So far, we’ve shown you how to create a trading strategy. We’ve also talked about how crucial it is for you to figure out what kind of forex trader you are.
Now it’s time to add some meat to your lean trading strategy by showing you how to build a forex trading system.
More specifically, we’ll teach you everything you need to know about forex automatic trading methods.
Mechanical trading systems produce trade signals for traders to follow.
They are dubbed mechanical because a trader will enter the deal regardless of market conditions.
In theory, this should eliminate any biases and emotions from your trading because you are expected to obey your system’s rules NO MATTER WHAT.
If you perform a simple Google search for “forex trading systems,” you’ll find many, many people claiming to have the “Holy Grail” method that you can buy for “only” a few thousand dollars.
These techniques are said to generate thousands of pips per week and never lose.
They will show you the said “results” of their ideal systems, which will turn your eyes into dollar signs while you sit there thinking, “Wow, I can make all this money if I just give this guy $3,000.” Besides, if his technique generates hundreds of pips per week, I’ll be able to recoup my investment in no time.”
Cowboy, slow down. There are a few things you should be aware of before handing over your credit card information and making that impulse purchase.
The reality is that many of these systems DO work. The issue is that forex traders lack the discipline to adhere to the system’s guidelines. There are many publications that offer systems, but none that teach you how to develop your own.
This class will walk you through the processes necessary to create a forex mechanical trading system that is suitable for you.
Goals of Your Mechanical Trading System
“DUH, the goal of my trading system is to make a billion dollars!” we hear you say.
While that is an admirable aim, it is not the type of goal that will lead to your success as a forex trader.
When creating your mechanical trading system, you should aim for two things:
- Your system should be able to identify trends as early as possible.
- Your system should be able to avoid you from getting whipsawed.
If you can achieve those two objectives with your trading strategy, you will have a far better chance of success.
The difficult issue about those objectives is that they contradict one other.
If your system’s primary purpose is to detect patterns early, you will most likely be fooled numerous times.
On the other side, if you adopt a mechanical trading method that concentrates on avoiding whipsaws, you will likely be late on many transactions and miss out on many others.
When creating a mechanical trading system, you must strike a balance between the two objectives.
Find a technique to recognize trends early on, but also a way to tell the difference between phony and true signals.
Many forex traders share their trading system ideas, therefore you might find one or two that you can utilize while developing your own mechanical trading system.
