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Trading systems are software that allows
traders to conduct trading activities in a timely and organized way.
A trading system is a cluster of manually defined rules that prompts
the entry and exit for a given trade equity. The trader has to
assign entry and exit points on a chart for certain defined equities
and the task will be completed at the designated time and date.
A trading system is something like a sophisticated organizer. This
organizer also executes tasks pertaining to the trade once it gets
the signal. Signal is the trading system jargon for the points of
entry and exit. The rules for a trading system are developed through
trading and analytical tools. Some of these principles include:
Moving Averages, Stochastic, Oscillators, Relative Strength, and
Bollinger Bands.
Two or more principles can determine
a single rule. The mechanics behind rule- development is complex and
requires tremendous technical as well as trade know-how. This is one
reason why trading systems are not yet widely accepted. Many people
incorrectly think of trading systems as being beyond their
capabilities. Actually, there are several software and trading firms
that have developed their own trading systems and market these
aggressively. Some of these are very useful while some have received
mixed ratings.
Trading systems make trading activities
a lot faster and easier once you have done the initial work of
setting the rules in place. Also, the system doesn't require
constant manual operation -- you can invest your money even while
you take a nap.
Trading systems have penetrated
virtually every equity market. In stock trading, futures trading,
and even in the complex FOREX market, traders extensively use
trading systems. All in all, developing a trading system is not easy
but a good trading system is definitely a boon for all traders.
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