Forex Trading Systems

Mickey | Financial | Saturday, January 22nd, 2011

If you’re going to be highly successful and profitable in the world of Forex currency exchange trading you’re going to have to have a solid set of forex trading systems in place that includes solid money management principles, the proper timing of signals, and even a psychological management plan. Not only do you need to have a solid plan in place but you need to be able to follow it to the letter, almost religiously. You’re also going to have to have the willpower to stick to it rather than chasing currency pairs on a whim or letting the psychological factors of fear and greed take over when you should instead be going by the book.
As with anything else in life and perhaps even more so with Forex, the people who write down their specific goals and stick to them are much more likely to be successful than people who don’t. Therefore make your Forex plan exists on paper rather than a set of vague and loose rules in your head.
Whether you’re going to be using automated forex system trading or not, when it comes to the contents of your Forex trading plan the first aspect should be sound money management principles. You should be able to set clear ground rules as to the absolute upper limit your willing to risk on any given specific trade. For most people starting out a recommended rule of thumb is to never risk more than 1.5 to 2% of your total outstanding account balance on any given trade, whether you’re going long or short. Think about that for a minute. Money management is more critical than any other aspect of your trading scheme. Even if you have a trading plan that is successful 90% of the time, if you don’t have some money management, you can still blow your entire account on one huge trade during the 10% of the time that the strategy does fail. Therefore, at the end of the day, although it’s not exotic or interesting, good old-fashioned psychological discipline and money-management beats out any of the latest indicators and fancy tactics when it comes to trading Forex.

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