What is a Trading System?
A trading system is simply a group of specific conditions, that determine entry and exit levels for a scrip. These levels, known as signals, are often plotted on a chart in real time and prompt the immediate execution of a trade.
The most common technical analysis tools are Moving averages, Bollinger Bands, RSI, Stochastic and Oscillators etc...
Commonly, more than two indicators will be combined in the creation of a signal. For example, The Moving Average crossover Trading system uses two moving average. eg: 14 period Moving average and 10 period Moving average to create a signal. If 10MA cross above 14MA a buy signal will appear and 10ma cross below 14MA a short signal will appear.And also may use RSI, Stochastic, MACD to confirm the signals.
What is the advantage of Trading System?
a) It helps to control the Emotions.Emotion
is consider the largest enemy of the traders. When a trader follow the trading system, he may able to control his emotions perfectly and he can increase his winning trades.
b) Saving Times.
Saving lots of time to analyse the market.
What is the disadvantage of the Trading Systems?
For creating a Trading system, one should have very good knowledge of Technical Analysis and also the impact of parameters.
Is trading systems are useful?
Most of the trading systems available in internet are scams. but many successful trading systems are also in the market. The main challenge is find out the good one.
When you planning to purchase a trading system, it can be difficult to find a Good trading system. But most scams can be spotted by common sense. A guarantee of 1000% yearly is clearly outrageous as it promises that with only Rs.5,000 you could make Rs.1500000 in one year .If it is true, Why the creator want to sell it? If he use his own system, he can be billionaire in few months.
So better ask a free trial and test it yourself for few days . Never trust any unrealistic offer.
What are the Essential part of the trading System?
a) Technical Analysis Software.
It is a platform, which automatically analyzing the data (eg: open,high,low,close, volume,open interest etc..)
to predict the future movement of a particular instrument. Amibroker, Metastock, Metatrder,e-signal Advance Get are the popular charting software.
b) Realtime or End-of-the-day Data Feed
Data Feed means the descriptions of a trade which executed in the exchange. eg: traded price, traded quantity, time of the trading etc....