How to Create a Trading System

Creating a trading system can seem like a daunting task if you don't know what you are truly trying to achieve. The goal of creating a system is to find a set or rules and parameters that can give you an edge in the market and hopefully return a profit. Many traders have the goal of creating a system but focus on all the wrong areas. The main focus for the majority of traders is how to generate a profit. Now this is obviously a large part of a system but if your sole focus is how to return a profit and not the rest of your system then you are most likely going to overlook the other 75% of your system.


Lets break down how to create a system from scratch, for this example we are going to focus on price action since Gorilla Futures is based on price action.


The idea:

First off you need to have an idea on how you would like to trade, as stated above we are going to focus on price action. The idea behind this is traders need to first grasp the concept and it needs to resonate with them. Creating a system based off something you don't fully understand is going to generate nothing but problems. Many new traders run into this issue because they are chasing profits and not focusing on building a reliable system that works for them and resonate with them.


For many new and even experienced traders there is going to be a period of trail an error. You might have to try a handful of different trading ideas before settling on one. There is nothing wrong with this and this period should not be rushed. Spend a few weeks to a few months on each idea. Once you have a type of trading you would like to build on and create a system around then and ONLY then should you move on.


The system:

The system it self is broken down into three parts:

#1: Trading idea (Price Action)

#2: Parameters

#3: Rules


We know our first part is based on price action in this case, now we need to find our parameters. When we talk about parameters we are mainly talking about how we get into a trade,what we are going to do once in a trade and lastly how to exit.


Those three parts that make up our parameters might seem obvious but will need to be set in stone. For this example we are going to be looking strictly at price action and this system is strictly for example/demonstration purposes only.