How To Choose a Forex Trading System That Works and Suits You

12:58 in forex, make money, trading system

There are so many different trading systems, you can use to trade the FOREX market, some are better suited to some people than others. For example May some people find it easier to understand and take into account factors rather than watch a screen in technical indicators, and vice versa.

The first logical step to determine what type of trading system are best for you is actually aware and understand the well-known methods of analysis used in trade the currency market. Once you are aware of the tools that are available, you can generally know what type of analysis that suits you. For example some of the main methods of technical analysis that are popular include:

Pivot points

Chart Patterns

Fibonacci Retracements

Chandelier models

And some fundamental factors that are widely used include the analysis:

Interest rates

The balance of trade

Unemployment rates

The gross domestic product (GDP)

You May now be able to develop your own system by combining certain methods of analysis at the same time, giving you a method that you're comfortable with. On the other hand, May you decide you want to trade someone else's system, whatever, that brings us to the next step is to determine the profitability of a trading system.

Determination of profitability

Most people think back testing is the best way to determine the profitability of systems. However back testing does not always give you a real idea of how a profitable system. The reason is that when you're back to test your system on historical maps, you only see clearly configurations that have occurred, and not always see those who are less obvious. These less obvious can sometimes produce losses, which is why back testing is not always the best method to implement.

A better method of determining profitability is through an exchange of your system in real time with a demonstration. This gives you a real understanding of what your system is capable of doing. This would also allow you to familiarize yourself with your trading platform at the same time. In determining profitability, you must look in terms of expectation and potential.

And the hope of opportunity

These two factors combined will be able to tell you what you could hope to do over a period of time. The wait is calculated using the following formula:

(Probability of winning × average gains) - (probability of losing × average loss)

This will give you a figure which is the average amount that you can expect to make a trade. This should not be a negative amount, if it is, you should consult another type of trading since you can not make money on a system that produces a negative expectancy. It is obvious that the higher the figure is better. Now, on the occasion factor.

The luck factor is how you are often able to share with your system. Multiply your expectancy figure with your luck factor, it tells you how much you could hope to do over a period of time. The more you have the possibility to trade, the more money you should expect to be done. This brings us to the last component of a trading system, money management.

Money Management

In the absence of money management you will end up as a statistic. In other words one of these + 90% of traders who lose their money. The money management tells you how much your account balance at risk by trade. The entire money management is to ensure your survival over the long term, and preserve your capital.

The most common form of money management percent is the risk model which tells you not to risk more than x per cent of the balance of your account on any one trade. A range of 1-3% is generally accepted an amount which has been a reliable percentage to be used to earn money in the long term.

Conclusion

Taking into account the above factors, you'll be able to determine whether a trading system that suits you best, and with simple mathematical calculations, you'll be able to determine its profitability