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Tradewinds

The Ingredients of a Trading System

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In an article named, "What Is a Trading System?" By Van K. Tharp, Ph.D., Dr. Tharp interviewed an Army systems expert, LTC Ken Long, about developing systems.

 

1) Define who you are:

2) Objectives:

3) Calibration:

 

Those 3 things were suggested to be the starting point in developing a system. In the article, a distinction is made between a trading plan, a trading strategy and the trading system.

 

The trading strategy includes things like the setup, and stop losses. The trading system is more like a business plan.

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The trading system defined in the article includes a "Self-Knowledge Section:"

 

It suggests listing your strengths and your weaknesses and how you plan to to capitalize on your strengths and avoid (or overcome) your weaknesses.

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