Forex Trading Systems - Discover The Criteria Of A Working System
In order to get steady profits from forex trading
, you need forex trading systems that have been proven to work. There are tons of trading systems at the internet, some of it really work while some other are just trash. Your job now is to identify the one that really works.
Well, what can you do to identify real forex trading systems? The first thing that you want to check is if it use various resources such as chart, news, advices, etc to make decisions; you don't want a system that make decisions without real reasoning. Additionally, check a few other requirement for a good trading system by utilizing the guarantee period (usually sixty days):
1. It's not using complex rules or a lot of variables. Based on research, a simple system is proven to works better than a complicated one. So if you examine a system and it is filled with complex rules, it might not be the one for you.
2. It has to make profits with as little loss trades as possible. Note that no matter how good a system is, it's inevitable for you to experience loss occasionally. However in a good system, you will notice that in the end of the month you still make profits. Test your system in a practice account and find out the result yourself.
3. Aim for a long or mid term trends. Some systems will also support Scalping (a method where a trader makes numerous trades that aims for small profits), but I don't recommend it if you are a manual trader; that is a perfect system for a forex robot.
Aim for long term trends means that your position will keep open for several days or more, so you have to keep calm when the market volatility is against you. By following long term trends, a trading system can gain larger profits.
When a human trader try for long term profit, utilizing a poor system will make him very influenced by his emotion, especially if the market is move against him. This is simply understandable since it is his money on the line, but this is also what distinguishes newbees and experts.
An expert trader with real system will not affected, has high expectation in his system, and has put some countermeasures methods to prevent large loss such as stop loss order. On the other hand, an amateur will wait around while looking at the prices, wishing the volatility will turn to his side, and when he can't take it any longer, he will close the position, scared of larger loss.
Applying proper risk management methods is a good idea. For example: put a stop loss and take profit order on the price that you want, then get away from the computer monitor if you can't deal with the pressure.
4. It can trade several currencies. Different trader has different favorite currency pairs. You don't have to limit it to one pair; in fact, most traders have several preferred currency pairs that they really good and familiar at. A real system can adjust itself with his user preferences by having strategies to analyze and earn profits in different currency pairs.
There are lots of forex trading systems at the market, but you only need one that works to support your path to success in forex trading. Testing a system in a practice account is advisable if you have the time.
by: Matthew Johnson.
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