FX Trading Systems

FX Trading Systems Which Work
Summary 1. Trading systems 2. Managing your capital 3. Trader Psychology 4. Pithy There are many different methods, systems and strategies which traders, “newbies” and mature “pro’s”, apply to the market to make a prosperity from the movements in the prices. Each trader will emphasize that his or her methods are the most excellent and the most money-spinning, but the truth is that each trading system has its strengths and weaknesses. The real keys to making money from the Forex market are the following: 1. Having and clear and simple trading system, and applying it consistently 2. Managing the funds you are trading with mean disciplines 3. Taking control of your psychology This article will examine each of these three keys separately and propose some simple guidelines for traders to follow to avoid being trapped by the market during the inevitable periods of volatility which materialize daily. 1. Trading systems There are essentially two types of systems which traders employ. These are: a. Price following systems b. Price prediction systems Let’s examine each one briefly. Price following systems These are systems which rely on steam indicators, oscillators and averaging methods to simply follow the market in the direction in which it is moving. The simplest of these is to find a suitable moving average ( MA ) and trade in the direction the MA is pointing, with the price on the correct limb of that conventional. One can add to that a full variety of other indicators such as MACD, Stochastics, RSI and Bollinger Bands etc. One charting package I use has 29 different indicators, leading to an overload of endless plausible combinations to service. Additionally, there are about 20 different achievable time frames to study. Its not hard to see why traders end up with the commonly know “paralysis of analysis” which is recognized by the comatose mouse aid and glazed eyes of someone sitting in frame up of the screen for 12 hours without taking a trade. They key is to keep it so simple. Decide at the moment from you choose to trade from ( scalpers may desire 5 minute or 15 minute charts, whereas assembly / day traders may prefer 1 hour, 4 hour of the day charts ) and gaze for a perfect simple system which merges no more than 2 or 3 indicators. Such systems may also incorporate simple trend line studies, with the trade decree following the customary undisguised line trend. Whilst the signals are given by your system, take your trades assertively and consistently. Do not abandon your method and start searching for another neighboring the first loss.

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