• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 10. Trading Systems > Your Trading System

Your Trading System

When you mechanize a system for your personal use, you take all your discretionary judgments and build them into the rules. For example, if you know you are uncomfortable with a high level of risk, you make a rule that sets a tolerable level of risk. If you want to trade a currency-only portfolio, you make that a part of the rules from the beginning. In other words, you hardwire all the different scenarios that you would see in daily trading in advance across your portfolio. If a market rises 100 percent in a day, you have rules that tell you what to do. If a market loses 10 percent, follow your rules. With your trading rules established in advance and put into your system, you can avoid constant discretionary decision-making.

When you are in the heat of the trading battle, your rules for entry or exit or how much to buy must be clear. You cannot afford to think about the rules as the situation unfolds. You must have the precise and unambiguous plan established in advance. It also helps to be on the defensive:


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint