This blog is a continuation looking at trading systems, in particular the 1 - hour trading system.  

Today is Day 3 of trading systems, so what did the markets do today?

1 Hour Trading System

Day 3 - 19th August 2015

This falls a little bit outside the acceptable points range but I would still place a trade.

(Charts created using MetaStock Pro 14, Try it now for free for 2 months - MetaStock Free)

This blog is a continuation looking at trading systems, in particular the 1 - hour trading system.  

Today is Day 2 of trading systems, so what did the markets do today?

1 Hour Trading System

Day 2 - 18th August 2015

Today's first hour has 38 point range.
The First hour high : 6564.55
The first Hour Low : 6527.79

Long entry is 6565...Target 6603
Short Entry is 6527...Target 6489
Stops are 38 points and Targets are 38 points for Today.

This falls into the acceptable points range so a trade would have been placed today.

(Charts created using MetaStock Pro 14, Try it now for free for 2 months - MetaStock Free)

Trading Systems

Trading systems have been used all over the world for centuries, why are they so popular you may ask? Well it's because of the many benefits the trading systems provide such as providing entry and exit points, taking the emotion out of your trading, providing a plan and consistency and hopefully making you some profit.

This blog will be looking at a few of these trading systems and looking at how they work and how they perform. There are so many trading systems to choose from that it can be hard to decide which one to use but it does depend on what type of trader you are and the level of risk and complexity you would like to take.

Whatever trading system you decide to use you should try to have a few rules in place things like:

• Try to stick to one trading system at a time, you don't want to overtrade and confuse yourself!
• Test out the system fully before you actually place a real trade with real money! This is where you will be able to tell if the trading system works for you or not.
• Stick to your money management rules.
• Try to stick to the rules of the trading system, of course you can adapt it but don't change it completely as the rules are usually there for a reason.
• Remember any type of trading carries risk.

These are just some of the rules, I'm sure you will have many more.

1-Hour Trading System

In this first blog I will be looking at the 1-hour trading system, I have chosen this particular trading system because it is very simple and I like simple :)

So what is the trading system? Well it works on the basis that the first hour of trading sets the tone for the rest of the trading day, this is based on a 5-minute chart. 

So you take the first hours high and the first hours low and find the different in points range, you would then use this as your trading range.  You would do a buy bet at the first hour high price and set the stop loss at the trading range, you do the same thing for the sell bet, you do a short on the first hour low price and set the stop loss at the trading range.  The prices should move in the direction of the breakout an amount equal to the range of the first hours trading.

Whatever happens, you should exit at the end of the day if neither your stops or limits gets hit as you should not keep any over night positions.  Also another rule is that if the trading range on the first hour is very large say more than 40 points then it's best to not to open a trade for that day and come back the following day.  The reason for this is that the higher the trading range the more risk involved in the trade, the ideal range is from 10-30 points in the first hour. As you can see this 1 hour trading system is quite an easy system to follow.

So what was the system for Day 1 Monday 17th August?

The first hour has 60 point range.
The First hour high : 6585.80
The first Hour Low : 6526.65

Long entry is 6586...Target 6646
Short Entry is 6526...Target 6466
Stops are 60 points and Targets are 60 points for Today.

(Charts created using MetaStock Pro 14, Try it now for free for 2 months - MetaStock Free)

As there is such a high points range this trade would be too risky and therefore no trade would be done.

We have to wait for the next day to see if a trade is possible.

Trading in stocks requires a great deal of general knowledge, technical knowledge and experience. Besides, the trader must have confidence and courage to face his losses and control his emotions. Political and economic knowledge is required to analyze the future happenings for smart investment. It is essential to know, how to invest, where to invest, when to buy and when to sell. Even if a person has good mathematical skills and extensive knowledge, only experience can be the trusted help. Beginners must be confident and take losses in their stride.   Fundamental analysis and technical analysis will help to understand the stock market and to trade successfully.

Long-term investors must do fundamental analysis, which includes the future progress of the company, expected profits, current financial status, hurdles the company may face in future, competitors’ growth and financial statements. Technical analysison the other hand is based on historical market data and current market activity, which provides an abundance of vital information. This includes identification of trends, patterns, support and resistance levels and a number of indicators that are vital in your trading. Charts, charting software and mathematical analyzing tools can also aid technical analysis.

Anyone interested in taking up trading can benefit from all the help that is available. There are a number of tools and resources they can use and they can learn the basics online. There are specialized websites where one can become a member of a reputable trading community to learn or share their skills and know-how. The community members impart honest information to the learners and support them to acquire trading knowledge by sharing their experiences. The members can connect with each other and discuss their experiences, market trends, latest news, offer tips and suggestions and can have healthy conversation to gather better ideas and solutions.

There are also live chat facilities available where traders can chat to each other in real time as trades happen so basically they can share and work together as the trades unfold during the day. This type of sharing experience is vital in understanding and gaining knowledge in the stock market. The live chatfunctions can help many new traders to take right decisions at the right time. It also helps to improve trading knowledge for better dealings. When there are a number of great resources and a friendly community of experienced traders from around the world available on the Internet, why let go of the opportunity? Grab it immediately to become a successful trader.