The RETT Technique: Build a Trading System That Actually Works

June 09, 2025

🚀 The RETT Technique: Build a Trading System That Actually Works

Most traders lose money not because technical analysis doesn’t work—but because they don’t have a reliable, data-backed system.

Over the years, I’ve developed a simple yet powerful 4-step framework to build trading systems that perform in bull markets, bear markets—even during recessions.

I call it The RETT Technique.

Let’s break it down.

🔍 R – Read Trading Books with Backtested Results

Start by studying books that offer concrete rules and verifiable backtests—not just vague theory or motivational fluff.

Why this matters:

📘 You get a real working framework—saving you months of trial-and-error
📊 You gain confidence through credible, tested data
👨‍🏫 The author’s reputation is on the line, ensuring higher quality content

As you read multiple such books, you’ll start noticing recurring principles behind successful strategies. That’s your cue to move to the next step.

🧠 E – Extract the Core Concepts

Behind every good system is a core concept that drives results.

Your job? Identify the “why” behind the system’s performance.

Some common concepts:

Breakout strategy: Buy after price confirms strength
Counter-trend trades: Bet on mean-reversion after extreme moves
Trailing stop-loss: Secure profits while allowing room for growth

Ask yourself:

What’s the primary setup and trigger?
What type of market is it designed for?
How is risk managed?
What rules define the exit?

When you extract the essence, you don’t just copy systems—you learn how to design your own.

📈 T – Test the Trading System

Now comes the crucial part: Backtest it.

Yes—even if the author already did it. Why? Because:

Their data might be cherry-picked
They may skip real-world friction (like slippage or fees)
You need to trust the system enough to trade it

What you gain:

Confidence during drawdowns
Proof that it works across various conditions
Insights into tweaks or improvements

A solid backtest separates fantasy from function.

🔧 T – Tweak the System for Performance

Once validated, you can either:

Trade it (start small), or
Optimize it for your needs

Here’s how to tweak smartly:

1. Reduce Drawdowns
Add trend filters.
➡️ Example: Only trade long setups when S&P 500 is above its 200-day moving average.

2. Improve Risk-Adjusted Returns
Test different parameters.
➡️ Example: Try 10-, 20-, or 50-day lows instead of a fixed 5-day.

3. Reduce Correlation with Other Systems
Diversify across markets or strategies.
➡️ Example: If you trade U.S. equities, try the same logic in the Australian or Canadian market.

💡 Pro Tip: Tweak one thing at a time to isolate impact.

🏁 Conclusion: From Guesswork to a Game Plan

Here’s why most traders fail:

❌ No structured plan
❌ No edge
❌ No consistent system
❌ Emotion-led trades

But the RETT Technique changes that by giving you a blueprint:

✅ Read books with proven systems
✅ Extract the key ideas
✅ Test the strategy yourself
✅ Tweak it to fit your goals

I’ve personally used this framework to build systems—including one that delivered 18.69% CAGR over the last decade.

That’s the power of repeatable, data-driven trading.

📚 Want to Jumpstart Your Journey?

Check out “Trading Systems That Work”—it features 3 backtested strategies designed for different market types.

💬 What’s Your Biggest Trading Challenge?

Struggling with overtrading? Emotional exits? System hopping?
Drop a comment below—let’s talk strategy.

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