Trading System Design: Test Your Edge

Finding a logical reason that your trades should work is the first step in coming up with a market beating strategy. After that, testing is required to be certain your idea actually works in the market because, in the end, markets are driven by emotions and logic will sometimes fail in the face of that.

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Rules for Trading

After deciding which markets and what timeframe are right for you, the next step is to come up with the rules for trading.

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Designing a Trading System: What Should You Trade

Designing a trading system is simply a series of decisions. First is deciding what edge you have over all the other players in the market. This isn’t as difficult as it sounds. Using a logical approach to the markets, any individual can develop a unique insight that lets them profit.

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Trading Systems 101

Traders buy and sell for a variety of reasons. Some traders will make decisions based upon news headlines or gut feelings. One may read that gasoline prices are at record levels and decide they have to go down, while with equal certainty another trader decides the news justifies even higher prices. These strategies rely on luck, rather than mathematical probabilities, to succeed.

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What is a Trading System?

A trading system is a collection of formulas and rules that generate buy and sell recommendations. Trading systems have been developed for decades, but the recent advances in technology with the pc and internet have increased interest in them and broadened the number of people actively involved in their use. Technical indicators such as oscillators, …

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