So far, we have taught you how to develop a trading plan. Now let’s discuss why it is important to identify which type of trader you belong to.

Next, we will teach you how to add to the trading plan framework and tell you how to create a trading system.

More specifically, we will tell you what a mechanical trading system is.

Mechanical trading systems refer to those systems that can provide traders with trading signals. They are called mechanical because traders will trade no matter what happens in the market.

In theory, this will eliminate all prejudices and emotions in trading, because as expected, you should follow the rules in the trading system, no matter what the system is.

If you check the “Foreign Exchange Trading System” on Baidu, you will find that many people claim that they have a magical system that you can buy for “only” a few thousand yuan.

It is expected that these systems can earn thousands of points per week, and they will never lose. They will show you the expected “results” that their perfect system can bring, and that will make you shine and say to yourself, “I can make this money by just giving this person 3,000 yuan. In addition, If his system can make thousands of points a week, I will soon be able to make my money back.”

Slowly, cowboy. Before you tell them your credit card number and make an impromptu purchase, you need to know a few things.

In fact, most of these systems work well. The problem is that traders cannot follow the rules applicable to the system.

In addition, in addition to spending thousands of yuan to buy a system, you can also spend time building your own free system and keep the money you want to spend as your trading capital.

Creating a system is not very difficult. The difficulty is to follow the rules you made when you created the system.

We can see many articles selling various systems, but few teach you how to build your own system.

This lesson will take you through the steps required to develop a system that suits you. At the end of this lesson, we will take the system used by a foreign exchange trader as an example to show you how good our system is.

The goal of the trading system

We know you would say, “The goal of my trading system is to make hundreds of millions of dollars.”

This is a good goal, but this goal will not make you a successful trader.

When you build your system, you have to achieve two very important goals:

  1. Your system must be able to determine trends as early as possible.
  2. Your system must be able to prevent you from suffering two-way losses.

If your trading system can achieve the above two points, your chances of success will increase.

The reason why these goals are more difficult to achieve is that they contradict each other.

If you have a system that is characterized by being able to catch trends quickly, then you are likely to catch fake trends.

On the other hand, if your system focuses on avoiding losses, you may be late in the transaction or miss many transactions.

When developing a mechanical system, your task is to find a compromise between these two goals. Find a way to identify trends as quickly as possible, while distinguishing false trends from true trends.