Category: On Forex
Finding or developing the best trading system is the most useful thing you can do as a foreign currency trader. When it comes to Foreign Currency trading there is no room for second guessing. But after all, FX trading is not about what we do with each individual trade – it’s how we apply the entire mechanical system we use. It has to be said though, that it is possible to waste a lot of time and money trying to acquire the best trading system there is, so here are a few useful tips on finding the best trading system. Many traders develop efficient entry and exit strategies for a system in order to trade in the most efficient P&L ratio. Establishing or finding the best trading system may seem to be difficult. However, if you follow simple tips, you may be able to obtain a system that will work for you best and I hope this will give you a great starting point till you develop your trading style.
Don’t waste your money on buying the ‘best trading system’ The truth is that trading is a SKILL that must be learned
There are a lot of systems out there which have been developed to aid foreign currency traders in their quest for financial freedom. Many people who develop these systems decide to sell them on to other traders as a way of making money. Despite the fact that it is possible to find a successful trading system for sale, there are so many poor systems for sale by people just looking to make a quick profit instead of trying to provide proven mechanisms for foreign currency trading. To get the best trading system for you by purchasing it, you would have to buy your way through an awful lot of time-wasting systems – and the money and that is spent buying and trying these systems could be put to far better use in actually developing the best trading system yourself.
Don’t assume a system is flawed because you lose a few trades
When you’re trying out different methods as part of your journey in finding the best trading system, make sure you don’t disregard a system purely based on the fact that it makes you a few losses. Remember that the best trading systems in existence are still going to make you losses – they work by giving you a method to follow for the long run, not a fail proof guide for every single trade you make.
Developing the best trading system doesn’t happen overnight
Don’t fall into the trap of trying to get a quick fix when it comes to developing or discovering the best trading system. The really good ones – and I mean the ones which are absolutely solid in the long run – are usually developed over a period of years, with a significant investment of time and money. The more detail, effort and persistence you put into truly working out the best trading system, the more solid your system is going to be for you.
A forex trading system is a set of rules, regulations, calculations and methodologies which have been combined in a way which can apply to every aspect of your forex trading. System development involves careful planning, meticulous testing and utmost patience. Remember, there's no such thing as a set and forget system or black box system simply because the markets are ever changing so as set of parameters in a given moment. Currency trading is one of the most dynamic and demanding markets there are, so you need to have the best tools possible to succeed in it.
How to know if your forex trading system is working for you
Does your forex trading system immediately give you a punch in the face? If it doesn’t then you might just be barking up the wrong tree.
The most important thing about developing a forex trading system that works is ensuring that the forex trading system you develop provides results. And such results should come smoothly, easily and effectively – they shouldn’t need constant tweaking, fine tuning and masses of attention to overloading in information details. The forex trading system you develop should provide instant results and a solid foundation.
A good way of testing how effective your forex trading system is not to try and prove it right, but prove it wrong. If you are easily able to pick faults and holes within the forex trading system you have developed, then regardless of how often it seems to work well, you are always going to be stuck with the possibility that your forex trading system could turn around and bite you deeply at any time in the future.
Don’t let your forex trading system get caught-up with chart patterns
Remember this useful piece of advice: No matter how well a chart pattern you’ve spotted seems to trend, patterns are not necessarily proof of how well a forex trading system will work. Patterns are designs of the human mind – we are programmed to see, spot and analyse patterns in data that could realistically just be random.
One of the easiest traps to fall into when developing your forex trading system is creating false patterns in your mind. Remember the importance of real data, and don’t go too far down the easily walked path of forming patterns that aren’t really there.
Another reason chart patterns can be unreliable
Another reason you shouldn’t use chart patterns you’ve seen as a basis on which to develop your forex trading system is that the human brain has a natural tendency to spot positive trends yet ignore negative trends. It is all too easy to analyse a forex trading system and point out the patterns that point to success, but omit those which point to failure – and all too often the two come as a package.
It’s important to understand that one of the reasons to use Forex trading system is that it enables you to take losses without allowing emotions: the more you avoid trading based on emotions; you will proportionally increase your chances of success.
Forex Trading. Is it purely for financial gain? Many people have asked the question: Do you get a buzz from forex trading?
The short answer of course is that yes, it is possible. But the reality of it is if you are engaged in forex trading for emotional satisfaction, you’re probably doing it wrong.
Emotion Versus Logic
If you want to make a success out of forex trading then you simply must decide from the onset why you’re doing it: Are you engaged in forex trading for business, is it for financial expansion? Or are you doing it for fun.
When you’re trading for emotional satisfaction, then when you make a win it’s going to give you some real elation. But in truth, you are going to lose in the long term.
Because emotion clouds your logical vision.
All of the success stories of those who have made a heaped fortune through forex trading come from those who put their emotions to one side and concentrate on the matters in hand. The truth of the matter is that forex trading is not fun – not if you’re trading for success.
