Trading Systems As A Determining Factor in Trading Performance

Studies on individual investors and professional §fund managers indicate that one reason professional §fund managers perform more consistently is their §reliance on trading systems for making investment §decisions. It could be hypothesized that a trading §system is a determining factor in producing higher §performance. This research sought to validate that §hypothesis by investigating the effect of trading §systems on individual trading performance, measured §by investors' trading decision accuracy rates. In §particular it examined the positive relationship §between the extent of investors' reliance on trading §systems and their performance level. A trading §system is a collection of technical trading rules §that could enhance an investor's decision accuracy §and predictive power in buying or selling a security §or a commodity future contract. For optimum §performance and profit, a trading system helps an §investor buy or sell a security at some specific §price at a particular time. Performance is the net §profit gained for an investor after liquidating all §his or her holding positions.