the performance of SysTrade.

What This Article Will Explain

This article provides a detailed explanation of the following points for those who feel they cannot win with system trading.

• Primary reasons for not winning with SysTrade
• Strategies practiced by winning traders
• Success stories of traders who improved after continuous losses
• Common questions and their solutions (FAQ)
• Key points to become a winner

By reading this article, you can resolve the question of “why can’t I win with SysTrade” and gain the knowledge and strategies needed to become a winning trader. In the next chapter, we will delve deeper into the main reasons why system trading fails to produce wins.

2. [Fact] Why 90% of System Traders Can’t Win?

Although many started system trading, many traders feel “for some reason they can’t win.” In fact, about 90% of traders who run system trading are said to withdraw because they cannot achieve consistent profits.

So why are there so many traders who can’t win with system trading? Here we explain the main reasons in four categories.

2-1. Over-reliance on Past Data (The Backtesting Trap)

Many traders emphasize backtesting (simulation using past data). If the backtest results are favorable, they think “this system can win” and begin operating with confidence.

However, there is a major pitfall: Good backtest results do not guarantee future wins.

■ What is the Backtesting Trap?

• System optimized only for past markets
  • In backtesting, optimal parameters are adjusted based on past data. However, real markets change daily, and there is no guarantee that the same conditions will recur in the future.
• Curve fitting (over-optimization) issues
  • A system that was thrilled its backtest win rate exceeded 90% may perform completely ineffectively in real operation. This happens because it was overfitted to past data, losing generality.

■ How to Avoid It?

• Conduct forward testing (real operation testing) in addition to backtesting
  • It is important to verify how well it works in current markets, not just past data. You need to run at least a month of demo operation to assess the system’s true performance.

2-2. Unable to adapt to changing market conditions

Another major reason for losing with system trading is changing market conditions.

System trading algorithms are designed to perform in specific market environments. However, market conditions constantly change, and rules that were valid yesterday may become invalid today.

■ What Happens When Market Conditions Change?

• Difference between trending and ranging markets
  • For example, a system designed for trending markets performs well when the market moves in one direction, but becomes prone to losses in ranging markets.
  • Conversely, a system designed for ranging markets is strong in markets that move within a fixed range, but can incur large losses when a trend emerges.
• Changes in volatility (price movement magnitude)
  • For example, sudden volatility spikes like the COVID shock can abruptly disrupt a system that had been stable.

■ How to Avoid It?

• Use multiple systems, including trend-following and ranging types
  • By switching between trend-following and ranging systems according to market conditions, you can more easily maintain stable performance.
• Regularly analyze market conditions and reassess system effectiveness
  • Make it a habit to review your system trading performance once a month and check whether it matches the current market environment.

2-3. Weak money management leads to big losses

Many traders do not understand the importance of money management when doing system trading. No matter how excellent the system is, if you cannot manage your capital properly, the likelihood of eventual bankruptcy increases.

■ Common money management mistakes

• Betting large amounts on a single trade (over-leverage)
  • Thinking “this system has a high win rate, so let’s bet big!” and wagering more than 10% of capital on a single trade.
  • A few consecutive losses can rapidly deplete capital, making recovery impossible.
• Not setting stop-loss rules
  • By not setting stop-losses, unrealized losses keep growing, eventually leading to forced liquidation.

■ How to Avoid It?

• Limit the loss per trade to within 1% of capital
• Know your maximum drawdown (maximum loss) in advance and plan your capital accordingly

2-4. Manually intervening in the system

The appeal of system trading is that you can trade according to rules without being swayed by emotion. However, many traders intervene manually mid-way, and fail to unleash the system’s true power, leading to losses.

■ Why manual intervention leads to failure

• Stopping trades emotionally after seeing temporary losses
  • Feeling anxious that you might keep losing, you stop the system mid-way.
• Mixing discretionary trading, breaking the rules
  • Thinking “in the current market, it’s better to buy manually,” you execute trades outside the rules, increasing losses.

■ How to Avoid It?

• Determine your risk tolerance before starting system trading
• Operate fully automatically for a set period and rigorously collect statistical data

【Summary】Four reasons why system trading fails

1. Backtesting trap (over-reliance on past data)
2. Inability to adapt to changing market conditions
3. Weak money management and excessive risk
4. Emotional manual intervention undermines the system’s advantage

In the next chapter, we will explain in detail the three strategies practiced by those who can win with system trading.

3. 【Practice】Three Strategies That Winning System Traders Use

In the previous chapter, we explained the main reasons why system trading (sys trade) cannot win. Now, let’s answer the question: ‘What are winning traders doing?’

