Building a Stock Market Trading System

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Your stock trading system should fit your lifestyle

Once you begin to understand the stock markets, you should be able to set up a stock market trading system, which fits your needs.

A stock trading system is essentially a set of rules used by a stock trader to cover the whole trading process. That is, it identifies which stock to buy, how much to buy, when to buy and when to sell.

man and child walking

To construct your own stock market trading system some of the things you need to consider are:

  1. Your family;
  2. Where you live;
  3. Your time lines;
  4. Your personality;
  5. Your account size;
  6. Your life schedule;
  7. Your risk tolerance;
  8. How much are you paying in brokerage fees;
  9. The amount of time it takes you to buy or sell a stock;

The goal is to design a simple stock trading system that fits your life.

Let's look at some things that occur in your life.

If you have a $10,000 account and a broker who charges 2% per trade then you likely want a stock market strategy that buys very infrequently and rides long gains. You cannot afford to trade frequently. If you do, you will likely lose all of your money to commissions.

If you have a Monday to Friday day job then you will likely not be day trading.

If you cannot sell a losing stock then you may want to consider other ways to invest, instead of trading.

If you cannot sleep at night because you have a large position in a stock, you may need to rethink your position size.

If you have decided that none of the existing systems you have found fits your life and trading style, what do you do? How do you go about building your own trading system?

A Basic Trading System

First, you need to identify a concept that you want to trade in a specific market and determine if it is profitable.

Then you would want to determine what your risk tolerance is.

Lastly, you need to identify how you would get in and out of the market.

If you can do all that then you can make a stock trading system that fits your lifestyle.

If you are interested in building your own trading system and want to learn more, you can begin by understanding how other stock traders have built their trading systems. Reading the books written by experts in our book summaries section is one way to go about building your own stock market trading system.

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Monte Carlo Simulator
for Traders
Having troubles sticking with your trading system?

Do you move from system to system looking for the one system that will bring you riches?

Perhaps you already have it and tossed it aside when it went into a down period.

Using this Excel based program will show you what you can expect out of your trading system once you know the % wins and profit factor.

Stop wasting your time searching for the perfect system (which does not exist) and start trading.