- Summary: 1. Working of stock system2.

The user of the system makes consistent amount of money, by following the system. There are many stock trading systems followed in the real world. Some work better, some fare very badly. The trading system suits few people because of the inherent design of the developer. When a trading system is advertised, there are two sets of people who are in the play. There is a designer and there is a user.

The designer gives us his trading system for many reasons. He gives us of good intentions which are rarity. He thinks that he has found a great system of making money and wants to share that system with his fellow people and thereby also making some more money for himself when people buy the system. The good intention is that he also wants other people to make money as he is doing. He does this because he thinks that he has found a stress free means of making money from the market. There are other designers, who back test a certain trading system and think that it will work., It may work some time and many a time, it may fail. He might not know if it would be a success or not. He wants some real crowd to test it and also make some money for himself.

There are some professional designers of a trading system who are also

professional traders who by the virtue of years of trading experience have devised few means and methods and a discipline which they want people to follow. The people who follow them think that they would also make money. The professional trader might have back tested the system for years, and system may work perfectly only for the humane qualities that is required of the user.

The user of the system might not a having fast access to the resources nor might he have the experience to make a quick decision. He might not be a quick person who might be willing to spend his hard earned money on some machine calculations. All these factors determine the working of trading system designed from the perspective of the designer.

The user of the system might use it for his purpose. He might not be able to follow or figure out a system of trading the market that he would like to experiment. He might not succeed, because the system might not be performing to his expectation. Sometimes the system might give a sell signal too soon. If he ends up taking the signal, he may lose money or does not gain money at all. His gut instinct might tell him that it might be too soon for him to sell; however, since he has to follow the system fully well to get the full benefit of the system, he might be willing to follow the trading system. The user is in a dilemma always while trading. He does not always know if the system will be working for him.

For example, a system designed by a position trader does work for only the position trader; it does not work very well for other types of trader. The reason for this is obvious. The trading system designer may have designed the system based on his type of style and his trading mentality. It may work very well for that particular designer. When the trading system is applied and used by hundreds of users, then the Trading system employed is exposed.

Few examples of a trading system are as follows.

One system asks the user to use technical indicators like RSI and a MCAD combined together. This system tells the user when to buy and when to sell. The system asks the user to buy when the RSI is oversold condition and the MCAD is also moving up.

Some other systems ask the user to use a Bollinger band and a SlowStoch. When the average lines of a Bollinger band come together, the stock may move rapidly either in up direction or the down direction. The Bollinger band combined with the oversold or overbought condition of the slowstoch tells the user to buy or sell the stock. This is another example of trading system.

There are hundreds of time-tested, back tested trading systems used by big companies, famous traders and professional tip givers. But the reality of using the trading systems is quite the opposite. Many a time a user of the trading system realizes that he is losing money and somehow the trading system does not fit his style. So, he either discards it or does not use it always. So this method of using the system does not give him the incentive to use a trading system. So he ultimately goes back to using the old time tested ways of his trading. So, he ends losing sometime and winning sometime.

So, how to select the system

Understand the system very well. One should see what they are asking the user to do. A system designed for a position trader and to be used by a position trader will not work for the day trader. So the deal is to see the suitability. The system needs to be used by the people for whom the system is designed for. And they the user should have the resources and patience and time to see what are said by the system. For example, a system that asks you to hold a stock for a month goes down after a week and the user panics and sells of the stock, the trading system is no good for him, because the system is asking to send hold for a month but the user is unable to hold because of disciple or cannot afford to lose his hard earned money. So one should get a free trial of the Stock trading system or do paper trading with the system for a while before deciding on the usability of the system for his or her purpose.