Forex Trading Systems

Forex Trading Systems - Before You Buy One...

by Harold Hsu

Although there is a plethora of scam trading systems circulating the internet, there are indeed a few good systems based on sound fundamentals that perform consistently well. However, even when people purchase such good trading systems, they sometimes still fail to produce consistent profits. Why?

One problem is because the buyers don't understand the operating logic behind these trading systems. They just don't know why they are buying or selling! They just want to know when to buy or sell, and don't care about the reasoning behind each buy or sell setup signal.

You see, when a trader doesn't understand the trading system he follows, he'll easily lose confidence in it the moment he starts suffering a few loses. That's when he'll begin to change the rules of the system, and so his trading discipline basically goes flying out the window. And I think I don't have to elaborate on what happens to traders with no trading discipline - Simply put: they lose money. They lose a lot of it.

Ideally, Forex traders should all develop their own trading systems. But I'm sure that not everyone will have the luxury of the time or effort required to develop a reliable trading system.

That's why when you choose to purchase a trading system, please make sure you understand every single aspect of it. Understand why the system tells you to buy (or sell), and why the system tells you to hold a position (or to exit).

Another important thing to understand, is the reasoning behind the largest position size you're allowed to hold per trade. In Forex trading, the size of your trade positions ties in very closely to your entire trading system.

Every good trading system considers the maximum allowable position size in relation to the overall trading strategy. Don't consider purchasing trading systems that don't include a relevant money management system... chances are that those are scams!