Trading Systems Introduction
A trading system is basically a set of rules that determine entry and exit points for any given stock. Traders often refer to these points as trade signals.
A trading system is objective and mechanical. The purpose is to provide a strategy to produce profits greater than losses by controlling your trades for you.
Trading systems usually include one or more technical indicators in their implementation. For example, a Moving Average Crossover system would buy when a short-term moving average crosses above a long-term moving average and sell when a short-term moving average crosses below a long-term moving average.
Trading systems may have any number of rules, such as “don’t buy unless volume is trending upwards”, or “exit if Parabolic SAR crosses the close”, etc. The actual profitability of a trading system depends on how well the trading system’s rules perform on a trade-by-trade basis.
Traders spend much of their time optimizing their trading systems in order to increase profits and reduce risks. In the case of a basic Moving Average Crossover system, this is accomplished by modifying the parameters of the moving averages themselves. A trader may optimize a trading system by means of back testing.
The back testing feature of Vanguard AI allows you to back test your trading systems and modify parameters to achieve the maximum amount of profit and minimum amount of risk.
Trading systems found here in Vanguard AI’s Knowledge Base are just some of the many variations of trading systems available. As always, we highly encourage you to back test each system before using it in real life trading and use proper risk management protocols.
Some of the trading systems in Vanguard AI Knowledge Base takes shorting positions and this is to show how to script systems that has shorting strategies. Shorting is yet to be allowed by the Philippine Stock Exchange so you can simply remove the shorting portion from the system script.