Trading is nothing but finding direction of trend and then trading that direction. So here is how you can build that system.
Step 1 : Pick a high volume, high movement asset
Step 2 : Monitor the price movement pattern
Step 3 : Based on movement pattern, pick 2 variables to get short term and long term trend of assets that could work on assets.
Step 4 : Pick 2 variables to get in trade
Step 5 : Define your risk and profit booking strategy
All of above steps will contribute to just 10% of work.
Rest 90% is this,
Step 6 : Build at least 2 years of experience on above system, find out weakness of system and improve after testing system on 100 trades.
Example:
Step 1 : Asset Selection BANK NIFTY
Step 2 : Price monitoring. Opens most of the time with gaps, can stay stuck all day, usually trends only half of the day
Step 3 : Long Term Trend Variable : Major Support/Resistance Break. Short Term Trend Variable: Moving average of your choice. In this case I would be using VWAP
Step 4 : Variable 1 : Definition of Trend, Variable 2 indicator of your choice. In this case I am using Bollinger Bands
Step 5 : Risk : Max Risk 12,000 per trade, Reward : 1:1+tax
Step 6 : Trade this system for 2 years, after every 100 trades look for weak variables of system and make them strong.
System applied on today’s trade.
A system can not work flawlessly day in and day out, the asset behavior can change over time therefore a system review for after every 100 trades is required to ensure the system is working as expected.
