Hi and welcome to the 'Which Forex System?' blog.
I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!
Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>
You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.
You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.
Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>
Yours 'Forexly',
Cliff
So what is a Forex Trading System?
By Nathan Tucci
Most times you hear about Forex Systems, you are talking about an automated program or a trading robot, but that is only one definition for a trading system.
Let’s talk about what a Forex Trading System really consists of.
First, there is the obvious part: an entry strategy. A trading system MUST have a very detailed entry strategy. The entry strategy should be written out on paper and should include everything you need to see on the chart in order to make your entry. The entry strategy should include:
- What the candle should look like that you are entering on.
- What needs to happen before that candle.
- What time frames you will take an entry on.
- Where the price needs to be.
- What indicators you are looking at.
- What those indicators need to be showing.
- What filters you have in place to keep you out of bad trades.
- What trend or reversal signs you are looking at.
- Whether news impacts an entry or not.
- What time of day you are willing to enter a trade in.
- What pairs you are willing to trade.
The entry strategy for a COMPLETE Forex System must have EVERY detail you are looking at in order to make a trade. It should be so exact that you never need to ask yourself whether or not you should enter the trade–it is just a simple “yes” or “no” based on the criteria that you have defined in your entry rules.
The next thing a Forex Trading System MUST include is a risk management strategy. The risk management strategy must include exactly what your risk parameters are.
This part of the trading system would describe what type of management the system uses so does it risk a standard amount of pips, or a certain dollar amount or a certain percentage, ect. Not only does the system need to describe what type of management is used, but it also needs to detail how that particular system works. For instance, if you are risking a standard 2 percent per trade, your system should describe how you are going to calculate your lot size, if there are any instances where risk should be decreased or increased, if there is a max pip amount that you would place a stop loss on, if the risk decreases if there are other trades already open in your account, if there is a maximum or a minimum lot size you are willing to place on a given trade, if different currency pairs require your system to put forth more or less risk, ect.
Again, there should be zero guesswork in how you set up your risk on a given trade. Everything should be black and white if you have a complete Forex Trading System.
The next thing a trading system must have is a trade management strategy. This is different than risk management, because trade management talks about how you handle the trade after the entry itself.
This is extremely vital to a trading system, because no system can be consistent or successful without knowing how you are going to manage the trade BEFORE you even get into it. Once again, you really need to know everything black and white without having to think about it in order to create a true trading system.
Trade management should include everything you would possibly encounter while a trade is open–which is A LOT! Let’s think about some things a system would need to cover in terms of trade management:
- Is there a hard profit target?
- Is there a trailing stop?
- What system do you use to trail the stop?
- When does the trailing stop kick in?
- Do you take partial profit?
- How much profit do you take?
- When do you take the partial profit?
- How many times do you take partial profit?
- Is there a point where you would add to the trade?
- Will you add if it is winning or losing?
- At what percent of winning or losing will you add?
- How much will you add?
- Is there a point where you would add a hedged position?
- When would you add a hedged position?
- How much of a hedged position would you add?
- Should you ever pull the entire trade off before it hits a stop or target?
- How do you handle the trade if news is coming out?
- How do you handle the trade if other trades are in play?
- Do you leave your trading station with a live trade in play?
- How do you set up a live trade if you are leaving or going to bed?
- How do you handle a trade if it is struggling at support or resistance?
- What do you do if you accidentally enter an incorrect size on the trade?
- How long will you hold a trade if it is floating around the same price?
- Will you take an entry on a pair if you are already in the same direction on a correlating pair?
- How many trades will you take on at once?
- Will you hold a trade over the weekend?
- Will you hold trades that earning negative interest in your account?
- How long will you hold a trade that is earning negative swap?
- What if there is a signal, according to your entry rules, in the opposite direction before you get out of the trade?
You should have a written out answer to every one of those questions BEFORE you enter a trade. If you do that and follow it, your system will have a MUCH better chance of being successful.
Once you have set up specific entry rules, solid risk management, and a complete trade management guide, you are on your way to having a Forex Trading System.
Fir the system to be complete, you should also consider account management. You should think about the point at which you need to be withdrawing money regularly from the account, if your risk should decrease as your account grows, if you should split your capital into multiple accounts, ect.
If you have a good system in place and are able to manage the capital that system is producing, you will be a very successful Forex trader, and that is what having a Forex Trading System is all about.
http://www.winnersedgetrading.com/forex-trading-system/
I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!
Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>
You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.
You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.
Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>
Yours 'Forexly',
Cliff
So what is a Forex Trading System?
By Nathan Tucci
Most times you hear about Forex Systems, you are talking about an automated program or a trading robot, but that is only one definition for a trading system.
Let’s talk about what a Forex Trading System really consists of.
First, there is the obvious part: an entry strategy. A trading system MUST have a very detailed entry strategy. The entry strategy should be written out on paper and should include everything you need to see on the chart in order to make your entry. The entry strategy should include:
- What the candle should look like that you are entering on.
- What needs to happen before that candle.
- What time frames you will take an entry on.
- Where the price needs to be.
- What indicators you are looking at.
- What those indicators need to be showing.
- What filters you have in place to keep you out of bad trades.
- What trend or reversal signs you are looking at.
- Whether news impacts an entry or not.
- What time of day you are willing to enter a trade in.
- What pairs you are willing to trade.
The entry strategy for a COMPLETE Forex System must have EVERY detail you are looking at in order to make a trade. It should be so exact that you never need to ask yourself whether or not you should enter the trade–it is just a simple “yes” or “no” based on the criteria that you have defined in your entry rules.
The next thing a Forex Trading System MUST include is a risk management strategy. The risk management strategy must include exactly what your risk parameters are.
This part of the trading system would describe what type of management the system uses so does it risk a standard amount of pips, or a certain dollar amount or a certain percentage, ect. Not only does the system need to describe what type of management is used, but it also needs to detail how that particular system works. For instance, if you are risking a standard 2 percent per trade, your system should describe how you are going to calculate your lot size, if there are any instances where risk should be decreased or increased, if there is a max pip amount that you would place a stop loss on, if the risk decreases if there are other trades already open in your account, if there is a maximum or a minimum lot size you are willing to place on a given trade, if different currency pairs require your system to put forth more or less risk, ect.
Again, there should be zero guesswork in how you set up your risk on a given trade. Everything should be black and white if you have a complete Forex Trading System.
The next thing a trading system must have is a trade management strategy. This is different than risk management, because trade management talks about how you handle the trade after the entry itself.
This is extremely vital to a trading system, because no system can be consistent or successful without knowing how you are going to manage the trade BEFORE you even get into it. Once again, you really need to know everything black and white without having to think about it in order to create a true trading system.
Trade management should include everything you would possibly encounter while a trade is open–which is A LOT! Let’s think about some things a system would need to cover in terms of trade management:
- Is there a hard profit target?
- Is there a trailing stop?
- What system do you use to trail the stop?
- When does the trailing stop kick in?
- Do you take partial profit?
- How much profit do you take?
- When do you take the partial profit?
- How many times do you take partial profit?
- Is there a point where you would add to the trade?
- Will you add if it is winning or losing?
- At what percent of winning or losing will you add?
- How much will you add?
- Is there a point where you would add a hedged position?
- When would you add a hedged position?
- How much of a hedged position would you add?
- Should you ever pull the entire trade off before it hits a stop or target?
- How do you handle the trade if news is coming out?
- How do you handle the trade if other trades are in play?
- Do you leave your trading station with a live trade in play?
- How do you set up a live trade if you are leaving or going to bed?
- How do you handle a trade if it is struggling at support or resistance?
- What do you do if you accidentally enter an incorrect size on the trade?
- How long will you hold a trade if it is floating around the same price?
- Will you take an entry on a pair if you are already in the same direction on a correlating pair?
- How many trades will you take on at once?
- Will you hold a trade over the weekend?
- Will you hold trades that earning negative interest in your account?
- How long will you hold a trade that is earning negative swap?
- What if there is a signal, according to your entry rules, in the opposite direction before you get out of the trade?
You should have a written out answer to every one of those questions BEFORE you enter a trade. If you do that and follow it, your system will have a MUCH better chance of being successful.
Once you have set up specific entry rules, solid risk management, and a complete trade management guide, you are on your way to having a Forex Trading System.
Fir the system to be complete, you should also consider account management. You should think about the point at which you need to be withdrawing money regularly from the account, if your risk should decrease as your account grows, if you should split your capital into multiple accounts, ect.
If you have a good system in place and are able to manage the capital that system is producing, you will be a very successful Forex trader, and that is what having a Forex Trading System is all about.
http://www.winnersedgetrading.com/forex-trading-system/
