Online Trading System
There are a number of trading systems
available online. Any trader who decided to start using an online trading
system faces a question of searching, evaluating and selecting.
The online search is not a complicated task when we can see a lot of
classified directories in addition to the search engines. All a trader has
to do at this stage is to narrow the search to a specific description of the
The most important stage of the research is evaluating the online trading
system. No matter what you are looking for, online options trading system,
online futures trading system, stocks or indexes trading system, you have to
find out if you are comfortable with trusting your money into the system you
Below, you will find some of the question that are logical to ask in the
online trading system selection:
1. What kinds of signals does trading system generate?
Traders should know how to use the system. Is it easy to use or it requires
some studding time. Are the signals explicit (buy/sell), somewhat explicit
(60% up and 40% down for example) or a trader has to generate signals based
on the system rules;
2. Does an online trading system require using any additional charting or
any other software?
You need to know how much money and time you have to spend in order to use
3. Does the offered online trading system allow you to auto-trade signals
with leading online brokers?
This question is significant, even if you are not going to auto-trade. If
the signals generated by the system are not auto-tradable you should be
aware of the reasons. Is it because the technical difficulties (brokers do
not support signals from the charts), or is it because signals are not
explicit (60% up and 40% down for example) and are not clear for a broker,
or is it because there are no online brokers who would trust this system...
4. What is the basis behind the system? How does the online trading system
Some online trading systems use "black box" explanation and some completely
reveal the mechanics behind signals generation. You should feel comfortable
trading "black box" trading system as well as you should be ok with
technical analysis in case one is revealed.
5. How are traders notified about signal changes?
You should know how quickly you will be able to react to a signal generated
by the online trading system. You should know if you will be able to receive
signals via cell phone, or you should monitor the computer all the time.
6. At what time are signals issued?
In case of a full-time job it would be difficult to use signals generated
during the trading hours especially in case when the selected online trading
system cannot be auto-traded.
7. Are signals designed for market orders or for limit orders?
Some online trading systems generate signals to be executed at market
prices. With such systems, as a rule the trading system will enter and close
a position at a price that differs from the prices available to those
traders who decided to follow the signals. It happens simply because a
trader needs some time to execute signals and even if a trader opens/closes
position within a minute after a signal was generated the entry/exit price
could differ significantly.
8. Does the online trading system use stop-losses?
If an online trading system does not use stop-losses you should be
comfortable with this fact.
9. What is the system's performance?
A trader should be able to review an online trading system's trade history.
If one is not available or if a history is hard to find or it represented in
a way that makes it hard to evaluate objectively ask WHY;
10. Are the online trading systems monitored by an independent third party?
If a service is not being monitored, the logical question is to ask WHY.
Traders should know whether they can trust the result represented for an
options trading system. In some cases a system cannot be monitored simply
because the generated signals are not explicit.
You should feel confident about the online trading system you use and you
may have many other questions. Whatever trading system you chose, it should
never conflict with your personal risk tolerance and trading style.
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