For a beginner trader, it is hard to trade CFD without knowing the trading system of any potential risk you are taking a step on. The trading system compromises the set of rules formulated in buying and selling of any subjective elements in the market environment. Through this, it is really necessary to know how the trading system works in general. Knowing this will surely increase your trading performance as a trader. There are two trading systems in the market today, one is the mechanical and the second is the discretionary trading system.
If you are interested to know further about the CFD trading system, let this article helps you find out the best system for trading that might affect your trading performance and trading outcomes. Here are the two:
- The Mechanical Trading System
- It is an automated trading system that can consistently beat the financial market at any time. This system has set orders and regulations to follow by a trader before putting anything in a spread table, it may include the amount allocated per trade, the time period when to enter or exit a trade, and how much to risk on each possible trade. In using this kind of trading system, you as a trader can write down what you are looking for in the CFDs that you want to trade yourself, the system itself will automatically reject any CFDs that do not meet your standards or criteria. It will lessen the time of playing hunch as to the basis for your trades.
- In using this trading system, you can enter your criteria to several trading platforms, for you to be able to see how those standards work overtime even for the past five years. Also, as a trader, you can maximize and minimize your criteria to test and create a customized trading system that matches your personality and manages your risk effectively.
- The Discretionary Trading System
- It is decision-based trading in which you as the trader can decide on the current market conditions. It is also rule-based trading that the trading system decides which trade to choose from and the current conditions won’t matter at all. The traders’ decision greatly influences this kind of trading system, as this decision may affect their personality and comfortability towards their trading experiences. Some traders will find it easy to figure out the type of trading systems that are suitable for them.
As stated by Capitality, regardless of which among the two trading systems you choose, it is important to know all the trading criteria that you are comfortable with. In trading, the goal is to make consistent trades and this trading system will allow you to trade in a professional manner, keeping records on the possible mistakes before you cost too much and making higher profits in a consistent manner. According to some trader experts, it is also good for a beginner trader to try the two types of systems to be able to see the differences and uniqueness. In this way, you can have first-hand experience in choosing which works for you best!