What Is a Trading System?

Before I get to the main discussion, I will quote a sentence that was written by Sun Tzu, the contents are as follows:

The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.

Why you need a trading system?

For a change of traders are losers become a profitable trader, you need a trading system. The question is, whether the fact that the trading system?

First, Let see what is the definition of the system. According to the dictionary, the system is a means, methods or procedures are organized, regulated, can be applied repeatedly. Examples such as fast-food restaurant franchise business. All branches implement the same system, from the menu, spices, cooking methods, even to the interior of the room. Because profitable, the system is consistently repeated in all its branches.

In the context of trading, trading system is a way or an organized trading rules, applied regularly and repeatedly. Some traders refer to this trading system as a trading plan. The sense is the same.

If you have 100 million to open a restaurant business, what do you do first? Most likely you will do some research. For example, where the location, what food that will served, how much it costs and so forth. Then create a new plan or a business plan. Well, if you want to trade shares of 100 million, are you going to do the same thing? Supposedly, YES! Trading should be treated equally. Otherwise, it is tantamount to gambling. Unfortunately not all traders have a trading system or a trading plan. Their home buying or selling based only feeling or recommendation. Furthermore, predictably, they were not among the 5% of traders who succeed. By not having a plan, you are planning to fail.

You called a success as a trader if you can increase your capital balance. The balance of the increase derived from trading profits. The more trading profit coffers means you grew older. Thus, the key to success in trading is trading repeat that provide benefits. In other words, you must have a trading system that aims to repeat the successful trading.

If you do not have a trading system, usually a big profit when you are, then at other times a big loss, to spend money in your trading account. There is no consistency in your trading.

If your trading like the picture above, how can you increase your balance? At least you will break even, if you're lucky.

Maybe you could say that does not require trading system, because you know someone traders who do not have a system, but can continue to profit. My answer is probably not that person does not have a trading system. He also has a trading system, even though he does not realize it. Trading system needs to be interpreted broadly. Not just a matter of indicators, analysis and other technical matters. Traders are unknowingly doing the same thing constantly, which allowed him to record profit consistently in the long term. Without realizing it, the system naturally has fused with her​​.

I once had an acquaintance unique stock trader. He did not use technical analysis. Also did not understand the fundamental analysis. He said that his brain has rusted for things like that (although I think actually he's not stupid). Every day he comes to the stock gallery. But he was not trading. Rarely turned to the monitor. His work just to chat, read a newspaper and drinking a cup of coffee. Then how he trades? He only started trading at the sight of other friends of stress or panic. So when others panic selling, he panic buying. I think, "crazy!". But he always do that. And he quite often makes a profit from the market rebound. In the world of trading, the trader as he is referred to as a contrarian. If the market turns down again, he sold shares directly. That he is trading at any time. Unconsciously, he had a trading system. Naturally he had a rule when buying stocks and when to sell.

Consider it, a trader who has always been different from the system of traders who do not have a system. Traders who have system always CONFIDENCE. He knows when to act and what to do in any situation. Back to the earlier acquaintance. If he recommended certain stocks that are rising fast, he simply replied, "What do I care !!!?". His friends think, given the money but instead rejected. Not that she did not want to profit, he just was not comfortable because it violates his own habit. Contrary to the current system makes benefit.

People who do not have their own systems generally always acted carelessly, quickly confused and panic, or just looking for information which direction the market to anyone, that just makes him more confused. Just look at the people who like fast frantic trading on the mailing list or forum, either stocks or forex. Certainly the person does not have a system. Usually they just follow, regardless of the risks.

Trading systems like a weapons that help you face the war in the financial markets. You certainly do not went to battle with only bare hands? So, before you make a trade, you should have a trading system.