Will A Trading System Work For Night Trading?


As a day trader, you always want to have a good trading system that you can rely on as you trade. If you decide to trade during the day and at night, you might need a different trading system for each. But the key is to use the trading system you develop and stay with it. The last thing any day trader wants to do is trade from the seat of their pants, entering and exiting without an overall strategy...that is how you can get burned.

What is a trading system? A trading system is a set of rules that determine entry and exit signals for a given financial instrument. Signals are shown on a technical analysis chart in real time, keeping up with the Market. Signals prompt the trader to take an immediate action, either buy or sell. The operative word is rules. A successful trader will keep the rules that they have established and not change midstream. The main reason why any trader should have a trading system is to keep emotional trading decisions to a minimum. Trading tends to be 50% technical and 50% emotional. Without a trading system, the emotional side can be more than 50%.

As we know, trading is a business. With any business, you have rules you follow. Say you ran a restaurant. You wouldn't change the menu every day or keep buying different amounts. It wouldn't take long to go out of the restaurant business that way. You need to know your menu, know what your customers want to eat, know how much food you need to buy, how many customers you have every day, etc. That makes you profitable. When you first opened the restaurant, you may not have known these things. You might have experimented. You wouldn't have known how many customers you have every day so you might have wasted some food. But over time, you figured out all these things to run your business and be profitable.

This would be the same for your trading system you were developing. You might lose some in the beginning until you know the market, the rules that work for you and your comfort zone, etc. But after a while, your trading system became a business. Every trading day should be uneventful. It is just a business. You start trading, you make your profit, you end off for the day and go do something else.

How do you know if you have a good trading system? You know if your trading system is good if, over time, you have more wins than losses. Again, the key is over time. There may be days when the trading system simply doesn't work. There might be some unusual Market conditions on a given day so you might not be profitable every day. That doesn't mean that your trading system is bad. It just means you had a bad trading day. When there is a bad day with lots of losses, that doesn't mean that you throw your trading system out. It takes time to develop a good trading system, that is not something you will build overnight. But once you determine the rules that work for you, and allow you to trade from your comfort zone, then the trading system should be maintained while trading.

Can you use your trading system with night trading? A good trading system can be used no matter if you are trading during the day or night trading. If over time your trading system is profitable, then it will work for night trading as well. You might have to "tweek" the system for the night period, but you will still have rules to follow at night. Your trading strategies should work well and give you strong alerts, especially if you are trading futures.

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