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First we'll start off with what a system is. According to Merriam-Webster's Collegiate Dictionary a system is "an organized or established procedure". It follows then that a stock trading system can be defined as "an organized or established procedure for trading stock". Two words in this definition are very important. Those words are organized and established.
These words basically tell us that a stock trading system is planned. Planned is good because it indicates that when trading using a stock trading system that we know what to do ahead of time. Every profitable stock trader has a plan. You don't want to jump into a trade and then try to figure out your next move at the last minute.
Another thing we can say about stock trading systems if that they are designed to trade stocks profitably. That, of course, is the intention and not necessarily the outcome. Basically I haven't heard of anyone wanting to create a stock trading system that loses money. Stock trading systems may be broken down into 2 basic types:
Fundamental
Technical
The differences are that fundamental analysis uses economic data about supply and demand whereas technical analysis uses past price, volume, etc. data. Most of the time when someone refers to a stock trading system they are referring to a system designed using technical analysis. Stock trading systems range from very simple to very complex. A simple example of a stock trading system would be as follows:
Buy a stock at the open every Monday
Sell the stock at the close every Friday
I know this is a simple stock trading system and you're probably saying to yourself, "That would never work". Maybe it would and maybe it wouldn't...only through testing would we be able to find out.
Stock trading systems have grown in popularity over the last few years. One of the reasons more and more people are trading stocks using stock trading systems has been the need to have more control over risk. After the sharp decline in stock prices starting about April 2000 we all started to realize that maybe there is more to making money in the stock market than "buy and hold".
Trading in the stock market is something that perhaps everyone in the world has considered at one point or another and when you are thinking of entering into the financial game of trading, there are some things that might be good to consider. A share of stock is really just a financial asset or an economical extension of a company that is then released to the public for sale. The whole function of the share is to ensure that there are funds coming into the company via public sale of the stock or share, which then allows the company to use these funds to expand itself and gain much more profitability.
The value of the stock is really dependent on the company that the stock belongs to and this is down to many factors which can also include the performance of the company and the financial figures that it develops annually. But this is not important now. What is important is that now you have made the decision to actually invest in the stock market and to do so effectively, you have heard that having a stock trading system to help you out is one of the ways that retail traders have been using to make decent money and good headway into the stock market.
This article does not really get into the technicalities of what should be a good stock trading system, what this article does is that it breaks down the fundamentals that should be there making the system something that everyone can recognise is good. For one thing, it should be compatible with a whole host of platforms. This would cut down on the complaints that people have been producing saying that some of the stock platforms available are not compatible for some older systems.
The next thing that you should look out for is that the stock trading system should be user friendly and designed for universal use. Ease of use is one of the most important things that should be a feature within a stock trading system. Some of the problematic systems out there are actually those that are really difficult to use and they have not been designed with the user in mind. The last element that should be in the system is that it works! That is the most important thing and you should not blindly be just buying a system and hoping for the best.
Read the reviews on it and talk to as much people as you can. There are many sites out there that have been set up to review and break down stock systems and recommend the best to the consumer out there. The advice is that you need to be able to read this and make a decision from there and thus you would be able to get your hands on a good system that can help you make trading decisions and of course, eventually, make you money from the stock market trading environment.