A Trading System is a set of rules according to which the signals are generated for the opening and closing of speculative positions. Any trader uses for its operations a set of rules that can be more or less complex and subject to exceptions. There are basically two models of the mechanical and discretionary trading that in this and the next 2 trading post will talk about the mechanics, then the possibility of teaching a computer to our trading system and make it fully automatic.
Before starting work, a trading system, regardless of basic rules which constitute it, should be able to identify the type of market in which it resides. Not all automatic systems are suitable for all markets, in principle it is possible to identify four different types of trading systems that fit at four types of market: Trading Systems
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Trend Following Trading Systems-based media and Resistance
* based on Breakout Trading Systems Trading Systems *
based oscillators
In trading online trading systems probably more common and easier implementation are based on Trend-following indicators such as MACD and moving averages, or they can to capture large market movements and remain in position until the trend not reversed. The trading systems of this type generally produce their profits with a limited number of transactions but often generate false signals during periods of congestion of the market. For this type of system is the 80/20 ratio where 80% of the profits derived from 20% of transactions. Their strong point is certainly represented by the large gains that are able to provide during trend.
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