Many traders understand a variety of technical indicators and have accumulated a wealth of trading experience, yet they still cannot profit, and the root cause lies in the lack of their own trading system. A trading system is the "rule" of trading. It guides all aspects of trading, when to enter, when to exit, how much position to take, how much to set for a stop loss, everything is up to it!

So, how should traders establish a trading system that suits themselves? Here, this article summarizes the six steps to build a personal trading system from a technical perspective.

Step 1: Time Frame

The first step in creating a system is to clarify what type of trader you are, are you a day trader or a swing trader? Do you like to look at charts every day, or do you prefer to look at them weekly, monthly, or even annually? How long will the position generally be held?

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Answering these questions will help traders choose the appropriate trading time frame. Of course, in actual trading, you must refer to multiple time frames, but what is said here is the main time frame used to select trading signals.

Step 2: Find Signals to Identify New Trends

Identify new signals as early as possible, so traders need to look for indicator signals to accomplish this task. Moving averages are one of the most commonly used indicators, and the usage is relatively simple. Just wait for the fast moving average to cross the slow moving average, which is the most basic "moving average crossover" trading system.

Step 3: Find Signals to Confirm TrendsThe primary objective of constructing a trading system is to filter out the interference of false signals, which can be achieved with the help of other indicator signals.

There are numerous indicator signals that can assist in confirming trends, such as MACD, oscillators, and RSI. As you become more familiar with an increasing number of indicator signals, find some that suit you and integrate them into your trading system.

Step Four: Define Risk

A crucial step in the process of building a trading system is to determine the level of risk you are willing to take in each trade. Many traders are averse to losses, but a qualified trader will always consider potential losses before making money. Traders must provide a margin of fluctuation for trades, but it should not be too large.

Step Five: Define Entry and Exit Points

After determining the risk, the next step is to identify specific entry and exit points to maximize profits! Some people trade immediately after the indicators give a trading signal, regardless of whether the current cycle's candle has closed; others will wait until the candle has closed before trading.

For exit points, traders have several options to choose from:

Trailing Stop: If the market moves X points in the direction of the position, then move the stop loss in that direction by X points.

Fixed Target: Set a fixed price target and close the position when the market reaches that target.

Conditional Take Profit: Set a series of judgment conditions, and close the position when all are met.Step Six: Establish a Trading System and Adhere to It Strictly

This is the most crucial step after constructing a trading system: strict enforcement. Discipline is an indispensable trait for a trader and must strictly follow the rules of the trading system. Otherwise, even the best system, if not executed effectively, will find it difficult to generate profits.