Here, we introduce the three strategies that system traders who consistently generate profits practice.

3-1. Balance Backtesting + Forward Testing

Winning system traders do not rely solely on backtesting; they also emphasize forward testing (testing in real markets).

■ Why is forward testing important?

Backtesting is a simulation based on past market data. Therefore, even if the backtesting results are good, there is no guarantee it will function the same way in future markets.

Example: Why you might win in backtesting but lose in live trading

• Over-optimized for past markets (curve fitting)
• Actual spreads and slippage not considered
• Market volatility changes, making it ineffective

■ How can we avoid this?

• After backtesting, conduct at least one month of forward testing
• Perform forward testing on a demo account, not a real account
• If trade count is low, conduct longer-term testing

By conducting forward testing, you can determine whether “this system will work in current markets”.

3-2. Switching Strategies According to Market Conditions

Do you think that if you keep using one system trading system, you’ll always win?

In fact, the optimal system trading strategy changes depending on market conditions. Therefore, winning traders analyze market conditions and switch to appropriate strategies.

■ Using System Trading According to Market Conditions

1. Trend market system
   • Effective in markets that move strongly in one direction
   • Example: “Trend-following system using moving average crossovers”
2. Range market system
   • Effective in markets that move within a fixed range
   • Example: “Contrarian system using RSI or Bollinger Bands”
3. Adjustments based on volatility (price movement size)
   • When volatility is high: risk-averse settings
   • When volatility is low: scalping-oriented system

■ How do you determine market conditions?

• Determining trend or range markets
  • Use ADX (Average Directional Index) to measure trend strength
  • Check the slope of moving averages
• Check volatility changes
  • Measure recent volatility with ATR (Average True Range)
  • Check price movements during news or economic releases

Winning traders adjust system application according to market conditions and respond flexibly.

3-3. Thoroughly manage capital and eliminate emotions

The most important thing to keep winning in system trading is thorough capital management and eliminating emotions.

■ Capital management rules that winning traders follow

1. Limit loss per trade to within 1% of capital
   • Example: With 1,000,000 yen capital, maximum loss per trade is 10,000 yen
2. Calculate maximum drawdown (maximum loss) in advance
   • Decide at what loss level to review the system
3. Clarify profit-taking rules
   • Decide when to take profits and avoid unplanned profit-taking

■ Things to do to eliminate emotions

• Do not get overly excited or discouraged by trade results
• Follow system rules faithfully and avoid manual intervention
• Leave the PC or VPS running the EA unattended without monitoring

【Summary】Three Strategies That Winning System Traders Practice

1. Balance Backtesting + Forward Testing
   → Conduct testing in real markets to confirm system reliability
2. Switching Strategies According to Market Conditions
   → Use systems appropriate for trend or range markets
3. Thoroughly manage capital and eliminate emotions
   → Follow risk management rules and operate calmly

By practicing these three strategies, you can significantly increase your chances of winning in system trading.

In the next chapter, we will introduce a real case of a person who had been losing in system trading and became able to win. We will explain in detail how to improve based on a specific case.

4. [Case Study] How a person who had been losing in system trading started winning

So far, we’ve explained why you can’t win in system trading (sys trade) and strategies to win. However, some may still not have a concrete idea of how to improve to win.

In this chapter, we explain how someone who had been losing in system trading actually became able to win, based on real cases.

4-1. Case 1: Big Loss from Believing Only in Backtesting

■ Case Overview

• People involved: A (30s, office worker)
• Start of operation: 2022
• Initial capital: ¥500,000
• Strategy used: Simple trend-following EA using moving averages
• Problem: Chose a system with good backtesting results, but kept losing in live trading

■ What was the problem?

A purchased an EA that had an excellent record of an 80% win rate over the past 5 years in backtesting.

However, when actually trading in a real account, it resulted in a negative balance for three consecutive months, ultimately losing half the capital (¥250,000).

→ The cause of failure was overconfidence in backtesting results.

■ How was it improved?

A used this failure as a catalyst to implement the following improvements.

1. Conduct forward testing and confirm performance in real markets
   → Conduct a one-month forward test on a demo account and check if similar results occur in live trading.
2. Adopt a strategy that adapts to market conditions by considering volatility
   → In addition to the existing trend-following EA, introduce an EA for range markets and adjust usage per market.

Result: As a result, capital stabilized, and after six months, losses were recovered. Subsequently, stable profits were achieved throughout the year.

