How To Evaluate the Best Forex Currency Trading System
Being able to pick the a good forex currency trading system from a bad one is a key skill every trader should master. Without being able to tell which systems are good, and which are bad, you can easily waste months of time and many thousands of dollars following a system that has no chance of success.
This short article will help you quickly identify potential forex trading systems using a very simple 4-part process.
Most systems can be quickly ignored simply because they have fatal flaws that ensure they will never work long-term. Here are the tell tale signs of a flawed system:
- Most systems don’t teach a proven system for success. Instead of giving you a step-by-step plan, they teach incomplete and often inaccurate theory that does nothing more than confuse you.
- Most systems don’t teach technical analysis. Instead they expect you to understand fundamental analysis and assume you have hours each day to spend in front of your computer waiting for the perfect time to trade.
- Most systems don’t teach you how to manage risk. They don’t show you how to use risk management strategies that compliment their trading strategy, leaving you exposed to large losses and risking your capital.
Now that you can spot a flawed trading system, let’s take a look at the 4-part system you can use to identify trading systems that have a good chance of success.
Over the years I’ve seen dozens of trading systems come and go, and I’ve developed my own proprietary system for quickly picking systems that are worth investing in. If you follow these 4 steps and ensure any trading system you invest in meets these criteria then you will greatly increase your chances of success in forex.
Step 1. Your trading system should give you all the steps you need to succeed and not leave anything out. It should be as “paint by numbers” as possible so you can get started quickly and not have to guess at what to do in any situation.
Step 2. The system must teach you proven technical analysis strategies that are simple to understand and easy to implement. It should also require some thought and not be completely automated.
Step 3. Your trading system should not be time consuming and should not need you to be chained to your computer all day. It should be flexible and require only a few minutes each day.
Step 4. Your trading system should teach risk management strategies that work hand-in-hand with the core strategy to protect your wealth while maximizing the potential upside.
This evaluation system will allow you to quickly identify a potential forex currency trading system while eliminating duds from your radar.
Of course, there is always risk involved, and it’s up to you to implement the strategies correctly, but you’ll give yourself the best chance of success when you choose a system that meets this criteria.
Is Day Trading Forex Currency Your Best Bet?
Rarely a week goes by where I don’t get asked if “day trading” is the only way to trade forex.
While most people still seem to think you must be a day trader to be successful in forex, a small group of traders have realized there is a better way that requires less work and produces the same kind of profits.
What I have found is day trading forex currency is not beneficial for most new forex traders. In fact, because of the time and focus required to be successful at day trading, it’s actually one of the reasons many new traders fail.
Now we have access to methods that are much simpler, take less time to implement, and still generate impressive profits, without the need for constantly watching the markets. These methods obviously work better for new traders as they remove many of the problems associated with day trading.
The most popular method that is taking the forex world by storm is “end of day trading”, and for good reason.
New and less experienced forex traders like this method because it only takes a few minutes each day (as little as 25 - 45 minutes) and doesn’t require you to be at your computer 24/7.
End of day trading also has the advantage of taking larger profits over a longer period of time, rather than the smaller short-term profits of day traders, which means your profits are on par and often greater.
Of course, end of day trading requires slightly different strategies than day trading, so you should invest in a forex currency trading system specifically created for end of day trading.
One of the big disadvantages of day trading — stress — is largely reduced by using an EODT strategy. Because you are only focused on your trading for a few minutes each day and are not needed to be “on” all the time, it takes a lot less mental fortitude to be successful.
End of day trading lets you make the same (or better) profits as DT by taking larger profits once a day, instead of smaller profits throughout the day. This means you put in less work but make the same amount or money.
It should be obvious now that you don’t have to day trade forex. You can use an end of day trading strategy at get results that are just as good while investing less time and effort.
A Few Dissimilarities Between The Forex Foreign Exchange Buying And Selling Market And The Stock Market System
In the FX foreign exchange market buying and selling takes place between two counties with different currencies. The FX exchange trading marketplace is over thirty years old, established in the early 1970’s. The forex exchange market is one that is not based on any one business or investing in any one business, but the trading of currencies.
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The difference between the stock market system and the FX foreign exchange buying and selling marketplace is the vast buying and selling that occurs on the forex exchange trading marketplace. There is millions and millions that are traded daily on the forex buying and selling marketplace, almost two trillion dollars is bought and sold daily. The amount is much higher than the money traded on the daily stock market system of any country. The foreign exchange buying and selling marketplace is one that involves governments, banks, financial institutions and those similar types of institutions from other countries.
What is traded on the FX exchange trading market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the foreign exchange buying and selling market system is something that can happen fast for any investor from any country.
The difference between the stock market and the forex exchange trading market system is that the foreign exchange trading marketplace is global. The stock market is something that takes place only within a country. The stock market system is based on businesses and products that are within a country, and the forex exchange trading marketplace takes that a step further to include any country.
The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex trading market system is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading are located in so many different times zones. As one market system is opening, another countries market system is closing. This is the continual method of how the FX trading marketplace buying and selling occurs.
The stock marketplace in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock marketplace, or the United States stock marketplace and the dollar. However, in the forex exchange market system, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market system and the forex exchange trading market.
Now it’s your turn to use this foreign currency exchange market information to work wonders for you. Your actions using your newly found knowledge of foreign currency exchange market will provide for you and your sales figures. Here are some valuable resources for any foreign exchange trading related business: