TradingBlog

Technology advances helps change trade systems and nourishes the growth in this world of speculation. One of the many recipients of faster and stronger technology is system trading as high speed computers now help retail and institutional traders develop systems, crunch numbers, and back test hypothetical results in seconds. Traders need to question themselves with this question, “With explosive advances in technology and market information, why is system trading so difficult for most who give it a try?”

The key to a proper trading strategy drills down to the foundation of that strategy. To have the proper foundation, a solid understanding of how markets work and why price moves as it does is to be understood. Trading system should not have any flaw in thought process the existence of which lead to poor trading results. If we want a consistently profitable trading system, we had better make sure that the person on the other side of our trades is a consistent losing trader. Our system had better be an expert at finding a novice trader or we are in trouble. We don’t need to know the exact person on the other side of our trade, we just need to know if they are a consistently profitable trader or a consistent losing trader, and the chart will give us most of this information.

A proper trading system need to have reality based logical rules.

Failure à Success
In reality, a proper trading system means a simple transfer of accounts from those who do not realize market logic to the accounts of those understand the market logic. Trading systems just accelerate the process.

Most traders who develop trading systems don’t take this approach or think in the simple terms. Most traders do not begin their knowledge path by managing institutional order flow. The huge majority of traders will begin with a trading book or tutorial developed by a writer or speaker. It sure will NOT be from a real market speculator. Unlike real trading system, books are filled with conventional use of indicators and chart patterns that may not work. If so, the author would certainly not be selling the book to you. Instead he may be a leading trade broker in the market now. When designing your trading system, make sure you bring your foundation back to the basics of how and why price moves in any and all markets.