4-2. Case 2: Big Failure from Ignoring Capital Management

■ Case Overview

• People involved: B (40s, self-employed)
• Start of operation: 2023
• Initial capital: ¥1,000,000
• Strategy used: High-leverage scalping EA
• Problem: Took too large a lot in a single trade, causing capital to evaporate quickly

■ What was the problem?

B, driven by the desire to double capital in a short period, maximized leverage and risked 10% of capital in a single trade.

Although capital increased steadily in the first month, one day a sudden market shift occurred. Consecutive losses led to losing 90% of capital (¥900,000) in just two weeks.

→ The cause of failure was neglecting risk management.

■ How was it improved?

B learned from this failure and decided to enforce the following three points.

1. Set the maximum loss per trade to less than 1% of capital
   → For ¥1,000,000 capital, limit the maximum loss per trade to ¥10,000.
2. Set a maximum drawdown (maximum loss) in advance, and stop the system if exceeded
   → Predefine a rule: if losses exceed 10%, review operations.
3. Set lower leverage and enforce prudent operation
   → Reduce the lot size per trade by half.

Result: By following these rules, a single loss did not become fatal, enabling stable long-term operation. Subsequently, capital gradually recovered, and after one year, the total was in the black.

4-3. Case 3: Destroying System Advantage through Manual Intervention

■ Case Overview

• People involved: C (20s, student)
• Start of operation: 2021
• Initial capital: ¥300,000
• Strategy used: Short-term scalping EA
• Problem: Adjusted trades manually whenever a loss occurred, amplifying losses

■ What was the problem?

C couldn’t rely solely on the system and, when a loss occurred, manually increased lot size or changed entries.

As a result, the system logic failed, causing losses beyond expectations.

■ How was it improved?

1. Decide on a rule of ‘no manual intervention at all’
   → Resolve to follow the system’s rules even if losses occur.
2. Avoid looking at the screen during operation
   → Operate on a VPS and check results once a week.

Result: This allowed the system to perform at its true capability, and after six months, stable positive profits were maintained.

【Summary】Common Points for Those Who Had Been Losing in System Trading to Start Winning

1. Use forward testing in addition to backtesting
2. Adjust strategies according to market conditions
3. Enforce capital management and keep individual losses small
4. Never engage in emotional manual intervention

By practicing these, you can increase the win rate of system trading and aim for stable profits.

In the next chapter, we introduce FAQs that beginners in system trading often have.

5. Frequently Asked Questions (FAQ)

Questions and concerns about system trading (SysTrade) are common among many traders. Here, regardless of whether you are a beginner or experienced, we answer the points many people wonder about.

Q1. Can SysTrade really win?

A1: You can win, but proper operation is required.

SysTrade is superior to discretionary trading because it can eliminate emotions and trade according to rules. However, to keep winning with SysTrade, the following conditions must be met.

✅ Adopt a strategy that fits the market environment (consider differences between trending and ranging markets)
✅ Conduct proper backtesting and forward testing
✅ Implement rigorous money management and keep losses per trade small

The idea that anyone can automatically win by implementing SysTrade is wrong. Only with proper adjustments and risk management can you achieve stable profits.

Q2. Which EA (automated trading tool) is recommended?

A2: You should consider that there is no all‑purpose EA.

A common question, but there is no “ultimate EA” or “100% winning EA.” Because the market is constantly changing, and any EA only works in a specific market environment.

✅ EA strong in trending markets (moving average or breakout type)
✅ EA strong in ranging markets (Bollinger Bands or RSI contrarian type)
✅ EA that adapts to volatility (adaptive type or AI analysis type)

First, it is important to choose an EA that fits the market environment you want to operate in, and test it on a demo account.

Q3. Is it okay to intervene manually in SysTrade?

A3: In principle, no. Manual intervention usually reduces win rate.

The biggest advantage of SysTrade is eliminating emotions and trading according to rules. However, many traders become anxious, thinking “I might lose if I keep this,” and manually close positions or change settings.

✅ Examples of failure due to manual intervention

• Fear of loss leads to manual closing → later the market moves in profit direction and you regret
• Ignoring rules and increasing position → consecutive losses, loss expansion
• Stopping EA midway → overall negative result

If you frequently look at the screen during operation, you may want to intervene. Therefore, it’s best to run on a VPS (virtual server) and minimize daily checks.

Q4. How much should I start with?

A4: It is recommended to have at least 100,000 yen of discretionary capital.

In SysTrade, it is important to set an appropriate lot size relative to your operating capital. Please refer to the following guidelines.

