Trading System

A group of rules that determine when and where to place an order, how many units to purchase, where to put the initial stop loss and take profit, if and how and where to move the stop loss and take profit, when to exit, and so on - all the steps involved in trading written down in logical steps.

Basically, it's a plan you follow while trading, in the belief that by following the rules you will tip the balance of probabilities in your favour. Maybe you got these rules from a book, or a seminar you went to, or the cab driver on the way to the seminar, or maybe you developed these rules yourself from many years of experience. It's not important where the rules come from as long as they are repeatable and profitable. What is important (aside from being profitable) is that you follow the rules quite strictly - otherwise there is no reason to have the rules in the first place.

Trading systems for automated trading
To have a computer do your trading for you, the rules need to be mechanical. A rule like "when in an uptrend" is not mechanical - the computer does not know what you mean. Certainly sometimes it is obvious to human eyes that the price is "in an uptrend". Other times it can be ambiguous - ambiguity by definition being not compatible with mechanical. But often you can develop mechanical versions of such rules. In this case an example might be to replace "in an uptrend" with "Close of 15-Minute bar is above its moving average of the last 20 bars".

If you can distill all of your rules into mechanical form, then you can have a computer do the trading for you.