**Trading System Definition**

Trading system (TS) – is a set of rules and instructions which demonstrate the right way on how to open and close positions considering the results of a technical analysis. Apart from that, trading systems let traders get rid of chaotic nature and randomness. Following the system, one can exclude emotional and sensible part while selling or buying. That’s why it is so important to follow the system even if a potentially profitable position in different strategies (bitcoin trading strategy, swing trading strategies etc) will not be opened.

**Types of Systems**

There exist 3 main kinds of systems which are advised for trading purposes:

– Systems that follow a trend – these systems evaluate the dynamics of the market with the help of simple rules: whether the market moves sideways, up or down thus determining the direction of a trend. In the capacity of a direction analysis, one can use indicators and tendency filters;

– Systems based on breakout support and resistance levels – they give a signal after the trend is changed or after a sideways trend in the direction of a breakout. Systems which are based on a breakout are computerized least of all because of complexity of levels determining. This fact makes it like a strategy that is solved by an individual approach;

– Price corridor- is a system which was deliberately created in order to receive income during the time when the market is in a certain price diapason. This type is more computerized than the previous one because of more opportunities to make math calculations and conditions of giving a signal;

**How do Trading Systems Work?**

At the very beginning, when creating a trading system, a trader should determine which expiration times he can work with, i.e determine working time-frames. Short-term periods are applied by a start-up deposit and principles of money management. Long-term ones are characterized by less financial noise. Moreover, on these long-term time-frames, technical analysis is more accurate and therefore gives less wrong/fake signals. They are more recommended for a successful and profitable work yet require a larger start-up capital.

The second task is to determine an entry point with the help of a technical analysis. In any trading system, with any analytical instruments, analysis should be started with a longer period and with the time move to a shorter one. At first, a trader should estimate the market condition in general, then analyze the market situation on different periods and finally analyze the working period. If there appears a signal that is confirmed on long periods, it is time to open a position.