Why You Need Mechanical Trading Systems?
Traders use different approaches in their trading. There are always advantages and disadvantages of different systems. Majority of successful traders use self developed mechanical trading systems. The majority of unsuccessful traders depend on discrete trading method.
Many traders use their own developed trading systems. There are many actively developed trading systems for sale as computer programs also known as Expert Advisors or Robots. Theses robots vary widely in prices. It can be from a few hundred dollars to a few hundred thousand dollars.
Sometimes these computer programs are developed for a certain bank or a corporation. The significant advantage of these programs is that they generate signals that can be used by the trader for trading.
The discrete trading method is used by many traders. They depend on their experience and instincts in trading. It is like an artist trying to adapt to different market conditions and using flexibility and tactics corresponding to the particular market condition.
The main disadvantage of the discrete trading approach is the unstable trade results due to the stress factor influencing the trader. The traders mood and health can greatly affect the outcome of each trade.
Using a mechanical trading system almost completely removes the influences of the stress factor. It also reduces the negative pressure on a trader which is obviously a big plus. However, it prevents the trader from quick adjustment of trade tactics and strategies under changing market conditions.
It also doesnt allow the quick customization of the trading system in cases like the change of the account size. There are eight requirements that any ideal trading systems should fulfill.
1. A trading system should allow for the maximum adjustment to any traders psychological character and makeup.
2. It should be universal and does not depend on a particular market condition at any moment of time.
3. The trading system should be simple, logical and understandable comprising of ready to use elements and units.
4. The trading system should provide specific price signals for the trader to open and close positions at the levels chosen some time in advance.
5. The trading system must allow some room for the traders creativity.
6. Without violating its main principles and elements of the trading system, there should be some flexibility to modernize and adjust the trading system in accordance with the changing market conditions.
7. The trading system should relieve the trader from emotions. It should remove psychological stress in trading and should be ruled based that do not depend on emotions.
8. It should be customizable. Different traders can use the same method with different account sizes and different risk/reward appetites.
No one trading system can fulfill all these requirements. Change of market conditions could lead to negative results from a previously effective trading system.
The only way of satisfying these conditions is through developing a diversified trading system. Trading systems based on these requirements could be complex and adjustable. It can consist of a set of systems that can be used as the basis for specific trade tactics at any given moment. - 23311
Many traders use their own developed trading systems. There are many actively developed trading systems for sale as computer programs also known as Expert Advisors or Robots. Theses robots vary widely in prices. It can be from a few hundred dollars to a few hundred thousand dollars.
Sometimes these computer programs are developed for a certain bank or a corporation. The significant advantage of these programs is that they generate signals that can be used by the trader for trading.
The discrete trading method is used by many traders. They depend on their experience and instincts in trading. It is like an artist trying to adapt to different market conditions and using flexibility and tactics corresponding to the particular market condition.
The main disadvantage of the discrete trading approach is the unstable trade results due to the stress factor influencing the trader. The traders mood and health can greatly affect the outcome of each trade.
Using a mechanical trading system almost completely removes the influences of the stress factor. It also reduces the negative pressure on a trader which is obviously a big plus. However, it prevents the trader from quick adjustment of trade tactics and strategies under changing market conditions.
It also doesnt allow the quick customization of the trading system in cases like the change of the account size. There are eight requirements that any ideal trading systems should fulfill.
1. A trading system should allow for the maximum adjustment to any traders psychological character and makeup.
2. It should be universal and does not depend on a particular market condition at any moment of time.
3. The trading system should be simple, logical and understandable comprising of ready to use elements and units.
4. The trading system should provide specific price signals for the trader to open and close positions at the levels chosen some time in advance.
5. The trading system must allow some room for the traders creativity.
6. Without violating its main principles and elements of the trading system, there should be some flexibility to modernize and adjust the trading system in accordance with the changing market conditions.
7. The trading system should relieve the trader from emotions. It should remove psychological stress in trading and should be ruled based that do not depend on emotions.
8. It should be customizable. Different traders can use the same method with different account sizes and different risk/reward appetites.
No one trading system can fulfill all these requirements. Change of market conditions could lead to negative results from a previously effective trading system.
The only way of satisfying these conditions is through developing a diversified trading system. Trading systems based on these requirements could be complex and adjustable. It can consist of a set of systems that can be used as the basis for specific trade tactics at any given moment. - 23311
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in trading stocks and forex. Know These Forex Training Secrets. Learn Forex Trading.
posted by Mr. Forex at
12:35 AM
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