Most confused Terms in Trading demystified

Trading Method

A trading method is the overall process and trading style that is used to profit from the markets. A trading method can be defined as principles used to successfully trade in the stock market, options, forex, futures, or bonds. These operating principles are based on the belief of long term profitability and increased value of trading capital. Traders using different systems and different plans can use the same methodology. Methodology is based on the specific style of trading, with some examples being:

Technical Analysis. Trend Following.

Value Investing. Momentum Trading.

Growth Investing. Swing Trading

Trading System

A trading system is a set of rules that quantifies buy and sell signals, as demonstrated by successful testing on price history or chart studies. A trading system is the specific kind of data or knowledge used to execute the trading method, based on price action or fundamental valuations. These signals are triggered by measurable technical indicators or key levels on charts. Trading systems have specific parameters relating to position sizing that manage risk and increase the probability of profitability over time. A trading system has at least eight quantifiable elements:

· Entry signal

· Exit signal

· Winning percentage

· Risk to reward ratio

· Position sizing parameters

· Frequency of trading opportunities

· Average expected annual return

· Maximum expected draw-down

Trading Plan

A trading plan is a set of rules, consistent with a trader's chosen methodology and system that govern how trades will be executed in real-time. These rules determine what will happen based on the trading system's entries and exits, risk management, and psychology. The trading plan is meant to keep the trader disciplined and safe from their own weaknesses, while providing the parameters for consistent profitability.

Understanding the difference between methodology, system, and plan is essential to organizing and implementing trades at the right levels. As traders turn research into beliefs, trading methods will become their religion, trading systems will become their bible, and their trading plan will allow them to walk in faith every day.

What we actually study in Technical analysis?

we have only two input data set on which we perform our study Then Why these kind vast study of oscillator, indicator, cycles, candlesticks etc. etc. heap needed?

TA is continuous evolving field, everyone does there own study , publish reports, modify old work and finally serve you old wine in new bottle. I am not blaming anyone here but its the harsh truth of TA. yes , there are quiet improvement there is no doubt about it but according to me its same, as said before its old wine in new bottle.

As my engineering profession empower me to don't believe anything blindly. when i look at TA its seems as it was before 100 year back and i have very strong reason for that because from 100 of years we get only 2 data set to analyse the market and that is price and volume.

Secret of Feedback Loop

Core Study of Inputs(info)

Trade plan