Trading systems are software that allows traders to conduct trading activities in a timely and organized way. A trading system is a cluster of manually defined rules that prompts the entry and exit for a given trade equity. The trader has to assign entry and exit points on a chart for certain defined equities and the task will be completed at the designated time and date.

A trading system is something like a sophisticated organizer. This organizer also executes tasks pertaining to the trade once it gets the signal. Signal is the trading system jargon for the points of entry and exit. The rules for a trading system are developed through trading and analytical tools. Some of these principles include: Moving Averages, Stochastic, Oscillators, Relative Strength, and Bollinger Bands.

Two or more principles can determine a single rule. The mechanics behind rule- development is complex and requires tremendous technical as well as trade know-how. This is one reason why trading systems are not yet widely accepted. Many people incorrectly think of trading systems as being beyond their capabilities. Actually, there are several software and trading firms that have developed their own trading systems and market these aggressively. Some of these are very useful while some have received mixed ratings.

Trading systems make trading activities a lot faster and easier once you have done the initial work of setting the rules in place. Also, the system doesn’t require constant manual operation -- you can invest your money even while you take a nap.

Trading systems have penetrated virtually every equity market. In stock trading, futures trading, and even in the complex FOREX market, traders extensively use trading systems. All in all, developing a trading system is not easy but a good trading system is definitely a boon for all traders.