That’s where mechanical rules come in.
Mechanical rules are a set of predetermined criteria that you follow when making trading decisions. These rules are based on objective factors, such as price levels, technical indicators, and time frames. By following these rules, you can remove emotion from the equation and make more rational trading decisions.
Benefits of using mechanical rules in trading:
- They can help you to avoid emotional trading: When you’re not relying on your emotions to make trading decisions, you’re less likely to make impulsive or irrational choices.
- They can help you to be more consistent: When you follow the same rules every time, you’re more likely to achieve consistent results.
- They can help you to manage risk: Mechanical rules can help you to set stop losses and take profits, which can help you to protect your capital.
Of course, mechanical rules are not perfect either.
In fact, they can’t take into account every possible factor that could possibly affect the market. However, they can be a valuable tool for traders who are looking to improve their decision-making and reduce the impact of emotion on their trading.
If you find yourself interested in learning more about mechanical rules, there are a number of resources available online in libraries. You can also find a number of software programs that can help you to backtest and optimise your trading rules.
Additional Tips For Using Mechanical Rules In Trading:
- Backtest your rules on historical data – this will help you in seeing how your rules would have performed in the past.|
- Optimise your rules – this means adjusting the parameters of your rules to find the combination that produces the best results.
- Be patient – it takes time to develop a successful mechanical trading system, don’t expect to start making money right away!
Put simply, if you’re willing to put both the itme and effort, mechanical rules can be a valuable tool for helping you become a more successful trader.
This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
All trading carries risk.