Forex Trading,Some Points to Take in Consideration

Here are some important points you need to take in consideration while creating your trading system.

1. Always be skeptical about your own ideas, focus only on results. Sometimes is easy to track trading opportunities, what is hard is to capitalize on them and make money from them. The performance of any trading system should be measured with actual trading (either demo or an account with limited funds).

2. Sometimes you lose even when you have followed your system to the rules. Losses are part of the game, there is no possible way to avoid them, and we need to learn to lose. So if you have followed your system 100% and took a loss, celebrate it! The only way to stay ahead of the game is by rigorously following your system.

3. Sometimes while trading large positions you can lose control of your emotions. Don't be overly aggressive with the market and follow a well planned money management technique. It should tell you what you are going to risk on your next trade.

4. Try to understand why your system works, this way you will develop the required confidence in yourself and your system.

5. There will always be some “indicator” that could have kept you out of a losing trade. But remember your system is not designed to win all your trades, but to win most of them.

6. When you finally created your system, describe it in simple and logical terms. If a 15 year old kid is not able to understand it, then something is wrong with it.

7. Use only 2-3 indicators: one indicator to identify the trend and one or two indicators or variables for entries and exits. The more indicators you use, the more complicated your system becomes. Most of the time “the simpler the system the better performance it will have”. Also use non-correlated indicators, do not choose two indicators that are supposed to measure the same market condition.

8. Test your system over large data samples (over 50 trades) and in various market conditions, this way you can see under what conditions your system works better.

9. If you decide to trade several currency pairs, try non-correlated pairs. For instance, if you trade long the Euro and long The Pound, your are likely to get the same result on both of them, elevating your risk if the market goes against you.

10. News trading? Determine whether you are going to keep your trades open during important news announcements. If you are trading for the short term you are likely to keep tight stops, and an important news announcement might hit your stop loss level.

11. While you are in a trade, open your mind to every possibility, sometimes you don't see or ignore evidence against your trade.

Forex Trading Systems Creating a Trading System

It is very important to have a system that perfectly fits your personality, otherwise you will find it difficult to follow and it will be hard to generate consistent results. Nevertheless, how do we know if the system we are trading is the right for me? On the last section of this lesson, we will find out the proper steps that need to be followed in order to make sure our system fits us.

Most traders have problems with the system they are using because they did not develop it. A system that works for one trader does not mean that it will work for all traders. The system creator “created it” based on his personality and unique circumstances (trading capital, risk profile, etc).

If this is your case, you need to follow the same rules and re-create and tweak the system until it fits your needs as a trader and personality.

In order to create a successful system you need to take care of the following steps:

1. Types of systems

2. Trading styles

3. Choose the concept of trading

4. System Conceptualization

5. Testing and live trading

Forex Trading Systems- Introduction

By now, you should know that it is important to trade based on a trading system; otherwise, it will be very hard to generate consistent profits from the Forex market. Trading systems tell you where to get in and out the market.

When you devise a system, you look for certain moves and what indicators, patterns or price behavior caught that move, then you create a set of rules; when these rules are present in the future they signal a trade.

Most systems are based on price patterns or technical indicator readings (technical patterns). However, we must not forget something: patterns (whether chart or technical patterns) are never the same, they are only similar. In order for two patterns to be the same exact pattern the same traders need to be involved on both patterns, and not only this, they have to be in the same mood so they behave in the exact same way. We know this is almost impossible since there are just too many variables that need to be accounted for. Take for instance, how many traders are waiting in the sidelines? How many traders will get out of the market sooner than they have planned? How many of them will take partial profits? And so on...

This tells us that there are no certainties about the outcome of every single signal. Even though we don't know the outcome of any individual trade, the outcome of a set of trades is predictable; we also know that if we follow rigorously our system we will be ahead of the game in the long run. When our system signals one trade it only tells you that there is a higher probability that the market will go in the intended direction, probabilities will play their part.

So we know two important things:

• We don't know in advance the outcome of any signal
• If we follow our system rigorously, we will be ahead of the game

What is interesting is that we do not need to know what is going to happen next in order to make money in the Forex market, we only need to make sure we have a well-developed system and follow it rigorously.

However, before we apply this knowledge we need to develop our own system. In this lesson we will show you how to effectively develop a system the fits your personality.

The following topics are covered in this lesson:

Creating a Trading System - 

                                                     Important information about trading systems.

Types of Trading Systems - 

                                                           There are two types of trading systems; we will review their advantages and disadvantages. 

Trading Styles -  

                            Review of the trading styles you might adopt to develop your trading system. 

Trading Concepts -

                                     Not all trading concepts are for every trader, choose the one the better fits you. 

Trading System Conceptualization -

                                                                         After choosing our trading style and concept, we need to begin our system conceptualization. 

Testing and Live Trading - 

                                                       Once we created our system we need to test it and see if it really fits our personality, a few tips to do an effective testing. 

 Some Points to take in Consideration - 

                                                                          Before taking any action please take these important points into consideration.

What is forex?

What is forex? Why trade forex? 

 

The foreign exchange market – or forex for short – is the buying and selling of currencies, and it’s one of the fastest growing markets in the world. From 2007 to 2010, forex market activity increased by 20%, with average daily turnover reaching nearly $4 trillion in April of 2010.

 

 

Forex trading works much like it does with stocks, you buy low and you sell high. The benefit of trading forex is that you don’t have to choose from thousands of companies or sectors. Plus, you can make things even simpler than choosing which company to buy.

For example, most people, even those that are new to forex, have an opinion on the US dollar and the US economy. They can easily take their opinions and translate them into a forex trade. Buying or selling US Dollars as simple as they buying or selling a company’s stock.

Also, another advantage of the FX market is that it doesn’t begin at 9AM and end at 4PM. Trading takes place 24 hours a day, 5 days a week. For most people 24 hour trading means they can trade before or after work. Plus, you have the flexibility to make your trades online.

 

 

Plus, you can buy and sell at any time, in up trends (also called bull markets) and in down trends (also called bear markets).