Thomas Alva Edison arguably the most renowned scientist with the highest number of patents in his name used to say ‘Opportunity is missed by most people because it is dressed in overalls and looks like work.’ Author Malcolm Gladwell has converted this statement into exact time that it takes for anyone to be successful. According to Gladwell it takes 10,000 hours of deliberate practice to become world class in any field. That is the kind of dedication which is needed to succeed. A common man looks only at the wealth of a successful person but not at the amount of effort that went behind it. This rule is valid in every walk of life, including trading. Many of us are willing to buy what a successful investor is buying without putting in much thought behind his move. Most of the time the investor would have been adding to his position bought at a much lower price. Very few market participants are willing to put in the effort needed to be successful. Many are willing to spend lakhs of rupees to buy various so called trading strategies from the market and attend lecture series by experts only to realise that it was all a waste of money. They are not willing to put in the effort needed to develop a trading strategy of their own because it sounds like too much work. In some cases the trader is unaware of how to develop a trading strategy of his own. But without necessary and deliberate and focussed effort and a clear mind long term success is not possible, be it trading or any other endeavour in life. Having a strategy of your own and putting the effort to develop it builds confidence in holding on to it, even when everything else around you is falling apart. Even if you are using someone else’s strategy you should go through the motions of creating it as if it is your own. A good trading strategy goes through various processes – creation, testing and use. Creation is the creative part and the only part which requires mental work, the other two are laborious and mechanical in nature. In this article we will be talking of developing a non-discretionary technical strategy only. To create a strategy the trader needs to decide the market he wants to trade, the time frame to be traded and a basic knowledge of technical analysis along with a creative and inquisitive mindset. While developing a trading strategy four things will need to come out very clearly. The entry point for the trade, the stop loss or the maximum loss, the exit or profit booking point and finally the amount to be invested on every trade. Let us assume that we want to test the trading strategy where we look at buying a stock only when it is oversold. Among the many ways of determining an oversold stock one of the most popular is using the relative strength index (RSI) oscillator. As an example let’s say our buy signal is generated every time the RSI oscillator goes below 30. If the company is good, then the indicator will give very few entry signals in a year, which is good for a novice trader. Our entry point is thus defined as the point when the RSI touches 30. Our stop loss point is, again for simplicity sake, if RSI continues to fall and drops below 25. Our exit point can either be a percentage or profit target exit say a five per cent rise above our entry point or a trailing stop loss of low of the week. The later would ensure that in case if the stock runs away we would be in the trade. Finally the amount needed to be traded is to be decided. Most traders risk one per cent of their trade on every trade, the conservative ones risk only 0.5 per cent or lower. While we have used a very simple example of buying a stock, many complex variations can be created with new filters being added like high liquidity or buying stocks only above 200 day moving average. Ones we have the strategy mapped out we need to back test it on the market. If the strategy has worked in the past, chances are high that it may in the future. All trades should be noted when the RSI has touched the oversold mark of 30. The stop loss and exit levels should be followed and noted. The more a strategy is back tested the better feel and confidence the trader will have on it. In order make a strategy your own, some traders try it on at least 1,000 trades, many traders do it on much more. With a basic knowledge of programming and a good software package, thousands of trades can be back tested is minutes. After the strategy is back tested and the result is satisfactory is the real test of the trader. The strategy needs to be put into use and money deployed on it. This is where many traders fail. Even if the strategy has worked on paper they are either unable to follow it in real life or tweak it to their liking. Every tweak is almost a new strategy and needs to be back tested. It is thus advisable to bet small amounts on every strategy and slowly increase the size to avoid losing mental balance. A point worth noting is that many strategies will not last for eternity they would need changes with the changing times. This would require a new approach. But then that is the beauty about trading, one needs to change with times. As in every successful business, there is a plan which is followed. In the business of trading the trading strategy is the plan which has to be adhered to at all cost.