Build Your Own Trading System

[Build Your Own Trading System]

Everyone knows that trading is high risk.

 

Imagine yourself to be a soldier, who is your best friend to make you survive in the battlefield ? right, Weapon.

then, do you get your weapon ? if you do, just stick to it. but if not, how to get your own weapon ? or, how to build your own weapon ?

 

there are some steps you need to do:

 

1. Start with a concept

 

This step is the most important in this plan. Because the concept will be the core of your trading system. Develop your own concepts of how markets work. You could read about trading systems and study what others have done, there is a great deal of useful information out there. But most importantly, think for yourself.

In general, you should know what you would use to win in this market, chart pattern ? Elliot wave ? or something else.

2.Turn your idea into a set of objective rules.

 

After you have your concept, you should determine what your system is supposed to do and how it will do it. it is with this step that you produce the details needed to accomplish the programming task. You need to take the overall problem and break it down into more and more detail until we finalize all the details.

 

Let’s see an example:

A trader trades with chart pattern break-out. Following are the question he should answer:

a. Which patterns he would use ?

b. In which timeframe ?

c. How to confirm the break-out ?

d. What about the markets actions after the break-out ? how to add-positions according to those actions ?

e. How to measure the duration of the trend after the break-out ? how to track the trend and take profits ?

f. How to choose the best chart pattern when there are two or more patterns during a certain time ?

g. How to decide the positions according to the quality of the chart pattern ?

h. How to monitor himself ?

 

3. Historical test on the charts.

 

Following the rules you just determined in step 2, let’s check the trading signals that arer produced on the charts. We want to see whether our idea has been stated properly, and also, we want some proof that the idea is a potentially profitable one.

 

There are some standards to check:

a. During periods of winning, profits are larger than 40%, Drawdown is less than 10%

b. During periods of losing, losses are less than 20%

c. Winning rates are larger than 65%

 

so, after the 3 steps, we know exactly how we are trading. yes, we get the weapons. but, does it mean that we are ready to hunt money in the market ?

Not exactly ! the weapon is only part of the trading system.

 

(to be continue.....)

 

PS: sorry for my poor english. I'm not sure if you could understand what I post. if not, please let me know.

 

Best wishes

 

Thank you for your so much useful tips. Actually i am beginner in gold & silver trading.if you have any more tips for future trading of gold & silver.pls send me tips @ (gkasti@yahoo.com).

thanks again..........