Free Info – The Importance of Developing Your Own Forex Trading System

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The Importance of Developing Your Own Forex Trading System



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There are many, many different people out there selling their”forex secrets” or trading systems that promise to make you amillionaire in a month. How do you sort through the overload ofinformation to pick the right one, without going bankrupt in theprocess?

The key to consistent success in forex is to develop your ownpersonal trading system. Sure, someone else may be having greatsuccess with a certain system, and decides to crank out an ebookor a website to sell it. But because there is such a thin linebetween profitability and losing it all in the forex market, itis impossible to convey every single piece of information thatmakes a system successful. Even the most detailed systems willnot have the answers to more than a small slice of thesituations you will be faced with in an average day oftrading.

So how do you go about developing a personal trading system? Thefirst thing is to ask yourself what kind of trader you are. Howmuch time do you have to spend at your computer? Are youcomfortable carrying trades overnight, over a week, or longer?Are you prepared to leave your trades alone while you are notmonitoring the charts? Day traders and swing traders tend towant to close all their trades before they leave the computerfor an extended amount of time to make sure all is well.Longer-term traders leave trades open for days or weeks, andonly log on occasionally for maintenance.

If you decide that you are not comfortable leaving your tradesalone for an extended amount of time, consider yourself a daytrader. Day and swing trades tend to rely on tight stops andtechnical analysis. Long-term trades rely more on fundamentalanalysis and worldwide economic conditions. This is anotherfactor to consider – will you enter a trade based on chartaction, support and resistance bands, overbought and oversoldconditions? Or do you prefer examining larger trends in theeconomic factors that will affect prices?

The most important factor in the success of any system istesting. Constantly test and refine your system, and eventuallyyou will find yourself consistently in profit. Pick severalcurrency pairs and become a specialist in them. If you are aswing trader, is there a time of day where a pair always seemsto move in the same way? Become aware of each currency market’sopening and closing times. Often when one or both currencies ina pair are closed, movement will be much less volatile and moreconsistent. Long-term traders should focus more on the lesspopular pairs, as they are much less susceptible to short-termspikes in price that go against the overall trend, and you won’tbe stopped out as much.

Your trading style should also influence your choice of marketmaker. For example, if you are a swing trader, the spreadbecomes much more important to you. Choosing a market maker withsmaller spreads will be very beneficial. People who are willingto take bigger risks should go for market makers with highermargins, and risk-averse people ought to find the smallestmargin they can.

Does all of this mean that you should not listen to any forexadvice? Of course not. You should just be wary of anybody whoclaims to have a foolproof system, especially when they areselling it. Don’t expect to follow any system to the letter andhave success. There are many systems and people out there thathave good fundamental advice, and the key to profit is to takethis advice as a basis for your own system that suits your ownneeds. If you are willing to put the time and thought into yourtrading, you too can save yourself being one of the 90% ofpeople that do not achieve success in the forex market.

About the author:

Evan Bastian is a forex trader and webmaster of Explore Forex, a repositoryof unbiased commentary and reviews on all things forex.


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