There are a lot of forex trading systems around, and quite frankly, a lot of them work. This is not to say that a forex system that was profitable for me will be profitable for you. There are a lot of things to consider, like trade session, currency pairs, personality, time frame, etc. All of these play very vital roles in how a forex trading system works out for a trader.
Having said that, it is worth mentioning that there are many forex trading systems in the forex market that are scams. They appear profitable as they are promoted to be so. But the truth is they are not close to useful in trading the forex market. The problem now is how can one distinguish between forex trading systems that work and those that do not?
Most of the traders in the forex market are short term traders. They open a trade and close it out before the end of the day, gathering profits little by little to add up to something substantial by the end of a period of time.
A SWING TRADING SYSTEM THAT WORKS
Swing trading is a trading style that requires patience and to stay on a particular trade for more than a day. It is a great trading style for traders that may not have time to closely monitor the market during the day but can spare a couple of hours daily analyzing the market.
Here is a very vivid description of a swing trading system that works
It makes use of the daily charts, simple moving averages, stochastic, and RSI. The simple moving average is used to identify when there is a new trend almost as soon as it starts.
The stochastic helps the trader to avoid overbought and oversold areas. It also helps one to determine if it is alright to enter a trade after a moving average crossover. Then for more confirmation, the RSI comes in to verify the strength of a trend.
The first thing to do in this system is to figure out the trade set up, and then determine how much risk is alright for the trade. The higher the time frame, the more risk a trader should be willing to risk with this system. This is because the probable profits that will be made from such a trade will be high.
Finally, entry and exit rules are clarified, and then start a manual back test to begin the testing phase.
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