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How to create
best stock trading system

Every day trading rules
that improve your trading results

Stock trading system is one important part of your broad stock trading business plan that you have to create before you start real trading with real money.
Stock market trading system should be based preferably on several stock trading strategies that are used in different market situations.

One stock trading strategy could be suitable for bull market, another for bear market and some rules should also cover range bound or trend-less stock market.

There are also days or weeks when price moves are very volatile and there are times when volatility is low. It is much better to have rules that allow to recognize what is todays stock market situation.

Well, when I say stock market trading system I mean a set of rules. These rules have to answer the questions below. Consider them as your best stock pick guides.

  1. What is the time frame for your trades?
  2. What type of trades are you looking for?
  3. How you will find the best trading opportunities?
  4. How do you set entry, stop-loss and target points for trades?
  5. How do you enter and exit trades?
  6. How do you manage trade?

My personal stock trading system use rules based on these points.

Please notice that stock trading system is only one part of good business plan of every good stock trader.


Stock trade time frame


You have to define the time frame for your trades. You need to know how long you can hold a position. I define these types of stock trading.

Online stock trade types

My trades are based on simple rules. My basic premise for trades is support and resistance . So, a simple stock trade can be:
  1. Breakout trade . This trade indicates a break of a significant support or resistance level. My stock market tutorial that describes details of breakout online stock trades is quite simple way how to trade stock breakout.

  2. Pullback trade . This type of trade indicates that the price will bounce from an important support or resistance level.

I think that knowledge why and how to short stocks is very important for traders and active investors. The knowledge about three basic stock trading terms is also important for profitable trading results.

Short sell trade strategy could be used when you know how to trade commodities in bear market situation.


How to find trading opportunities


There are several ways to find the best stock pick (understand the stock trade setup) for the next day. You can use:
  • a stock screener available on Internet
  • a stock scanner integrated into your trading software or analytics software
  • a special list with manual selections


I use my best stock screeners in AmiBroker software for my personal trading. Here are the rules for breakout stock screeners. Checklists can help to improve the stock-picking process a lot also.

Very important part of good stock trading system are rules that help to decide what type of stock trading strategy is best for todays stock market situation.

Set up your
entry, stop-loss and targets
for stock trade


You need to have these important values prepared for each trade setup you like and that fit with your trading strategy.

First, you need to find a good entry price, then you have to think about where to place stop loss and finally you must think about possible targets where you can realize profits.

I use these two main ways how to setup entry for my stock trades.

These three values must fit with your risk:reward ratio definition. This procedure will tell you if your setup is good and worth trading.

Entering and exiting stock trade


Knowledge of the right order types used to enter or close the trade is part of a good stock trading system.

Read also why I don't enter stop orders before the market opens.

I use pre market stock trading hours for my exits from time to time

It is important to stick with your risk management rules and do not chase the trade.

Stock trade management


A good trader has to take care of every opened trade. You also must regularly monitor stock trade development.

The most important tasks of trade management are


Low cost stock trade can be achieved only using proper risk management rules.

I recommend to check stock earnings date for every trade you want to enter.

Here is description what realtime stock charts I monitor during any trading day.

A very profitable approach in trade management is adding into an already profitable trade or re-entry of trade.

Prepare a list of rules for all these tasks in advance and follow them during active trading hours.

Write all the answers to the questions listed above on paper to ensure you won’t omit them in the future. These rules are the basics of your stock trading system.

Stock trading routine

Any stock trade system is practically one big set of rules for different tasks. These tasks could be divided into different parts.

Stock trading is not only about placement of order, entering or exiting of position. There should be also everyday trading rules for stock chart analysis, stock market analysis, trade management and much more.

You can divide your working day to different time parts based on time zone where you live and what market you trade. I live in Europe and trade US stock markets mostly so my workday time schedule is different then schedule of a trader living in America.

One part of my time schedule is pre-trading routine I do every working/trading day before market is open.

Another routine that should be part of stock trading system is needed to recognize stock trading mistakes and correct them


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