A trading system is a group of specific rules, or parameters, which determine entry and exit points for a given equity. These points, known as signals, are often marked on a chart in real time and prompt the immediate execution of a trade.
The most common technical analysis tools used to construct the parameters of trading systems are moving averages (MA), stochastic, oscillators, relative strength, etc.
The primary aim of a trading system is to manage risk and to increase profitability in any market environment. Optimal levels of risk and reward are accomplished by modifying the different parameters within each rule of the system.
One of the main benefits of trading with a system is the removal of emotion from trading: systematical trader will not place an excessively high risk trade due to frustration from a prior losing trade.