How to Build a Rule-Based Trading System 🎯
Want to take emotions out of trading? A rule-based system might be your answer.
Start with a clear strategy. Define exactly when you'll enter and exit trades. No guessing, no "gut feelings"—just specific conditions like price levels, technical indicators, or time frames.
Backtest everything. Before risking real money, test your rules on historical data. Did your strategy work in different market conditions? Be honest about the results.
Keep it simple at first. Don't overcomplicate with 20 different indicators. Start with 2-3 reliable signals. You can always refine later.
Set strict risk management rules. Decide your maximum loss per trade and stick to it. Define your position sizes before you enter any position.
Document everything. Write down your rules in detail. When should you buy? When should you sell? What's your stop-loss? If you can't explain it clearly, you can't follow it consistently.
Review and adjust. Markets change, so review your system's performance regularly. But don't tweak rules after every losing trade—that defeats the purpose.
The goal isn't perfection. It's consistency and removing emotional decisions from your trading.
