Why you need Forex trading systems and strategies.
Learning to trade profitably requires you to learn and master a few forex trading systems. The key to trading is to become a master of a few trading strategies, not the best ever. Forex trading systems are important because they will provide you with a structure, a set of rules, and a plan to follow. This article will discuss some of the different types of Forex trading strategies They are currently in the Forex market and teach you how to identify what makes the best FX trading system.
Indicator-based trading systems.
Approach with extreme caution, indicator driven strategies are often designed by someone who realizes that this setup is working at the moment. The problem is just that, it’s working for that present moment and often too little analysis has been done to understand the longevity of this Forex trading system.
The biggest problem with indicator based Forex trading systems is that it uses indicators to generate a trading signal instead of pure price action. Indicators are lagging and therefore tend to give poorer, later signals than pure price action, which is the most up-to-date information on the chart.
However, as this trading system often looks exciting and ‘sexy’ on the charts, many amateur traders find this trading strategy too tempting.
The last glimpse of some guru in pan trading strategy.
A trading system that comes with the guaranteed promise that you will ‘never lose again and turn your computer into an ATM’; Unfortunately, the world is full of these so-called ‘gurus’ and their Forex trading systems that make millionaires. Experienced traders know that losing trades is part of the game, there will always be losers and winners, you must be prepared to take losses. Professional traders understand that no Forex trading strategy is guaranteed, however with proven trading results and performance figures they focus on the big picture of success. The best way to avoid falling victim to these scams when finding a Forex training company is to have proof of their live trading strategies and results. This way you will understand the realistic and honest performance of your strategies.
Trading systems that really work…
Harmonic trading patterns.
Harmonic trading is the art of recognizing particular price patterns in line with Fibonacci extensions and retracements to calculate turning points in financial markets. Confused yet? Harmonic trading is complex and requires a lot of time and practice to master, however it could be one of the best trading systems because it offers a high reward to risk ratio and is very versatile. It can be traded on any market at any time period.
If you are just starting to learn how to trade the market, your initial focus should not be on harmonic trading patterns, as it will take a lot of time and focus to understand. However, for more experienced traders looking for a new trading system to add under their belt, harmonic trading is worth a look.
Old school technical analysis trading strategies.
This particular trading system is well known and well traded throughout the Forex community for many years. Technical analysis includes; ascending triangles, consolidation breakouts plus head and shoulders patterns, flag patterns to name a few. The benefit of learning these trading systems is that they work and have decades of data to prove it.
The downside of these systems is that many new traders find this approach to trading boring and perceived as outdated. It lacks the glamor and excitement of the indicator-driven system. It’s not busy or flashy, and unfortunately, novice traders often mistake complexity for a sign of better performance and higher probability. However, the reason old school technical analysis still exists is because it works, and many experienced profitable traders use it in their own trading style. Aside from the lack of emotion, old-school technical analysis trading systems tend to have a lower success rate, which many people don’t want or can’t deal with. A lower success rate means that the winning trades are often very large, making the system profitable and worth learning as it gives you a solid foundation for learning the Forex markets.
Price action trading strategies.
Now what you have been waiting for, I reveal to you that the best Forex trading system you can learn is price action. Price action trading is the reading of raw price action on a chart. The price is the most current information on the chart, so it will give you the most current situation when you read the chart. Price action as a Forex trading system is an incredibly simple method that is effective and functional, as it works in both trending and ranging markets, with and against the trend. Learning price action can simplify your Forex trading and dramatically improve your results. With price action, a trader has the advantage of trading any market at any time frame, as price action setups are effective in all market conditions.
Price Action Trading Systems to Learn:
one. Pin bar configuration.
the pin bar price action forex trading strategy It is an investment system. It is designed to trade the highs and lows of the markets and can also be used in trend continuation by buying dips in uptrends and selling tops in downtrends.
2. Inner Bar Configuration
Inside bars can be used very effectively when trading Forex. They are mainly used when trading strong trending markets as a trend continuation strategy.
3. Surround Bar Settings
Engulfing bars are great for trend reversals. They are rare, but a very strong price action reversal signal. It can be used when trading trends, but is usually found at the end of trend reversals.
Four. fake setup
The fakey setup is a trend-based trading approach that looks for a false breakout of an inside bar formation. This setup can usually be found at support and resistance levels, much like the pin bar setup. Fakeys are used to buy dips in an uptrend and sell peaks in a downtrend.
Price Action Trading Systems… Your first step.
Don’t get overwhelmed, just focus on a few price action trading strategies. Trade these setups on a few different currency pairs. Grow your confidence. Get comfortable with identifying setups and really understand how to enter the trade step by step. Start with one price action Forex trading system and only when you feel completely comfortable add another trading system.
Conclution.
It’s fair to say that as long as you stick to something like old school price action trading or technical analysis, you can’t go far wrong. Beware of all the different indicator systems out there on the forums, and make sure you get your Forex education from a company with live trading results and experienced traders.
One of the biggest challenges that inexperienced traders create is cutting and switching between different trading strategies. Choose a Forex trading system and strategy that matches your personality. It might take a couple of tries, but once you find one you like and can become consistent with changing it, stick with it.
