A trading system is a form of trading based on tested rules of entry and exit. A stellar system includes the price (number one indicator), market stable datum, and other trading indicators. It is a “trading tool” for serious traders that are disciplined and willing to trade like a pro. There are valid systems and crazy systems. When a trading system ignores the price, it is likely to perform poorly. A viable trading system what is macd must contain the price and at least one stable data. An example of market “stable data” is the “Elliott wave” theory or the Fibonacci retracement or projections. Trading systems produce both bullish and bearish signals, but the price the number one indicator must prove the signals. There are direct signals and indirect signals. Direct signals are usually easy signals because in this case the validation of the signal introduces the signal. After an indirect signal, traders must wait for confirmation. A straight forward MACD system will be: buy when the price displays a double- bottom pattern and MACD crosses above its signal line.
Sell when the price displays a double top and MACD crosses below its signal line. These are direct signals, because the double- bottom pattern is a validation of a support level but also a confirmation of bullish zone. On the other hand, a double top is a validation of a resistance level but also a confirmation of a bearish zone. We can complete this easy trading method by including the higher time frame stable data. The stable data of higher time frame states: a higher time frame controls all lower time frames. A better system will be: Buy on the five minutes chart when the price displays a double-bottom pattern and MACD crosses above its signal provided that the price is at a support level on the hourly chart. Sell on the five minutes chart when price displays a double top and MACD crosses below its signal line, provided that the price is at a resistance level on the hourly chart. The hourly chart controls all lower time frames below sixty minutes including the five minutes chart.
Every “trading tool” must be tested and retested during Market opening hours on live chart. Traders must learn to understand their systems and become fluent in using them. It is one thing to have an effective system but another to be disciplined enough to use it like a pro. Every trading method is unique. Never mix two different systems. A trading system is not a trading robot, therefore, never use a system like a trading robot. Traders usually run trading robot blindly without knowing the parameters of the robot. Trading systems allow traders to make the final decision. A system is usually a written document while a trading robot is mainly a trading program or software.