What Is A Trading System?

By Author: Emilia Kramer
Total Articles: 66
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In the late 1950s, an American by the name of Edward Thorp did. He claimed that he has invented a method to beat the game of Blackjack. Nobody believes him. So, he visited the casino in Nevada with $10,000 to prove his point. At the end of the weekend, he has won more than $11,000, which is double the amount he has brought.

With a proven method, he proceeded to repeat the same success at other casinos, until he was banned from entering casinos.

How was He able to Beat the Odds?

Edward Thorp was a professor of mathematics and through keen observations of the Blackjack game and his knowledge of probability, he devised a method to increase his odds of winning. He divided cards into 3 sets. Cards 2,3,4,5,6 valued at +1, 10,J,Q,K,A valued as -1, 7,8,9 valued as 0. With every card being dealt by the dealer, he kept a running count. As the deck gets depleted, with his running count, he was able to calculate mentally what is his odds of winning. When he has a good chance, he will bet larger than his average bet.

Do You Have a Trading Plan?

Many people trades the futures market without any plan. Wins ...
... and loses are random. As a result, trading can toggle between winning streak or losing streak. Their emotions are also swayed by their performance in trading. To have consistency and almost a "sure-bet" like Edward Thorp, you need to have a definite trading plan with an edge.

Basics of a Trading System

The best thing is that you do not have to be a mathematician to develop a trading plan or system. A trading system has a clear entry point into the chosen market, with a very clear exit point if you are wrong, and finally a very clear exit point if you are right. By having a trading plan, you will be ahead of them.

Only Robots Trade Systems

I have taught many people about trading systems and they have been benefiting from using such a methodology. Perhaps the first time they hear about this method, they will resist by saying that system trading is like robotic trading. If the huge hedge funds are all systematically trading the markets, there would not be a need for human traders.

A Final Note

They are not entirely wrong. Trading with a system eliminates human emotions and reduces human errors due to fatigue or stress. However, bear in mind that trading system is not a "holy grail" and discretion must still be exercised, when the system user has developed sufficient experience with the system.

You can learn more about how to develop a trading system for your own use at my website [ www.futures-explained.com ].

Take the first step to futures trading now. The website will explain what are futures and how to profit from it. Learn what the big boys are doing and make money together with them!
Edmund Peh is an expert in trading and runs the very successful and popular website about futures for beginners [ www.futures-explained.com ]. He has helped thousands of people to get started in trading futures. Visit http://www.futures-explained.com right now for more information on futures.