How can you establish your own trading system?
Why shall you develop your own trading system?
Why shall you create something new if there are plenty of trading systems in Forex, which are effective enough to make good profit? The answer is easy: in addition to the key criteria, with which trading system shall comply, there is another, individual factor, which as a personality of a trader. We do not doubt that each person is unique; therefore, there is no need to explain what the use of the universally applicable strategy, which is suitable for all, but ignores your personal psychological peculiarities, can have ill effect on your trading results.
What does a trading system incorporate?
Any trading system incorporates some certain features. If you can put a “tick” against each of a feature, your trading system is operational, can fulfill all the functions and suits the purposes of a trader.
- Clearly specified parameters of opening and closing of transactions and tactics of trading system.
Your trading system shall efficiently control your trading process. It shall specify parameters, based on which you can make a trading decision to sell or buy. Thus, your trading system will help you avoid reckless actions and wrong trading decisions. The system shall prevent a personal judgment, enabling to make decisions on the impartial basis.
- Concept and instruments of your trade or trading system strategy
According to the concept of your trading strategy, you will select the instruments to be used in the currency market. Each component of a system shall implement a certain function. Nothing in excess, you will use only those technical indicators, oscillators or charts, which in combination will give you an overall picture of the market situation and help you make a trading decision, as describes in item 1.
- Consideration of your personal peculiarities and capital management
As we said above, your personal peculiarities must become an important aspect of your trading strategy. In other words, unlike the impersonal trading strategies offered by Forex, no matter that they can be very profitable, your own trading system will be tailored to your habits, taste, practice and “weak points.” You will adjust the time of trading, the length of timeframe and risks in accordance with your personality. You should remember that competent risk management will help you earn regular income.
You own trading system: step by step
Remember that there are three most important factors: tactics, strategy and capital management of your trading system
- Step №1
When you develop a trading strategy, first of all, specify your trading concept. Your strategy shall clearly show situation in the market, changes and potential direction of price movement. From the wide range of trading instrument you shall select those, which will give you full information on the market. The data you receive with the help of the indicators or oscillators shall give you strong ground for using your tactics. Depending on your preferences, your trading decisions can be based on trend, news or a channel.
- Step №2
As soon as you decide on your priorities in the currency market, you need to determine what actions you will take under certain conditions and signal. If your trading system is based the trend movement you shall determine the parameters of the oscillator, which will give you a buy or sell signals. Your trading decision shall be based on several factors, which will make your system more reliable. However, keep in mind that if your expectations are too high you might never take your chance to get a trading signal.
- Step №3
Here, every care must be taken, as trading psychology and capital management are two interconnected and most complex factors, which a trader, especially if he/she is a beginner, shall take into account. There are plenty of books and articles in a global network devoted to this topic. You can trade on demo accounts, examine your reactions and your ability to take a grip on yourself. It will help you develop your own trading strategy as you will adjust your risk control and capital management in accordance with your individual peculiarities.
Remember that diligence is the mother of success. Happy trading and good luck my friends!