Tips For Choosing The Best FX Trading System

Tips For Choosing The Best FX Trading System

Posted on March 10, 2011 Admin

Before we come to understanding the best FX trading system, it is important to understand what a ‘trading system’ means. An’ FX trading system’ means a set of strategies that is applied to the possible outcomes on the future movement of a certain pair. Of course, it would have been much easier if there was a formula like Einstein’s E=MC Square to give a guaranteed outcome, but unfortunately it’s not as simple. Every indicator gives a whole set of possibilities for future and then it’s the strategy that converts those possibilities into profits. The entire process of application of the indicator, reading its possibilities and then deployment of strategies is what makes a complete ‘Trading system’. The best system is the one that meets your criteria successfully and your comfort the most.

On the Internet, you find dozens of system sellers claiming to have finally produced the BEST FX TRADING SYSTEM after their years of research and blah blah.
Some of them do work. You might even be lucky to find the best one at the first go but here are a few tips which might help you decide on which one you want to buy and use.

The first tip is that the trading system should be based on an indicator easy to understand and easy to apply. Of course there is nothing like going with fundamentals where you need to just keep with the expected time of the news release, so you basically have nothing to do with the charts. You trade only when the news are released.

However, people have their own preferences and they may decide to rather stick to some technical indicator which they can use at any time of their choice. So, make sure that the system you choose, uses an easy indicator like channel or trend lines or pivot points. These indicators are easy to apply and can be used in any kind of market conditions, hence giving them a superior edge to others. The main advantage here is the comfort, the ease to use.

The second-must check point is that the system should give you a clear definition of a “started” and a “starting trend”. the best FX trading system trades with the “starting trend” as soon as emerging trend is confirmed. On the other hand, in case of a trend already started, the system should return to you the possible reversal points to it so that you can move against the trend as you are already late to catch up with the trend. So, remember, a good trading system will give you both kinds of trading possibilities, trading with the trend and trading against the trend.

A good system will also give you clear entries and clear targets for your trades. It has to also tell you clearly where to set your stop-loss if your reading was wrong. Of course, its human nature to take liberties with their analysis and with their money but a more professional approach to the markets will call for complying with all the necessary parameters as set by the trading system. No exceptions.

There also are the important factors like trade profit-potential, draw-downs and win-loss ratios. The best FX trading system will produce trades with profit potential in the ratio of 1:4 and above (i.e. the profit potential should be four times the size of the Loss potential on each trade, anything higher will only be an added bonus).

This high trade potential keeps you safe when your trading system starts producing a streak of losing trades. With this high a profit-potential, you can cover up on all your losses with only a couple of winning trades to follow, thus the advantage. A win-loss ratio in excess of 65:35 will only make the figures ecstatic.

However, there is also this important condition that the system should be able to produce not only quick-trades but also medium and long-term trades by making only slight adjustments to the reading charts. Its beneficial when you start making money and after a few days do not want to trade everyday or analyze the markets everyday. You could just apply your best FX trading system on a larger time-frame and there you have it, a trade that is three-months long.

Forex Major Currency Pairs

What Is Mirror Trading?

Tips For Choosing Signals In Forex Provider

This entry was posted in Forex Trading Tips, and tagged . Bookmark the permalink

Forex Trading Tips

Dive into the heart of Forex trading excellence with our "Forex Trading Tips" category. Uncover a treasure trove of expert advice, strategies, and market insights designed to elevate your trading game. Whether you're a novice exploring the world of currency exchange or a seasoned trader looking for that extra edge, our articles are tailored to empower you at every level. Discover time-tested tips on risk management, market analysis, and effective trading strategies that can help you navigate the dynamic Forex landscape. Join us on a journey of continuous improvement, where each tip is a stepping stone towards mastering the art of Forex trading. Maximize your potential and make informed decisions with the wisdom shared in our Forex Trading Tips category.

Trading Tools

Forex Trading Tools and Resources

Posted on December 9, 2023 Admin

In the dynamic world of Forex trading, having the right tools at your disposal can make a world of difference. Whether you're a seasoned trader... Red More


Social Trading Platforms: Connecting Traders for Success

Posted on December 2, 2023 Admin

In the ever-evolving landscape of Forex trading, the power of community and collaboration has taken center stage with the emergence of social trading platforms. These... Red More

Forex Pairs

Unveiling the Top Forex Pairs to Trade for Profitable Ventures

Posted on October 20, 2023 Admin

In the fast-paced world of forex trading, the choice of currency pairs can significantly impact your success. Wise investors understand that not all pairs are... Red More


Forex Risk Management Strategies for Small Accounts

Posted on October 18, 2023 Admin

Trading in the Forex market offers significant opportunities for profit, but it also carries a substantial level of risk. For traders with small accounts, effectively... Red More

Forex Trading Psychology Tips

Forex Trading Psychology Tips for Consistent Profits

Posted on October 16, 2023 Admin

Successful Forex trading is not only about understanding technical and fundamental analysis; it's also about mastering the psychological aspects of trading. Emotions can play a... Red More


The Top 5 Essential Indicators for Success

Posted on September 22, 2023 Admin

In the fast-paced world of forex trading, having the right tools at your disposal can be the difference between success and struggle. Among these tools,... Red More

Categories List