Where by means of intuitive trade the most experienced trader can double or triple his capital, application of good trading systems (TS) can help to get profit amounting to thousands percent.
However, these days the number of TS offered at Forex is so big that making a correct choice that will help you to achieve financial success is very difficult. Specialists of Ya-Hi.com broker company have agreed to lend a helping hand.
What Trading Systems are there?
A trading system is a mere selection of algorithms and instructions, compiled on the basis of technical analysis, by using which traders can define the right points for entering or quitting the market, as well as hold effective money- and risk-management. A trading system can be used in manual or automatic mode. If you trade with the kelp of a robot (of mechanical or automatic trading system), the computer makes decisions on its own, makes and closes deals, whereas you simply calculate your profit.
However, an ideal trading system has not yet been invented, so one can find over a thousand of them. Every TS has both, advantaged and disadvantages. But, unfortunately, not all of them work effectively and increase your capital. There distinguish over ten groups of trading systems, which are based on various principles. By having a closer look at their features we can understand what our chances are to get profit via a certain TS. Let us admit that trading systems are based on certain strategies, logics, principles, and assumptions.
Thus, trend TS are the most widespread ones; they orient on presence and strength of trends. However, due to the fact that most of the time the market encounters flats, consolidations, bounces, and pullbacks, this system cannot constantly demonstrate efficiency. Besides, there distinguish the following trading systems:
- for trade within a price channel or corridor;
- counter-trend TS, oriented on defining reversal points;
- TS on the basis of Fibonacci levels;
- TS on break of volatility;
- TS by the figures of technical analysis (patterns);
- TS, designed for intrasession trade;
- TS for scalping;
- TS on the basis of Elliot’s wave analysis;
- combined TS.
Many traders try to apply several trading systems at the same time. In such a case they can complement each other and help to define the right moment of entering the market with higher accuracy. However, sometimes trading systems can confuse a trader. For example, it is impossible to look to long-term deals and scalping at the same time. So, the question of choosing a good TS, which will suit you psychologically and according to the volume of your capital, remains very topical.
How to Choose a Trading System?
This question usually worries traders who are starting to apply automatic trading systems or to use the services of paid advisors. As a rule, they cost quite a sum, so you will always ask what sum you will earn as a result.
Although, do not hurry with calculating yet unreceived profit, for practice shows that some robots did not simply fail to bring profit, but “drained” a trader’s capital very quickly. This happens when a trading participant applies an unchecked, raw MTS, buys a robot that is outdated, or uses a TS, which does not correspond to current character of trade or volume of trader’s capital. In order to avoid such bad consequences, one should follow at least some basic principles when choosing a trading system.
First of all, pay attention to price. You can find numerous offers of trading systems and advisors, which cost 10-30 dollars. Of course, their sellers assure that you will get rich almost at once, but they do not explain the reason of selling these “golden geese”. The price of most effective robots amounts to thousands of dollars, but there always is a reservation concerning the nature of the market, where they can be applied. One should also pay attention to the minimal volume of trader’s deposit, which guarantees safe risk/reward profile. Such information should never be neglected. Otherwise, a trade will sustain a loss or lose his capital.
However, many broker companies in the framework of their marketing policy often advise to use robots and advisors. Besides, absolutely free of charge. Such offers can be considered, for a serious company will not work against its clients. Anyway, before application every robot should be tried out on a demo account, so that you use a trading system only when you are absolutely certain of its effectiveness.
When choosing a trading system one should also pay attention to its limitations. As a rule, this information is put in “small print”, but is very important to make your trade successful. For example, there are robots, which function well only at a certain level of volatility. Or else they can be designed for low spreads (or absence of spreads), suitable only for certain currency pairs or other financial instruments, etc. Also pay attention to risks. Even if MTS presupposes very hard stop-losses, when important news appears, it is better to stop trade, for in such moments technical analysis fails to make accurate predictions. Stop using a trading system if it brings mere losses. You should understand the reason of unsuccessful trade when there is at least some money left on your deposit. In a word, be extremely cautious.
At the same time, you should not be afraid of applying trading systems. According to statistics, 88% of successful traders at Forex are computer robots. After all, machines count thousands of times quicker than people. Even relatively simple algorithms allow seeing what will never be noticed “with the naked eye” of a trader. Finally, unlike humans, a computer is never subject to emotions and is practically never mistaken, which allows a machine to make exclusively correct decisions. And what else is needed to achieve success at Forex?
