Day 5 – Strategies & Systems

 

Once you’ve got the hang of trading and what’re required to earn profit, you should then start to look for some forex systems and strategies to help you improve the efficiency of your trading.

You see, trading forex is one thing. Trading forex well & profitably is another ballgame altogether.

Why? It’s simple – the currency markets are often so volatile and unpredictable that most traders don’t have the know‐how or experience to make the split‐second decisions that “making a profit” requires of you.

It’s a common fact that EVERY trader loses money on some trades. Even the “big shots” who head multi‐billion dollar ventures for the banks make mistakes…

That’s why it’s so important to not risk more money than you can afford ‐ because you need to “play the game” with the mentality that you ARE going to lose, except for the times that you win.

Saying that, you’d be forgiven for thinking that forex trading is just one big gamble…

Guess what? It isn’t.

There are certain strategies and “systems” which you can purchase that help you to spot the trends and indicators that will make your trading life a lot less of a “risk” and a lot more of an “informed decision”.

But what are these “systems” and “strategies”?

Although slightly different (I’ll explain the difference in a moment), forex systems and strategies are essentially sets of blueprints which state that if a certain criteria is met, an action should be taken which will yield a certain result.

Put bluntly, they are just glorified formulas which state: ACTION + CRITERIA = RESULT. Obviously, the result everyone wants is profit… and lots of it!

The big difference between “strategies” and “systems”, and this is especially true with commercial forex products, is that most systems have now been branded and developed as automated software pieces which allow you to simply fill in some data, import some charts and the software will actually find the indicators for you…

So why are we talking about these things?

You don’t *need* a system or strategy to trade forex, but if you want to take a LOT of risk and “guesswork” out of trading, then its PAYS to use the tactics of others which have been PROVEN to make profit… and its becoming increasingly popular to “sell your secrets” if you’ve seen some success in the industry.

It’s like all these little ideas & strategies are all part of a big Forex “roadmap”. Except this roadmap has all the “shortcuts” marked on – allowing you to see exactly which routes will lead you to profit…

Forex systems and strategies are available for free or, as you’re probably aware, at a price. It’s often cited that there are many “scams” and “cons” with forex systems and although we’re not going to comment on any of that – I will

say that you definitely need to be careful with who you trust because there are a LOT of people out there with dollar signs in their eyes.

Whether they are “scams” or not, the fact remains that using forex systems and strategies is definitely the best way to keep your trading focused and aimed in the right direction.

Using some sort of strategy or system is definitely a bonus because it prevents you from becoming overcome with confusion and what we like to call “over opportunity” (where you simply spot so much opportunity that you can’t stop yourself but to try and get in on ALL the action).

We’ve found that you can use forex systems and strategies both to give you something to start your career with AND something to make your trading more efficient with.

Essentially, what I’m trying to say is that if you find a GREAT system (and there are plenty around), then you can easily plug it into your trading routine no matter how “advanced” you are, and then grow your profits and trading expertise exponentially.

The legwork has already been done by the vendor, because if it’s a good system, they would have tested and double tested it to make sure that it earns the most out of every trade… allowing you to just pick it up and start benefitting from it straight away!

Even if you don’t actually put the system to work in your “live account”, it still gives you a good insight into exactly what others are doing (and recommending you do) to make money with forex. It may even spark an idea in your mind to improve your trading!

The bottom line is that if you’ve mastered the basics and are looking to start making some “real money”, then it will definitely be worth your while to take a look at some strategies & systems. These will help you improve your trading efficiency AND profit.

We recommend you take a look at the review of our site here – where we’ve reviewed some of the most popular and well documented systems on the Internet. All the reviews on that site are made up of real customer comments so, unlike many others online, they are totally unbiased.

Basic FOREX Strategy

Technical analysis and fundamental analysis are the two basic areas of strategy in the FOREX market which is the exact same as in the equity markets. However, technical analysis is by far the most common strategy that is used by individual FOREX traders. Here is a brief overview of both forms of analysis and how they directly apply to forex trading:

Fundamental Analysis

If you think it’s hard enough to value one company, you should try valuing a whole country instead. Fundamental analysis in the forex market is often an extremely difficult one, and it’s usually used only as a means to predict long-term trends.

