Dow Jones (DJI) e-mini Trading System
A Dow Jones (DJI) trading system is a set of specific rules, which help determine the entry and exit points for DJI e-mini futures. Different technical analysis indicators are used in a trading system in order to determine the trend of a market, the strength and direction of the market and its use for a further investment. Based on the technical indicator a various trading system may be created that would fit specific needs of each individual trader.
DJI E-mini Trading System Rules
As a rule, a complete trading system is created by generating signals, setting up a decision making procedure, and incorporating risk management into the system. A complete trading system includes a trading software that allows to auto-trade the signals generated by the system. A trading system is supposed to be objective and mechanical, and the main rule in creating a trading system is to exclude an emotional factor from trading. As a rule, technical analysis combines a set of objective trading rules (usually in a formula(s) or algorithm(s)) that are used to test the system and adjust the system.
Building a Trading System
Liable and historically tested technical indicators are the
building blocks of good trading systems. However, even good technical analysis
indicators can lose their validity when combined in a trading system. Therefore,
it is important to not only back-test your system but to also forward-test your
system in real time.
A good trading system uses more then one technical indicator and a good system
builder as a rule follows certain steps. Some of those steps are researching
technical indicators, testing those indicators, combining the indicators into
the system, testing the system and adjusting. Only after that, can a system
trader start to auto-trade the DJI signals generated by the system.
©HGH Associated Press
2/21/2006
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