Why you should adopt a trading system?
When you were browsing to the internet looking for a forex trading system
e-book or software, you might see words like:“Make thousand pips every month”
“I’ve Finally Cracked the Forex Code”
"The secret formula used by pro traders"
"Killer system that will make you rich"
Are those statements true?
Well, I have to say "There is no secret code”,” NO Killer Systems”, “NO Holy Grail”
Remember, forex trading is not a get rich quickly scheme. It is need a lot of time and effort to build your own forex system.
What is trading system?
A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for your trade. These points, known as signals, are often marked on a chart in real time and will prompt you to pull the trigger.
Here are some of the most common tools used to construct a trading system-
1. Chart Patterns
2. Moving Averages
3. Stochastic
4. Oscillators
5. Relative Strength
6. Bollinger Bands
7. Elliott Wave
Often, two or more of these forms of indicators will be combined in the creation of a rule. For example, the MA crossover system uses two moving average parameters, the long-term and the short-term, to create a rule.
So, why might you want to adopt a trading system?
- It takes all emotion out of trading - Emotion is often cited as one of the biggest flaws of Individual investors. By cutting down on these human inefficiencies, system traders can increase profits. Apart from going through lot of strategies in this book so that you can construct your own Trading System, I am also devoting lot of space in psychology of trading, without which a trader can simply not succeed.
- It can save a lot of time - Once an effective system is developed and optimized, there is little to no effort necessary on the part of the trader. Computers are often used to automate the signal generation.
Developing an effective trading system is by no means an easy task. It requires a solid understanding of the many parameters available, the ability to make realistic assumptions, and the time and dedication to develop the system. However, if developed and deployed properly, a trading system can yield many advantages. It can increase efficiency, free up-time and, most importantly, increase your profits.
Designing a Trading System
In my book “The Way to Trade FOREX”, I discuss many of the successful and profitable trading strategies that I have made use of from most of the Tools mentioned above. In addition as a follow up service, I am also extending a free 1 month mentoring so as to help you not only devise a Trading system, but also help you in preparing a Trader’s Plan or assist with your Trader Psychology
.Here are some of the key factors to keep in mind when designing a trading system in the FOREX:
1. The liquidity and the volume in the Forex market is huge, therefore making trading systems more accurate and effective.
2. Most brokers do not charge commissions in this market, only spreads therefore, it’s much easier to make many transactions without increasing costs. Some brokers offer a very low pip spread.
3. Compared to the amount of equities or commodities available, the number of currencies to trade is limited. But because of the availability of 'exotic currency pairs'-that is, currencies from smaller countries--the range is not limited.
4. The main trading systems used in FOREX are those that follow trends (a popular saying in the market is "the trend is your friend"), or systems that buy or sell on breakouts. This is because economic indicators often cause large price movements at one time.
5. A good quality charting package.
I recommend you to use the charting available in your broker. Do not use third party charting since unlike stock market, forex market is not centralized and there are rate fluctuation on each broker.
Thank you for your time !
