Trading System

TME 013: Trading System


What is a trading system?

A trading system is a set of repeatable rules, that answers the following questions that a trader might have:

1) When should I enter a trade?

2) When should I exit a trade?

3) How much volatility is in the market?

4) How much should money I place the trade?

5) How much money should I lose on a trade?

A good trading system will answer those questions before a trade is ever placed.

The driver of any good trading system is the (buy and sell) signals. How do you know when to get into a trade?  This is where technical analysis comes in.  Technical analysis is an integral part of any trading system. Many tools have been developed by others to determine buy and sell signals some are below:

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Trend Trading TQQQ

Trend Trading TQQQ

Trend trading is a strategy that tries to profit from market trends.  In the past it has been used by the CTA industry to trade futures. In today’s time people have begun to use this strategies on stocks and ETFs.

One of the main components that help the success of trend trading in futures is leverage. Leverage allows a person to buy more than their account value to maximize gains. With stocks and ETFs the maximum leverage is much lower than futures contracts. While this maybe a good thing if you are trying to minimize risk it is bad if you are trying to maximize gains. To maximize gains leverage might be needed depending on your goals.

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