A forex trading system is simply a forex trading strategy. It is a method of trading the forex market that puts into consideration series of analyses to determine when is the right time to buy and sell a particular currency pair. As is the case with a forex trading strategy, or a forex trading system, it differs with users. A strategy being used by trader A to make so much profit in the forex market may be entirely different and useless for trader B. This is because personality, among other things, plays a very important role in what strategy works for whom.
THE FOCAL POINTS FOR THE RIGHT STRATEGY THAT WORKS
Asides personality, there are other focal points traders must take into consideration when developing or looking for a strategy that will work fine for them. They are
Mission identification and goal setting
FIRST STEP: PERSONALITY
Personality is the very first thing a trader should consider about forex trading system. You have to know your personality traits for you to really tell what strategy can work for you. If you truthfully understand what your personality is, match it to your trading and the rest is history.
SECOND STEP: MISSION IDENTIFICATION AND GOAL SETTING
This has to do with what you want from your trades generally in terms of how much return you expect from each trade. From there, you can tell how often you will have to trade to achieve your goal. Be wise not to set unrealistic goals though.
THIRD STEP: STARTUP CAPITAL
You need to have enough startup capital for two very important reasons. They are
To foster liquidity
To cushion losses
Without the right amount of money to start up with, a trader will not be able to fill in demands efficiently. Your startup capital is the commodity for sale, if there is not enough of it, there is bound to be some setbacks.
Losses lead to temporal drawbacks in the forex market sometimes. It is a part of the market and cannot be avoided. The role of enough startup capital in the case of losses is to cushion the effect of the loss, and encourage the trader to keep moving. It serves as backup if something goes wrong; which, by the way, is the reason traders are advised not to invest everything they have in their account in one trade.
There are other things a trader can do to ensure that a forex trading system is right for them. They include considering the market conditions, methodology examination, and risk management.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.