What is a trading system?
Module "Advanced Technical Analysis"
A trading system is a rule according to which you buy or sell securities. These rules can be both technical and fundamental in nature. One conceivable system would be as follows:
- You buy a security when the long-term GD rises, the security has broken through the short-term GD from bottom to top in the last 3 days, the dividend yield is less than 3% and the RSI leaves its sell zone.
- You sell when the momentum falls below the zero line and the long GD also falls.
You therefore define the individual conditions and link them to form an overall statement. The basis of the trading systems is the MM-Talk formula language, which you access via the formula editor and the individual dialog windows. A detailed description of the formula language and information on how to use the formula editor can be found in the MM-Talk reference. You can optimize the trading systems and use them to calculate new buy and sell signals.
Optimize trading system
One of the most important standard indicators is probably the RSI. By default, it is calculated on the basis of 14 trading days. But this setting is not optimal for all securities. With the help of the optimization you can let your Infront Portfolio Manager calculate different possibilities, such as 5 days, 6 days, etc. up to 25 days.
You will find that almost every DAX stock has a different optimal setting. You can also optimize the settings for the GD, momentum, RSI and dividend yield in the trading system mentioned above. The settings found in the optimization for each individual security are saved for each security and applied to the new signals. The idea of these systems is therefore to apply a system that has been optimized in the past to the future. Of course, there are a few tips and tricks that are described in detail in the following chapters.
Details can be found in the section Optimize trading systems.