Pocono George

Dave,

I've been listening to the classes on this site, Thank you for the education! You often refer to a "trading system". Is a "trading system" nothing more than a set of rules using price action, technical indicators, and money management? Or is there much more to it than that?

.....Pocono George

David Waring

Hi Pocono George,

Thanks for the question and for participating in the community.

I think you will probably get different answers to this question depending on who you ask. I am pretty loose when using terms and tend to use the terms trading strategy and trading system interchangeably. I think a lot of people however would say that a trading strategy is a set of rules for entering the market, exiting the market, managing a trade once in the market that a discretionary trader or someone who uses some discretion on their trades uses. Similarly I think a lot of people would say that a trading system is a set of rules for entering the market, exiting the market, and managing a trade once in the market that is set in stone so to speak and executed automatically without discretion.

So to answer your question in my opinion a trading system can be as simple as trading when two moving averages cross each other and then closing the position when they cross again. Now wether that would be a good trading system is another story. I am going to go more in depth into what I feel a good trading system or strategy should include in later lessons. Those lessons however will be based on Dr. Van K Tharp's work which you can find a summary of if you would like to delve into it ahead of time here:

What is a Trading System?

If there are any other thoughts on this subject or questions please feel free to post them below.

Best Regards,
Dave

Pocono George

Can you demonstrate a sample trading sytem? Is there a baseline system we can begin with then add our own style?

David Waring

Hi Pocono George,

I think that its important for each person to develop their own system so they really know all the ins and outs of it. So with this in mind what I am working towards in my lessons is what I hope will be a complete guide to everything someone knows to develop their own trading system. With this in mind I feel that it would be jumping the gun a bit to give a system for people to start trading now as people will not really understand what it is that they are doing with the system until they understand whats behind it which is what the lessons are for.

The lessons that are done so far give a large part of the equation which are methods for reading the market, trading psychology, money management and position sizing. With this in mind what I would suggest is starting to practice trading with play money with the things that we have discussed so far as this is a lot to take in.

Best Regards,
Dave

Pocono George

Dave, thanks for the advice...Keep up the good work! I look forward to your future classes on building a trading system.