David starts by introducing some of the key aspects of system development, including the importance of Psychology and Money Management in creating successful trading systems (referencing Dr Van Tharp).
All good trading systems start with a plan; the plan needs to accomodate entry, exit and money management rules - all of which need to be tested when developing a robust system.
David highlights research by Tharp which showed a trading system can be profitable when based on random entries, but only if money management rules are in place (in this case a coin toss + 1% stop adjustments).
The next chapter introduces the concept of Expectancy in Risk Management. In addition to aspects on trading float, maximum loss, trade size and initial stops.
His seventh point introduces trailing stops and when to set your exits.
His eight step talks above Software - the only software you need to create a trading system is already available at Zignals for FREE and only Zignals offers a 50:50 revenue share with the trading strategies you create.
The ninth step covers backtesting. One aspect David doesn't mention is the importance of out-of-range testing. Trading Systems should be developed within bull/bear cycles then run against three out-of-range timeframes for robustness.
The tenth step involves studying the performance of your trading system and looking at areas for improvement, e.g. win percentage, risk:reward, and drawdown. Maximising profitability is the primary goal of your strategy.
Step eleven discusses brokers and what features you should look for. The final step is about knowing yourself and understanding and developing a strategy which works best for you.
So how can Zignals help you build your free trading system?
* First we offer a FREE guide on building your first trading strategy on Zignals.
* Learn how to promote your trading system using Twitter.
* Start a Zignals Trading Strategy Business and earn 50:50 in a revenue share with Zignals
* Read what others are saying about Zignals on Investimonials.com.
Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies via his Zignals home page. Each Zignals member has an unique home page which they can share with friends and clients to sell their strategies. Zignals offers a full suite of financial services including price and fundamental stock alerts, stock charts for Indian, Australian, Frankfurt, Euronext, UK, Ireland and Canadian stocks, tabbed stock list watchlists, multi-currency portfolio manager, active stock screener with fundamental trading strategy support and trading system builder. Forex, precious metal and energy commodities too.
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