When you’re faced with a decision, there are two directions you can take – the logical route and the emotional route. And more often than not, the logical route is going to seem boring, dull and ultimately mind-numbing. But it’s the route that’s going to make you rich.
Why would anybody trade for fun?
It’s a genuine question and it is very important you ask yourself this before you embark on any sort of forex trading journey. Because, let’s face it – if you’re only in it for the fun, then couldn’t you think of more exiting activities to engage in that are more emotionally gratifying than forex trading?
But it does happen… people start forex trading, and the buzz they get from that first big winning trade sucks them into the addicting world of generating a sudden fortune overnight… but it’s these players who end up walking away from the table with empty pockets at the end of it. Why? Forex trading requires patience, dedication and a thorough application of proven strategies and methodologies.
Ultimately… forex trading does create fun
To get to this stage however, you must understand that you have to go through a thorough, logical and meticulous system to get there. The fun doesn’t come from the forex trading itself: The fun comes from all the things you can do with the money after a painstaking journey through the logical world of forex trading.
Want to make a fortune? Forex trading is for you.
Want to play games? Get yourself to an adventure park.
It’s a question I often get asked: What makes the most supreme qualities of a Foreign Currency Trading expert?
And throughout much of the material I publish, I have answered many sections of this question in different ways. But what I’d like to talk about here, is one real quality that can be applied to Foreign Currency Trading Supreme methodology in a huge number of ways: Dedication.
The different directions of dedication
I am not referring to dedication in a general sense. I don’t mean ‘to be successful in foreign currency trading you have to feel dedicated to making money’. I mean you really have to dedicate yourself to every single aspect of the FX trading industry.
Method Dedication: Unbelievably important. If you are not dedicated to your method, then you are walking a thin line and en-route to disaster. It doesn’t matter what your brain is telling you. FX trading will often have your brain saying ‘Exit! Exit!’. But what you have to ask yourself, is ‘would exiting at this point fit my Foreign Currency Trading Supreme methodology?’ and if the answer is ‘no’, then you stay. And yes, you’ll sometimes lose money. But it’s about the bigger picture.
Lifestyle Dedication: If you see foreign currency trading in the same way as you see a regular job, then it’s time for you to pack up your belongings and get in line to apply at the local burger joint. FX trading is not a regular job – that means you aren’t going to get every weekend off, you aren’t going to leave work at work and go home with an empty head. You must stay focused “around the clock” as the market never sleeps. It doesn’t mean you can’t relax – but if you want to make serious cash, you really need to keep your business at the forefront of your mind at any given time.
Dedication to be Different: Similar to your method of dedication, this simply means you have to stick by your decisions regardless of what others around you are doing. It is sometimes easy to fold to the pressures of following the example of another, but if you’re following the right plan and you’re sticking to it, you are going to be successful in the long-term picture of your FX trading career. Methods tell you to do the only thing that nobody else is doing? Put everything else out of your mind and stick to your plan.
The importance of dedication
Dedication is a very general concept, but can be directly applied to many aspects of foreign currency trading. If you can’t dedicate yourself to your trading, then you probably can’t become a supreme trader.
Foreign currency trading can be a tough market to compete in – no matter how good you are, the fact remains: it’s risky business. Without appropriate Forex Trading Risk Management techniques I can assure you, this will be short lived career.
That’s why, by employing proven and effective methods of risk control, you can reduce the potential damage Forex Trading can throw your way, and help your method move forward to success.
What is Risk Control?
Risk control is quite simply the process of identifying the sources of potential risks, and containing them as much as you can to maximize your chance of success. The ability to control risk is a critical skill for anybody taking part in Forex trading.
Forex Trading – the best techniques in risk control
There are a lot of factors to consider when it comes to controlling the risks you’re faced with every day. One of the most important techniques to consider and employ however, relates to the old saying: Don’t put all your eggs in one basket. What I mean by this, is that it doesn’t matter how successful a trade has been historically – there’s always the chance that it could prove you wrong. So instead of putting all of your money into one huge trade, make sure you spread it across a variety. See it as a way of hedging your bets in a sense. Sure, go ahead and put a little more money into the trades you know are the safest, but never concentrate your entire balance into one trade or specific group of trades – it takes one abnormal market slip, and you’re brought crashing to the ground.
Another vital technique to fasten yourself onto when it comes to risk control in Forex trading, is to always analyse the market from each moment that passes. Foreign currency trading seems to have a trend of persuading people to look at the risk/reward of any given trade from the point of entry – this means you aren’t going to mind so much if the value slips a little as long as you’re still in profit from the point you entered the trade. This is not the best way to look at your position – control your risk by analysing it at the point it is at now, not the point it was at three days ago.
Some final words…
Of course, there is a lot more than just this to controlling risk, but these two points are highly important when it comes to minimizing the risk Forex trading presents you each day. Remember to stick to your foreign currency trading methodology and don’t let negative factors such as a losing streak impair your ability to think methodologically.