iCharts Discussions

[svkum]

Do you know how to build a trading system? Well,
first you need to know the difference between a
system and a method.

A trading system is a clearly defined set of rules
that produce a predictable result. If 10 traders
apply the same rules then all 10 traders should get
the same results.

A method of trading is discretionary in nature and
relies on the individual's own ability to make a
decision with the information he has. In other
words, you decide to take the trade or not take the
trade depending on what you see on the charts.

One approach is no better than the other. Some
traders like to be discretionary and others like to
use a system. The main problem with each approach
is:

1. Discretionary traders often let their emotions
get the better of them and make bad decisions. The
indicators might be telling him to do something and
he doesn't, based on a feeling that the market
might do something else.

2. System traders can spend years trying to develop
a set of rules that actually work. They can spend
months analyzing historical data to apply their
rules, only to find they don't get the results
they want. It can also take a system a long time to
prove itself during live trading. You have to wait
for the market to go through all its stages before
you know if the system really works.

S V KUMTHEKAR

[chellps]

Believe what is happening during Trading
For example, A Co. might have made fantastic profits, but if market beats it, we should also beat it, If we go for rescue, we will be beaten by the market.
Method and system are like man and machine respectively, If certain conditions are met machine will act but man will give leniance hoping that the condition will become better. Most of the time machine will only win.