The previous article mentioned what aspects should be considered when defining the scope of a trading system from a top-level perspective. This article will talk about the three key points to grasp when building a trading system and how to grasp the technical aspects.

First, when developing a system, there are three key points that should be kept in mind:

1. The action is clear and executable

Exit, entry, adding positions, closing positions, taking profits, and stopping losses all require clear conditions as a basis, and this condition can be judged repeatedly. It cannot be said that facing the same market, one judgment is to enter the market this time, and the next judgment is not to enter the market. The logical consistency must be ensured. In this way, the subjective influence on the transaction can be eliminated as much as possible.

2. Backtest to verify feasibility

Backtesting is equivalent to feeding the trading system. The more thorough and closer the backtest is to the real trading scenario, the more data there is to correct the system parameters. Due to various factors, the actual performance is often not as good as the backtest performance, so the system performance obtained through backtesting can also let traders know its upper limit to a certain extent. There are also many points to pay attention to when backtesting. In short, it is necessary to simulate the real trading scenario as much as possible to avoid result orientation.

3. Establish standard transaction procedures

Trading tests not only the ability of traders to analyze and judge trading opportunities, but also the ability to quickly complete position calculations, complete order entry, and the ability to track positions in a timely manner. These need to be set in the trading system and are beyond trading technology.

Let's talk about the technical aspect. From the perspective of trading technology, the trading techniques used in a profitable trading system can be incredibly complex or incredibly simple.

And the various trading techniques vary greatly. Some only look at the candlestick chart pattern, some analyze price behavior, some count waves, some calculate based on indicators, some analyze the impact of short-term events, analyze on-chain data, etc. There are so many types of techniques that it is dizzying.

Therefore, an obvious misunderstanding of traders is to plunge into technology and keep learning, but ignore what is the most important thing to do to make a profit in trading.

However, it is undeniable that in order to continuously improve trading techniques and explore market rules, traders should try various techniques, find a trading technique that suits them, and continue to practice and study it.

The next article will take a short-term trading system as an example to analyze how to explore, backtest, adjust, and review the trading system.