Forex Trading System- All great systems have these basics in them: Entry rules, Exit rules & Money Management rules
Anyone who is serious about trading needs to have a Forex Trading System that is tailored to them, but there is no reason to start constructing Forex trading system from scratch.There are some good Forex trading systems out there for you to work with. Some of them are free and some are very expensive, but the price tags don't always reflect the actual value of the Forex trading systems. Many of these systems won't work for you, and I am not talking about out-right dishonesty here, which can be a big problem when trading. Your ability to effectively trade with system you may be considering using or buying.
You need to use a system that matches your life style and personality. Once you know what sort of Forex Trading System will work best for you, look at the components that make it work. Face it; if you are a new, or even a fairly serious, trader how likely are you to come up with a totally new concept? There are some very smart and wealthy traders out there. Why not use their ideas.
All great Forex trading systems have these three basics:
1) Entry Rules- Based on choosing levels/level picking. Confirmation signals. Momentum entries. More mechanical the less emotions when trading.
2) Exit Rules- Based on risk to reward ratio. Can vary if you scalp, day trade, position or swing trade. take trades where risk-to-reward ratio is at least 2:1.
3) Money Management Rules- Proper position size for your account, most time 1% to 2% maximum risk. The idea of risk tolerance. This is how much a trader is ready to put to risk with one trade or during some period of time. It is often unrelated to a particular trading set-up, but can depend on trader's perception of probability for the current trade. Examples: 1% of account balance per trade; $100 per trade; 10% per week, etc.
Anyone who is serious about trading needs to have a Forex Trading System that is tailored to them, but there is no reason to start constructing Forex trading system from scratch.There are some good Forex trading systems out there for you to work with. Some of them are free and some are very expensive, but the price tags don't always reflect the actual value of the Forex trading systems. Many of these systems won't work for you, and I am not talking about out-right dishonesty here, which can be a big problem when trading. Your ability to effectively trade with system you may be considering using or buying.
You need to use a system that matches your life style and personality. Once you know what sort of Forex Trading System will work best for you, look at the components that make it work. Face it; if you are a new, or even a fairly serious, trader how likely are you to come up with a totally new concept? There are some very smart and wealthy traders out there. Why not use their ideas.
All great Forex trading systems have these three basics:
1) Entry Rules- Based on choosing levels/level picking. Confirmation signals. Momentum entries. More mechanical the less emotions when trading.
2) Exit Rules- Based on risk to reward ratio. Can vary if you scalp, day trade, position or swing trade. take trades where risk-to-reward ratio is at least 2:1.
3) Money Management Rules- Proper position size for your account, most time 1% to 2% maximum risk. The idea of risk tolerance. This is how much a trader is ready to put to risk with one trade or during some period of time. It is often unrelated to a particular trading set-up, but can depend on trader's perception of probability for the current trade. Examples: 1% of account balance per trade; $100 per trade; 10% per week, etc.