Operating Capital	Recommended Lot Size (USD/JPY)
100,000 yen	0.01 lot (1,000 currency)
500,000 yen	0.05 lot (5,000 currency)
1,000,000 yen	0.1 lot (10,000 currency)

✅ Operate with discretionary capital and do not touch living expenses
✅ Limit the loss per trade to less than 1% of capital

If you force trades with large lots, you could lose all your capital in just a few losses. It is wise to start with small lots and only increase them once you can consistently generate profits.

Q5. How can you achieve stable profits with SysTrade?

A5: The key is continuous improvement and a long‑term perspective.

It is possible to generate temporary profits with SysTrade, but to consistently produce stable profits, you need to keep the following points in mind.

✅ Regular review of the system
→ Once a month, review performance and fine‑tune the strategy

✅ Have flexibility to adapt to market environment
→ Understand the differences between trending and ranging markets, and choose an appropriate system

✅ Ignore short‑term losses and operate with a long‑term view
→ Evaluate performance in 3‑month or 6‑month intervals, not monthly

✅ Enforce the rule of small losses and large gains
→ Do not try to win big in a single trade; instead, accumulate small losses while growing profits

SysTrade is not a “magic tool that wins if left alone.” However, if you master proper operation, you can achieve stable profits over the long term.

Summary: FAQ Highlights

1. SysTrade can win if you have the right strategy and money management.
2. There is no all‑purpose EA; choosing one that fits the market environment is crucial.
3. Manual intervention is generally a no‑go. Eliminating emotions is SysTrade’s strength.
4. Start with at least 100,000 yen of discretionary capital and set an appropriate lot size.
5. Operate with a long‑term perspective and continuously review the system.

In the next chapter, we will provide a comprehensive overview of what to do to win with SysTrade. We will organize the content so far and present a concrete action plan that readers can implement.

6. Summary: What to do to win with system trading

So far, we have explained in detail the reasons you can’t win with system trading (SysTrade) and the solutions. In this chapter, we will organize everything as a comprehensive summary of what you should do to consistently win with system trading.

6-1. Four Key Points to Win with System Trading

1. Don’t rely solely on backtesting; perform forward testing
   • Even if backtesting results are good, they may not hold in real markets
   • Confirm the system’s effectiveness with at least one month of demo operation (forward testing)
2. Adapt to market conditions and flexibly adjust strategies
   • Optimal strategies differ between trending and ranging markets
   • Don’t cling to a single system; use multiple EAs or logic depending on the market
3. Thoroughly manage capital and reduce risk
   • Limit loss to less than 1% of capital per trade
   • Set a maximum drawdown (maximum loss) in advance, and review the system if losses exceed a certain amount
4. Eliminate emotions and avoid manual intervention as much as possible
   • Operate the EA (automated trading system) with trust and don’t change the logic midway
   • Avoid frequently checking the trading screen; consider fully leaving it on a VPS

6-2. Concrete Action Plan: What You Can Do Starting Today

To succeed with system trading, it’s important to not only understand the theory but also put it into practice. Refer to the following action plan and start taking concrete steps from today.

✅ [Step 1] Check the current system’s operation status

• Confirm whether the EA or system you use is suited for trending or ranging markets
• Review past performance and analyze whether performance has deteriorated in specific market environments

✅ [Step 2] Start forward testing

• When trying a new EA or strategy, do not jump straight into a real account; first test in a demo account
• Perform at least one month of forward testing to confirm how it behaves in real markets

✅ [Step 3] Clarify capital management rules

• Set the amount at risk per trade to less than 1% of capital
• Set a maximum loss (maximum drawdown) and create a rule to stop if losses exceed a certain amount

✅ [Step 4] Make market environment analysis a habit

• Once a month, determine whether the current market is trending or ranging, and adjust the system accordingly
• Use indicators such as ADX and ATR to grasp market changes

✅ [Step 5] Eliminate emotions and fully automate operation

• Introduce a VPS to run the EA and prevent unnecessary manual intervention
• Do not check results daily; develop a habit of reviewing performance weekly or monthly

6-3. Finally: Continuous Improvement Is the Key to System Trading

System trading is not something you set once and then win by leaving it alone. It is important to adjust the system and strategy appropriately as market conditions change.

✅ “This EA is all‑purpose, so you can win without doing anything” → ❌ Wrong
✅ “Make appropriate adjustments according to the market” → ✅ Correct

The biggest point to succeed with system trading is to perform continuous improvement.

Use what you’ve learned in this article to review your own trading and aim for stable profits with system trading!

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