Stock Trading System is a set group of rules, guidelines or parameters that give an indication for the right time to enter or exit the equity market. The points are usually referred to as signals and are represented in a chart showing real time execution of trades.
Technical analysis can be used to construct Stock Trading System by use of the following tools:
-Moving Average (MA)
Investors use these indicators by combining them to come up with patters that shoe the best entry points and exit points of the market. The following are advantages of using a Stock Trading System:
-It saves trading time once optimized
-It eliminates use of emotions while trading which is a big cause of failure
-It can be accessed from other sources. Since it requires technical analysis knowledge, you can have it from other sources. Test any system with demo account before investing real money in it.
-They are complex to develop and acquiring from other sources require familiarity with parameters used.
-To employ the system into work, the trader has to use their own knowledge or realistic skills in the system to make it work.
-To develop a Stock Trading System is time consuming and even after completion, it requires regular revision.