A method is a general philosophy of trading. For example; trade with the trend, buy when the trend is up, and sell after it tops out. Or—buy undervalued markets, go long near historical support levels, and sell after resistance zones have been reached.
A system is a set of rules for implementing a method. For example, if our method is to follow trends, then the system may buy when a multi-week moving average turns up and sell when a daily moving average turns down (get in slow, get out fast). Or—buy when the weekly MACD Histogram ticks up and sell after it ticks down.
A technique is a specific rule for entering or exiting trades. For example, when a system gives a buy signal, the technique could be to buy when prices exceed the high of the previous day or if prices make a new low during the day but close near the high.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.