Create your own forex trading system

forex chart

If you try to find forex trading system, you will see that there are hundreds of offers in the Internet. They offer you a super forex trading system and promise make you a millionaire overnight for a very moderate price.

The proposal is often accompanied by graphics that clearly show the exceptional performance of the system. And you may get an idea that several hundred dollars not too much for a miracle system. And you are sure that the magic system will return invested money after just a few deals. However, the reality is not so easy.
The proposed forex trading systems may be workable. The problem is that traders have bought the system and often suffer losses simply because of a lack of discipline. They just not adhere to all rules, required by the system.

Perhaps instead of paying hundreds or even thousands of dollars for trading system, which you do not understand, better spend time and create your own system.

It is not so difficult to create your own trading system. And it will be your system. System that is sharpened especially for you. But here the decisive factor also is discipline and compliance with rules.

Objectives of the forex trading system

Besides the natural goal – getting good profit, you need to have other goals that will help you become successful at  forex.
There are two purposes – to recognize the trend as soon as possible and protect you against quick changes of trend.
If you manage to achieve both objectives in one system, then you will have a good chance to become a successful trader.
However, to achieve both objectives in single system is not very easy, because they are essentially opposed. If the system allows to identify a trend in the very beginning, it will often give false signals. But if your system protects you from false vibrations trend, the more likely it will also “protect” you from most lucrative deals. Therefore it is important to find a compromise solution that will make both goals to be achieved.

Testing trading system

After you create your system, you need to try it. There are special programs to test the system on the history. However, better to test the system manually. Thus the psychological factor will be used, and you control discipline. In any case this can not be done in a hurry.
It is better for a long time to create, test, and improve the system than lose money. When you are enough confident in your system, start to test it on demo account. Let it take several months before you start to work on real money.

The first point that needs to be taken into account is what type of trader you are. Do you prefer quick results or you are ready to wait a few weeks or even months? Do you want to monitor the charts every day, or once a week is enough? These questions will help you determine the time period which you should operate.

Find indicators that show the emergence of a new trend. It is directly related to the purpose – to identify the emergence of a new trend as early as possible.
For this purpose usually used the moving average, or its combinations with different time periods.

You also need to find an indicator that confirms the trend. This problem is related with our second goal – to protect us from false market fluctuations.
For this you can analyze several time periods, as well as channels and trend lines.

Further moment is risk management. Determine the allowable amount of damages per one deal. As it is unpleasant, but losses also should be planned.
Then, planning opening  and closing the position. And the most important is the closing. Plan where your goal is – point of closing.
Write down your system on paper and strictly follow it. This is a crucial moment in the creation of the system. Write down the rules of your system, and always adhere them whatever happens. Once again, the discipline provides a large part of the success. And if you not follow the rules, the entire value of the system is reduced to zero.

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