Where one lies on the spectrum largely comes down to preference and experience. Others will encompass much more than that. Some trading systems will simply give loose guidance regarding setups and risk, and leave the rest to discretion. This list is by no means exhaustive.Īs mentioned earlier, there’s certainly a spectrum when it comes to how much discretion a trader allows in their approach. In essence, a trading system is a set of rules or principles that governs a trader’s overall approach to trading financial markets.Ī trading system will therefore outline what types of trades a trader can take, the markets they may engage in, specific setups/structures that trades may be premised on, risk management, rules around times of day or trading sessions, trade management, and so on. I suppose since I’m outlining how one might go about systematising their trading, it would be helpful not to assume the premise and instead to make a case for a rules-based approach to trading. I think I can shed some more light than that on this topic. Most of the material I’ve found on Twitter regarding trading rules/systems has been generic “Don’t FOMO/trade the trend/buy low sell high” shit.
Note that this is also aimed at discretionary traders. The idea is to help novice traders be more organised in how they approach their trading and to set the framework for developing a set of rules or principles to guide them in this endeavour.
This outline is by no means prescriptive.
Trading systems exist on a spectrum from the rigid and automated to the loose and discretionary. I will note from the outset that this is a very broad topic. The aim of this article is to outline the author’s view on what a trading system is and to guide novice traders towards systematising their approach to trading.
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