Creating your own trading system

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Creating your own trading system is a complicated task and there are many trading strategies viz., Trend following system, EMA system, and counter trend system. You can use the five day high price and five day low price as your strategy. The breakout or breakdown depends on volume; we should be sure about the trend to trade the opportunities. If you are looking for beginner tutorial, then this is it.

Trading must be your passion and you should be happy to trade every day. Habit makes one a successful trader. Genius with no roadmap will fail ultimately while an average person with definite steps would move towards their goal. To achieve financial success, you must train your mind and it is not possible in one month. It is a long term process and you have to get rich systematically.

How can you create your trading system? How can you be successful in stock trading? No trading system is 100 percent correct and you can’t plot the crowd emotion. You can predict the emotion of crowd with the news and stock indicators. But you can’t be right always; stock indicators are used with the news of the stock.

Trading system is like a blueprint for the traders. It is considered to be a trader’s plan which you use EOD. It is a guide that helps you get the best out of the market. You can design your own trading system and create your own strategy which has to be very simple. Tuning is necessary, initial days you must tune your system.

We must have less stoploss and the risk to reward ratio must be greater than three. You can design system with Amibroker or Metastock. Fine tuning the system gives you higher accuracy; most stock analysts do the same. For designing a system, you must consider several things in mind like

  1. News
  2. Stock levels
  3. Supports and resistance levels
  4. Chart patterns
  5. Crowd behavior

It is not like you get a buy signal and you can start buying. It involves a lot of analysis regarding the people’s behavior. Will the crowd buy above this price or sell below the price, it all depends on the crowd and how they react to the news. As a stock trader or analyst, you should be aware of the crowd behavior and understand the trading psychology or otherwise called as the price action well.

Even the best traders in the world would fail 4 out of 10 times but overall you must be positive and never lose your investment. If someone had the best trading system, he would get rich and not share it with you. There is no formula to success, you just have to be able to read the chart pattern and align your trades with the index.

 

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