Trading system is a set of tools, rules and algorithms, that will help trader achieve profitability. Whatever combination of tools can be used as a signal – candlesticks combinations, news, indicators and so on. There are no limitations there, trader has flexibility here. The main demand – trading system should have an edge and generate gross profit exceeding gross loss.

Trading system should be described so, that trader should exactly know how to act in different situations. Trader should stick to his rules and not to break it, otherwise result will be unstable.

Trading systems can be divided on two groups:

MTS – Mechanical trading system. Trader executes signals that his system provides, manually. Most popular mechanical systems are based on indicators, but there are some them that even employ news to create a signal.

ATS – Automatic trading system or robot. It is an algorithm that automatically executes every trading signal. Most automatical systems are based on indicators. There are robots that employ Martingale and locks.

System consists of:

1. Strategy (the most important)

2. Set of rules for entry and exit

3. Money management (optimizing losses and increasing profits)

All factors above are used in the exact sequence. Also, it’s important to avoid «over-optimization» and not to fit your parameters to price action from the past to create perfect trading system. Market will change and all optimized trading systems tend to «break» and generate random results after that.