However it is important to mention that some traders do trade short term strictly on news releases. There are a lot of different fundamental indicators of the currency values released at many different times. Here are a few of them to get you started:

  • Non-farm Payrolls
  • Purchasing Managers Index (PMI)
  • Consumer Price Index (CPI)
  • Retail Sales
  • Durable Goods

You need to know that these reports are not the only fundamental factors that you have to watch. There are also quite a variety of meetings where you can get some quotes and commentary that can affect markets just as much as any report. These meetings are often brought out to discuss any interest rates, inflation, and other issues that have the ability to affect currency values.

Even changes in how things are worded when addressing certain issues such as the Federal Reserve chairman’s comments on interest rates; can cause a volatile market.

Two important meetings that you have to watch out for are the Federal Open Market Committee and Humphrey Hawkins Hearings. Just by reading the reports and examining the commentary, it can help FOREX fundamental analysts to get a better understanding of any and all long-term market trends and also to allow short-term traders to be able to profit from extraordinary happenings.

If you do decide to follow a fundamental strategy, you will want to be sure to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with real-time access to this kind of information.

Technical Analysis

Just like their counterparts in the equity markets, technical analysts of the FOREX trading market analyze price trends. The only real difference between technical analysis in FOREX and technical analysis in equities is the time frame that is involved in that FOREX markets are open 24 hours a day.

Because of this, some forms of technical analysis that factor in time have to be modified so that they can work with the 24 hour FOREX market. Some of the most common forms of technical analysis used in FOREX are:

  • The Elliott Waves
  • Fibonacci studies
  • Parabolic SAR
  • Pivot points

A lot of technical analysts have a tendency to combine technical studies to make more accurate predictions on your behalf. (The most common method for them is combining the Fibonacci studies with Elliott Waves.) Others prefer to create trading systems in an effort to repeatedly locate similar buying and selling conditions.

Using a profitable trading system with a demo account for a few weeks is a great way to get an accurate “feel” for Forex Trading – without risking any of your own money!

Choosing Your Strategy

Most successful traders will develop a strategy and perfect it over a specific period of time. Some people will focus on one particular study or calculation, while still some others use broad spectrum analysis as a means of determining their trades.

Most experts would likely suggest that you try using a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. Of course, in the end, it is the individual trader who has to decide what works best for him.

When you are ready to get started in the FOREX market, you should open a demo account and paper trade so that you can practice until you can make a consistent profit. Many people who fail have a tendency to jump into the FOREX market and quickly lose a lot of money because of a lack of experience. It is important to take your time and learn to trade properly before you start committing capital.

You also need to be able to trade without emotion. You can’t keep track of all stoploss points if you don’t have the ability to execute them on time. You must always set your stop-loss and take-profit points to execute automatically, and don’t change them unless you absolutely have to. Make your decisions and stick to them. Otherwise you will drive yourself (and your brokers) crazy.

You should also realize that you need to follow the trends. If you go against the trend, you are just messing with your money because the FOREX market tends to trend more often than anything else and you will have a higher chance of success in trading with the trend.

The FOREX market is the largest market in the world, and every day people are becoming increasingly interested in it. But before you begin trading, make sure your broker meets certain criteria, and take the time to find a trading strategy that works for you.

 
Next Steps:
1. Signup for a broker – the best broker we’ve found is Easy Forex. You can deposit money in a variety of different ways, including credit card payment, and you can start for as little as $100

fap-turbo

You can Read our full review or Visit the Website by Clicking Here >>

 

2. Select an automated trading software – one that will sync with your broker account. From our research, the most accurate and most aggressively back-tested software is FAP Turbo.

fap-turbo

You can Read our full review or Visit the Website by Clicking Here >>


 

 

Previous Lessons:

Day 1
Day 2
Day 3
Day 4
 
 

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