- The trading system is considered to be one of the most important factors for profitable trading.
- Without a proper trading system, you will not be able to make the money out of the market.
- Thus, you need to develop a well-researched trading system before trading with a large capital.
- Our human mind is trained in such a way that it will tell us or instruct us to do exactly the opposite of what one should do to become a profitable trader.
- Our motive should be to control our mind, and for this, we will need a strong as well as a solid trading system that will instruct us to do what is right at that point in time.
- With this, your view will be not to make just money for the short term but to make money for the long run with a proper trading system.
- Thus, it is very important to follow a proper trading system than just your view in the market.
The importance of having a proper trading system
- There are very common reasons for having a trading system.
- Everyone needs a proper trading system to succeed in the stock market.
Some of the important points to having a proper trading system in the stock market are as follows:
Trading system will prevent you from gambling
- When you have a strong view on the market and you hope that your view will go right irrespective of other circumstances, then it is indirectly said that you are gambling.
- Whenever you are taking a trade due to your instincts and not because of your logic and system, then you will gamble.
- Unfortunately, many traders are committing this mistake, and they also fail to understand the importance of the trading system.
- When you are trading anything other than your setup or plan, then you are indirectly trading because of your emotions.
- Hence, it is very important to follow one particular trading system consistently for a long time because that will make you a successful trader.
The trading system will instruct you to follow the risk management principles
- Regardless of the trading technique that you choose, it is very crucial to keep your capital risk under control.
- You are probably doing something incorrectly if the average number of your lost trades exceeds the average number of your winning ones.
- The 2% rule in trading is the one that will stipulate that you should not even risk more than 2% of your whole trading account on a single trade, which will also include brokerage as well as other taxes.
- This is also a well-known trading principle.
- For example, you should not risk more than Rs. 2000 on a single trade, including brokerage and other charges, if you are trading with a capital of Rs. 1 lakh.
- So, this can be considered the most basic but effective risk management rule that you are supposed to consider while you are making your own trading system.
The right trading system will develop the right trading psychology
- The market is totally uncertain, but there is one thing that is certain in the market, and that is that the market will never care about you.
- Whether you make money or lose money, whether you are rich or poor, the market will not make any difference.
- But after knowing all this, many people are still getting emotional about their trades, and that is the reason why they get frustrated and also allow themselves to be in control of the markets.
- You will never become a profitable trader until you develop the right trading psychology.
- Once you learn how to trade what you see, not what you think, then you are on the verge of becoming a profitable trader because once you do that, then you will not allow the market to control you, but you are controlling yourself and your emotions with the help of your trading system.
Conclusion
The above are the important reasons that will make you believe about having a trading system.
Frequently Asked Questions (FAQs)
Q1) What is the most important part of the trading system?
Always using a trading plan is the most important part of the trading system.
Q2) What is the importance of the trading companies?
Partnering with the trading company will give you access to the global markets and expertise.
Q3) What is the purpose of the trading system?
The main purpose of the trading system is to manage the risk and increase the profit in any market environment.
Q4) What will make a good trading system?
Traders should maintain a disciplined as well as a systematic approach to their trades.
Q5) What is the main point in trading?
The main point in trading is to make profits from the price changes in the short term.
About Us
Nifty Trading Academy is our academy where we teach you about the stock market as well as technical analysis. We also provide live market sessions and upload blogs for the same.