What is Forex Trading System

How do people usually start trading? A person opens a trading terminal chart, sees that the price, for example, goes up. He buys, but the price unfolds and goes down. He rather closes his position at a loss and opens a position for sale, but the price again unfolds and goes up. It turns out such unsystematic trade.

Or the price is actively growing up, a person sees the trend up, decides to buy, buys. But the price starts to go in the horizontal channel, then it turns down, then rises up again, and the person, passing through all these jumps, is lost, can do anything. This is characteristic of an unsystematic trade. A trading system is a set of rules that rigidly regulates all trading activities and excludes a subjective assessment of a person.

This means that if we have our own profitable trading system, we do not experience any emotions when the price moves quickly down, we do not make any decisions if the price goes in the horizontal channel or went up. We at every moment of time when the price is at each point, we know what to do, because we have a trading system, and it clearly regulates, rigidly fixes all the rules for opening and closing positions, etc. Roughly speaking, it's like an official instruction, following which we, in any case, will profit on a series of transactions.

That's what a trading system is.

What are the basic rules of the trading system?

1. The rule of opening a position. It regulates the conditions when a position can be opened: i.e. If certain conditions are met, then we buy, and if - other, then we sell.

2. The rule of closing the position. If we have strict rules for opening positions, then there must be rules when positions must be closed, because we get profit at the moment of closing the position. If we have somewhere opened a position, then sooner or later we must close it. And close the position is also necessary, guided by certain conditions. If all these conditions are met, then we close the position. If at least one condition is not met, then we do not close the position.

3. Rule of money management. What does it mean, we must manage the capital? This means that we must limit losses. If we at some point sold, but the price went further up, then there is no point in allowing our losses to increase. We have to close positions at certain levels at a loss in order to later enter the market with a different price movement, for example, buy, or wait, etc. But, in any case, we must manage our capital, and limiting losses is the main task of capital management.

4. Rule of management of exchange psychology. The first three rules completely define the trading system itself. We need to adjust ourselves in a certain way. It is necessary to educate in itself a correct view of trade in trading systems, in order to be able to adhere to the first three rules and get the result in the form of profit.

These are the components of a profitable trading system.

On the materials of the training video course Anatomy of trading systems.