With the ever-increasing use of virtual currency and its volatility, cryptocurrencies are being adopted across the world for various transactions. Cryptocurrency derivatives trading is a new trading area that many daytime traders are interested in. Last time we give you a brief introduction of the aspect of trading marketing and some point you need to remember. While in this article we will tell you the components of a complete system. We will give you the basics introduction of this, so you may have a deeper understanding of it.
What is a complete trading system?
A Complete Trading System includes each of the decisions required for successful trading: just as follow
1、Markets - What to buy or sell
2、Position Sizing -How much to buy or sell
3、Entries - When to buy or sell
4、Stops - When to get out of a losing position
5、Exits - When to get out of a winning position
6、Tactics - How to buy or sell
Markets – What to buy or sell
The first decision you need to made is what to buy and sell, or essentially, what markets to trade. If you trade too few markets, you greatly reduce your chances of getting aboard a trend. At the same time, you do not have to trade markets that have too low a trading volume, or that don’t trend well.
Position Sizing – How much to buy or sell
The decision about how much to buy or sell is absolutely fundamental, and yet is often glossed over or handled improperly by most traders.
How much to buy or sell effects both diversification and money management. Diversification is an attempt to spread risk across many instruments, and to increase the opportunity for profit by increasing the opportunities for catching successful trades. Proper diversification requires making similar, if not identical bets on many different instruments. Money management is really about controlling risk by not betting so much that you run out of money before the good trends come.
How much to buy or sell is the single most important aspect of trading. Most beginning traders risk far too much on each trade, and greatly increase their chances of going bust, even if they have an otherwise valid trading style.
Entries – When to buy or sell
The decision of when to buy or sell is often called the entry decision. Automated systems generate entry signals which define the exact price and market conditions to enter the market, whether by buying or selling.
Stops – When to get out of a losing position
Traders who do not cut their losses will not be successful in the long term. The most important thing about cutting your losses is to redefine the point where you will get out before you enter a position.
Exits – When to get out of a winning position
Many “trading systems” that are sold as complete trading systems do not specifically address the exit of winning positions. Yet the question of when to get out of a winning position is crucial to the profitability of the system. Any trading system that does not address the exit of winning positions is not a Complete Trading System.
Tactics – How to buy or sell
Once a signal has been generated, tactical considerations regarding the mechanics of execution become important. This is especially true for larger accounts, where the entry and exit of positions can result in significant adverse price movement or market impact.
Thanks for your time, after reading this article, you may have a deeper understanding of the components of a complete system. It was an honor to share the experience of cryptocurrency derivatives trading with you. In the next time, we will discuss how to making sense of trading. For more information, please follow all of our newest articles on Bybit.
Bybit is a cryptocurrency derivatives exchange with 100x leverage BTCUSD perpetual contracts; providing a fairer, faster, and more human trading environment. With a matching engine 10x the industry speed, a 24/7 multilingual CS, and an advanced order system. www.bybit.com