Are you confused when opening orders, hesitant when entering, and in pain when stopping losses? The root cause is that you lack a trading system that belongs to you.
Today, use five steps to help you build a system that makes your trading no longer confusing.
Step one: Identify your trading model
Before starting, you must first answer a question: What kind of trader are you?
Is it intraday short-term, all positions closed on the same day?
Is it still a swing trend, can the base position be held overnight?
Clarify your positioning, which is the foundation for building all systems. This determines the time frame and mindset for all your subsequent rules.
Step two: construct the five core elements of the system
A complete system must include the following five interlocking parts, none can be missing:
1. Distinguish trends - see the direction clearly, go with the flow.
Reference period (looking at the overall trend): for example, 1-hour chart, used to determine long or short direction. As long as the 1-hour chart is bullish, only look for long opportunities.
Trading period (decision making): for example, 5-minute chart. You spend 80% of your time on this chart, with entry, stop loss, and take profit set at this level.
Judgment phase: identify whether the trend is early, mid, or late stage. Late-stage trend risks are extremely high, should avoid intervening.
2. Find key levels - Define the battlefield and plan your actions.
Support level: only consider going long, do not short here.
Resistance level: only consider shorting, do not go long here.
Goal: find positions with an advantageous risk-reward ratio. If the price is too close to key resistance, the profit potential is insufficient, then this trade should be abandoned.
3. Wait for entry signals - Strike precisely, don’t act until you see the rabbit.
At key levels, wait for clear candlestick reversal signals, for example:
Long: Morning Star, Bullish Engulfing, Hammer.
Short: Evening Star, Bearish Engulfing, Shooting Star.
Core principle: position is better than pattern! If the signal candlestick does not appear at the key level, this signal is invalid, decisively give it up.
4. Develop a trading plan - in black and white, eliminate randomness
Before entering, be sure to write down your plan; this is your contract with yourself:
Target, direction, position
Entry point, stop loss point, target level
Decision rationale
5. Execution and review - iron discipline, continuous evolution
Execution: once the plan is made, execute unconditionally. Especially for stop losses, it should be like pulling your hand back from a hot stove, without any emotion.
Review: continuously record for a month, regularly review. Analyze where the mistakes were, is it a technical issue or a mindset issue? Improve what can be improved, avoid what cannot be overcome.
💡 Key summaries and reminders
1. Personalization: the technical tools in the system (trend lines, patterns, wave theory, etc.) are not set in stone. Choose one or two that you are most familiar with and trust; the key lies in using them to complete the three steps of 'defining trends, finding positions, waiting for signals.'
2. No holy grail: Having a system does not mean a 100% win rate. Its core value lies in significantly reducing your unnecessary, emotional losses, making your trading stable and replicable.
3. From knowledge to skill: Building a system is 'knowing', strict execution is 'doing'. Only through deliberate practice and real-world assessment can you transform from 'knowing' to 'doing', ultimately acquiring the ability to achieve stable profits.