Every forex trader is looking for that one best forex trading system that will solve all his forex trading problems and finally start to produce the gains he always dreamed about.
I must admit – I was exactly like that. I will start trading a system, and as soon as the trading system does not perform and I have a couple of losing trades I will be looking for the next system.
One day a light bulb went on in my head and it chenged my forex trading career for ever.
It was not until I was introduced to a single concept – that applied to trading will start producing results that you always dreamed about.
Apply Synergy in my trading
When applied to your trading it will make the world of difference.It basically means the interaction of two or more agents or forces so that their combined effect is greater than the sum of their individual effects.
Now – before you start thinking what on earth does this have to do with trading, you have to stay with me for a while.
When applied correctly the concept of synergy in trading can turn you from a constant loser to an 80% + winning trader.
One of the biggest mistakes aspiring forex traders make is to try to turn themselves into trading robots, and blindly trade every signal of whatever trading system they are trading. You must become a trader and have a view of the bigger picture.
The concept of synergy – applied to trading, explained in its simplest form is the following.
You must always have more than one reason to enter a trade.
The more confirming factors you have for a trade – the higher the odds of that trade will be.
By doing this I can guarantee you, you will be a profitable trader in no time.
An example of this can be where you get an entry signal of whatever mechanical system you are trading. This entry signal comes after a trend line break and a double top pattern.
The result of this is that you have an excellent winning trade.
On its own each of the three separate elements have an edge in the market, but when combined together this edge becomes much more powerful.If you want to be a successful currency trader, and constantly make pips and not lose them it is absolutely critical that you understand this concept.
This was truly the “light bulb moment” in my trading career, and it turned me fro a mediocre trader to a consistently profitable trader.The best forex trading system will combine several “reasons” or confirming factors for a trade – making the odds of a winning trade very high.
How to find the Perfect forex trading system for you
One of the biggest secrets in finding the perfect forex trading system is that you must find the forex trading system that suits your personality and trading style. One person might like to trade lots of times per day where this might drive another person completely crazy and not suit their personality at all.There are many different currency trading systems and trading styles and there are traders that make money with each of them.You must just find the forex trading system where you fit in.
A forex trading system must also fit your own inborn talents – some people are just good scalpers where other people are just naturally good swing traders.If you find a forex trading system that fits your personality and talents then you have just found the perfect forex trading system!
The question most people will then ask is how they find out what their trading style and talents are.
The best way to find his out is to try each forex trading system for a certain amount of time. You can get a forex demo account at every broker these days and it is free
Try all the different forex trading systems – scalp for 2 weeks, swing trade for a month, try some intraday swing trading– you will quickly discover which forex trading system you are drawn to and suits your own trading style. Once you discover which trading style fits your personality you can start to build a trading plan around this forex trading system.
You can then demo trade this trading plan for at least 4 weeks and if you are consistently profitable for at least 16 out of the 20 trading days you can start trading the currency trading system with real money.
Start trading mini lots in order to make the transition from play to real money an easy one. By following these steps you can find the perfect forex trading system
Some qualities of a Profitable forex trading system
Here are the qualities a good forex trading system should have:
- Entry method
Your trading system should have a specific entry method how you will enter the market.
You can enter on a breakout of a candlestick high or low, you can enter when price reaches a certain level – it all depends on your trading style.
- Taking profits
You should know where to take profits, on each and every trade. It is no good and will not work if you just leave the trade and “see what happens”
You should also know if you are going to have just one profit target for your trade or multiple targets
- Stop Loss
I once attended a trading seminar where the speaker stated that he never uses a stop loss and that stop losses are for losers. Well I think that trading without a stop loss is for idiots, which will eventually end up wiping out their trading account.
On every trade you enter you should have an exact stop loss level on which you should also base your position size.
- Position size
You should know exactly how much to risk on each and every trade. I would recommend no more than 2% of your trading capital on any trade.
You should have a plan how you will manage the trade once you have entered the market.
- Will you move your stop when you have a certain amount of profit?
- Will you move your stop to break even?
This is just some items any good forex trading system should include, and it also gives you a way to evaluate any trading system you might consider using
Different choices you have in forex day trading systems
When you first start trading you will be confronted with many choices, and in particular which forex day trading system you will be using should you choose to day trade.Everybody is looking for the best forex trading system, but then they do not have a clue what different systems are available.
Forex day trading can be done with many different systems, and before you pick any one of the day trading systems you should at least be aware of the different types of forex day trading systems that you get.
Any day trading system should it be forex, futures or any other commodities or stocks can be categorized into 3 main types of day trading systems.
Trend following
Firstly you get trend following forex day trading systems. This is a very popular type of day trading system, and you can be very successful with it and make a lot of money – if there is a trend present. The secret to any trend following day trading system is the ability to identify if there is a trend present, and to only trade when certain conditions are present. You should have the discipline to stand aside and not trade at all when you cannot identify a trend.
A good way to identify a trend is to place 21 and 50 EMA s on a 15 min chart, and to look at the separation between the two. If there is good separation trade all the pullbacks to the 21 EMA area.
Breakout
Breakouts occur when price tests a certain support or resistance area, and then breaks through it instead of reversing. A breakout forex day trading system can work very well when you notice price trading in a narrow band of say 15 to 30 pips for a couple of hours, and then breaks out in a direction. This works very well with market opens – especially the Frankfurt as well as London opens. Some people are very successful trading only these times. The breakout trade is even more successful if it is in the direction of the trend.
Reversal
Reversal trades occur when price reaches a certain support or resistance area, and fails to break through it. Price then reverses in direction, and it can be a very good forex day trade.
A successful reversal forex day trading system will include the identification of high probability reversal points, where the chance that price will reverse when it reaches this level is very good.
When price reaches such a level you can then look for confirmation like a candlestick reversal formation to make it an even higher probability trade.
I hope I have given you some insights into the best forex day trading systems available, and the secret is to pick one system that you are comfortable with, and master that day trading system
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