Currency Trading Systems - A Simple FREE System That Is Proven To Work

Currency Trading Systems - A Simple FREE System That Is Proven To Work

by Monica Hendrix

Do you want a currency trading system that's so simple, you will understand how and why it works in ten minutes, that has been used by some of the top traders of all time, is free and makes money? Then read on.

The currency trading system we are going to look at here is simplicity itself and you will easily understand why it works.

Many traders think it can't work because it's so simple - but when you consider trading legends such as Richard Dennis have used it in their forex trading strategies, then you will understand its well worth considering!

So what's the system?

It's Richard Donchian's 4 Week Rule

This system was originally devised in the late seventies, to trade commodities, by the father of modern trend following - Richard Donchian.

He noticed the predominance of the 4 week cycle in markets and based his system upon it. Here it is - just one rule: Close out short positions and take long position when a price exceeds the highs of the previous 4 calendar weeks. Close out long positions and take short position when a price falls below the lows of the previous 4 calendar weeks. That's it!

You can't get simpler than that and it works, check a long term time period on your forex charts and you will see it does. The downside of the system is that it will get chopped about and incur loses, when the markets consolidate. Here you can add a filter: To enter positions on the 4 week rule and exit the position on a shorter time frame. Periods that are frequently used are 1 or 2 weeks and then re enter on the 4 week rule. Not only is this system simple, its totally mechanical and you have no subjective judgment to make, you only need to execute the trading signal based upon a clear rule and the filter and that's clear cut. Now it's simple to learn, easy to use and it makes money - but most traders won't even consider using it!

Why?

1. Because it's too simple for most traders

They feel more comfortable using trendy indicators or systems and this one is not trendy but on the other hand, it will beat 99% of the forex trading systems sold by vendors.

2. It needs discipline to follow it.

It needs more discipline than many systems, because it is not fussy about pinpoint market timing and this is hard for traders to accept - even though it makes money.

3. It doesn't trade often

Most traders don't trade to make money, they trade for the thrill of trading and this system definitely won't suit this group!

Simple currency trading systems work best and always have, as their more robust in the face of brutal ever changing market conditions.

This trading system beats numerous complicated ones, as they have too many elements which break.

The above system works longer term and always has - its based on simple methodology but that doesn't mean it's not profitable, it is.

If you take the time to look at it you will see the merits of incorporating it in your forex trading strategy and you're in good company, with the number of top traders who use it or have used it over the years.

This currency trading system should be part of any trader's essential forex education so look at the profit potential of the 4 Rule.

Currency Trading Systems - Check This Key Point If You Want Big Profits

Currency Trading Systems - Check This Key Point If You Want Big Profits!

by Monica Hendrix

If you are looking at buying a currency trading system then you need to be careful 99% are junk and won't make you money to find the elite systems that can make you profits you need to check one key point.

The first point you need to check is the track record real or made up?

Check for the disclaimer below and if you see it avoid buying the system - here it is read very carefully:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

The fact is most of the systems you see on the net carry this disclaimer and it means the track record is not worth the paper it's written on. Anyone can simulate profits in hindsight, knowing the closing prices - but alas currency trading is not that simple.

When buying a currency trading system always insist on a real track record and audited statements from a broker. I saw one system where the vendor simply shows copies of his bank statement and that's his system sales, not trading profits!

You have to say to yourself if the vendor doesn't have the confidence to trade his or her own system why should you?

Once you have a real time track record you have at least some proof the system has worked. The key point with any system is applying it with discipline so check the drawdown (worst peak to valley) and recovery time. Finally, check you're happy with it and then trade it assuming this will happen again.

It's also a good idea to learn the logic of the system as it's easier to follow a system when you know how and why it will work longer term.

Another Way

Is not to buy a system but get a free one. A great one which is simple and works is.

Richard Donchian's 4 Week Rule

Look it up in our other articles its one parameter and it will beat 99% of the currency trading systems you see on the net.

The other way is to simply build a trading system yourself - it's a lot easier to do than many forex traders think and in the next article in this series, we will look at how to build your own successful currency trading system in under a week.