What Are Forex Trading Systems?
A Forex trading system is a set of rules which are aimed to ensure that you are trading in a way that is free of bias and the influence of emotion. Most beginner traders will look to learn a forex trading system whereas more experienced traders will eventually move to build a trading system of their own.
A good Forex trading system should look to cover and encompass for all possible eventualities that the markets may throw up. In that respect, they should consist of rules which govern, among other things the following:
- Which currency pairs to trade.
- When exactly to exit a trade and enter.
- Where to place Stop Losses and Take Profit rates.
Forex trading systems must always be tested against historical data (known as back-testing). Beginner traders, when looking to purchase a forex trading system, should always ensure that the system was properly back tested and that the results are genuine. There are certain software packages available now which back-test trading systems automatically.
Which Forex Trading System To Choose?
While this might sound risky, it can be quite a low risk strategy if performed correctly. As with all trading systems, the most important parameter which has to be addressed here is money management. Having a strict exit strategy and rules on how much of your equity to risk per trade must be clearly outlined.
Forex scalping systems have become popular of late. Scalping is a trading style which looks to take profits on very small price changes, usually soon after a trade has been entered into and becomes profitable. It is a strategy that does not look to capture 50+ pip moves; rather it is more about getting and watching the price in and out of trades for quick 5 pip moves which little by little add up.
Forex trading systems must always be tested against historical data (known as back-testing). Beginner traders, when looking to purchase a forex trading system, should always ensure that the system was properly back tested and that the results are genuine. There are certain software packages available now which back-test trading systems automatically.
A typical swing trading system will look to take larger moves ranging from 100-300 pips over a period of a few days or weeks.
Others prefer a day trading style and will be in and out of a trade within the same day. A typical swing trading system will look to take larger moves ranging from 100-300 pips over a period of a few days or weeks.
