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What’s the Most Important Part of a Trading System?

October 11, 2010 by

Every trading system is a complex object with a lot of rules. All Forex systems should consist of the entry and exit rules, define the market (instrument) they are designed for and state some position sizing (money management) strategy. Most traders I know give the highest priority to the entry rules of the system, pay some attention to the exits, in half of the cases don’t understand the difference between the trading instruments and have no idea about position sizing. I find myself quite aware about the importance of the position sizing but I’m always struggling to define some reasonable exits for my trading system. Of course, it can be said that all parts of the trading system are equally important. But I wouldn’t agree to such point of view. What do you think?

What's the most important part of a Forex trading system?

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If you have some questions or comments regarding the importance of different parts of trading systems in Forex, please, feel free to reply using the form below.

4 Responses to “What’s the Most Important Part of a Trading System?”

  1. Rob

    I would definitely say, for me it’s the choice of instrument.

    When to apply with “Confidence” the right trading strategies for certain market conditions i.e. ranging vs. strong trending etc.



  2. forex beginner

    Aren’t all co-related to each other for decision making? personally, i believe position sizing is most important as it will determine whether the portfolios,in general, are at the winning or losing end.


  3. Chris

    The most important thing in a trading system is the win hit rate,
    if the win rate is too low you will loose even if you use money managment.


    admin Reply:

    But one can have a very low win rate with a reward/risk rate high enough to compensate for that.


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