Trading System
The most effective & profitable strategies are usually quite simple
Trading System
Trading system is a set of rules which trader needs to follow regardless of the current market conditions. In this method of trading, the decision to make a trade is based entirely upon the trading system. System trading decisions are absolute and do not offer the opportunity to decline to make a trade based on the trader’s discretion. If the criteria are met, the trade is taken.
Why it is required ?
A trader should be well informed with following facts
- How much risk he is taking
- How much profit he is intent to take
- How to save himself / herself from any Critical market condition
To manage above challenges trader should have predefined rules for every market scenario. So that whatever scenario comes he/ she just need to apply the rules found from projected price zone.
Generally market traders often question whether the systematic approach can be profitable. They sometimes believe that discretionary strategies using different indicators/strategies as and when required can be better in the long-term. The reality is that professional traders, such as hedge funds, prop traders and HNIs, have been trading their own and customers’ money profitably for many years using trading systems. These professionals, whose trading records are audited and who survive on their trading profits, have demonstrated for decades that systematic trading can be profitable.
Advantage of Trading System
Firm Decision
One of the most significant benefits of systematic trading is that it helps to avoid the classical psycological human errors; to hang on losing positions in hope that they will turn favourable.
Back testing can be done
Because systematic trading strategies are typically written in specific rule set, they can be tested on historical data . This ability to back-test a trading strategy with the same rule set is one of the biggest benefits of systematic trading. Back-testing tells you how well the strategy would have done in the past.
While back-tested performance doesn’t guarantee future results, it can be very helpful when evaluating the performance of potential strategies. The back-tested results can be used to eliminate strategies that either don’t suit your trading style or are not likely to meet your performance goals
Committed to helping our clients succeed
Designing
Key component in designing of trading system is to define an Entry, Risk and Stoploss through rules since our core tool is to follow trend we can further specify designing trading system as: