Trading System is a set of rules to signal or execute the entry and exit of the equity. These rules are created based on various technical analysis tools. Various tools which are used to define these rules are Moving Average, Stochastic, Oscillators, Relative Strength and many others.
Traders generally spend lot of time optimising the stock trading system to attain stability and keep it risk free. Choice of these factors play a vital role in determining success of the system.
Stock Trading system has lots of advantages. It saves time of the trader. The operation which previously they had to do manually, such as the data analysis, can now be done easily via trading system. Thus, allowing traders to save lot of time. It also takes out the human error factor from equation. As everything is automated, error chances are reduced to negligible. In case of manual usage, a lot of factor may affect the outcome, such as skills of trader, temperament and emotional status which may lead to cloudy judgement.
Everywhere light is too bright, shadow is darker. The merits of stock trading system are tremendous but it also has demerits. Developing a stock trading system is a long and tedious task. One must have the basic knowledge of the technical analysis to effectively use the trading system. Also if you are using a third party software or outsourcing your work, be cautious about the same as it may be highly risky due to fraud risk. So, before seeking help thorough background check should be made about the company from which you choose to purchase the system.
As a whole the trading system is risky unless done cautiously. If proper precautions, measures are taken then the task becomes easy and saves you a lot of time.
