Building a Personal Trading System: The Key to Profit

The trading system is essentially a complete set of operational rules, similar to a human-computer interaction system or a reflex mechanism. It includes a series of specific trading rules such as entry, exit, stop-loss, and take-profit.

Many people have misconceptions about trading systems, believing that having a system is enough to achieve profitability or pursuing the so-called "perfect system." However, the reality is that there is no trading system in the world that can consistently generate profits. Even with an excellent system, it requires the user to have strong execution skills to be effective.

The core metric for evaluating a trading system is the "profit-loss ratio", which is the average profit amount divided by the average loss amount. An ideal profit-loss ratio should be no lower than 2, with 3 or above considered passing, and 5 or above considered excellent. It is recommended to calculate the profit-loss ratio of the trading system you have been using for a long time to assess its effectiveness.

Before designing a trading system, it is necessary to clarify investment goals, expected returns, and risk tolerance. A complete system should include the following elements:

1. Cycle Judgment: Analyze the Market Trend
2. Operational Thinking: Determine Basic Strategy
3. Select Coins: Filter Potential Coins
4. Timing: Seize the buying and selling opportunities
5. Trading Rules: Establish Specific Trading Strategies
6. Capital Management: Reasonable Allocation of Funds
7. Risk Control: Set mechanisms such as stop-loss.

When selecting coins, factors such as circulation size, subject matter, and on-chain data need to be considered. Timing and trading rules should have a certain degree of flexibility and be adjusted according to market conditions. Capital management requires the establishment of disciplined regulations and cautious use of leverage. Risk control is the last line of defense to ensure trading safety.

The role of the trading system is to standardize trading behavior and avoid arbitrary operations. Whether simple or complex, the key is to be suitable for oneself and to be effectively executed. Taking the Granville Eight Principles as an example, it is a simple system based on moving averages.

In summary, building a trading system that suits you and strictly implementing it is the key to achieving stable profits. Continuous learning and practice are needed to find the trading method that works best for you.