Forex Trading: The Perfect Forex Trading System
Trading in the Forex market has
gained popularity in recent years. But how difficult is it to succeed in the
Forex market? Or let me ask the question differently, how many traders are
making persistent profits in the Forex market? Unfortunately, very few of them,
only 5% of traders reach their goals. One of the main reasons for this finding
is that forex traders focus on misinformation while making trade decisions,
forgetting the most important factor: price behavior.
Most forex trading systems are
created using technical indicators (intersection of muffin lines, oversold
positions, sales on oscillators, etc.), but what are the technical indicators?
The technical indicators are just a series of data points drawn on the graph,
these points are calculated according to the mathematical equations applied to
the price of any currency pair. In other words, the price action is drawn in a
different way to allow us to see other aspects of the price.
There is an important conclusion to
be drawn from this definition. The truth is that the readings obtained from
these indicators depend on the evolution of prices. Take, for example, a
long-term Mopeng line signal when the price rises enough to allow the
short-term muffin line to cut its long-term counterparty up with a buy signal.
Most traders think that "the intersection of the muffin lines has raised
the price" but that the opposite has happened: the intersection signal of
the muffin line has appeared because the price is the one that has risen . What
I mean here is that the behavior of the price at the end is what determines the
operation of the index and should be taken into account when making any
decision related to trade.
Trading decisions based on technical
indicators without taking into account price measures will give us less
accurate results. For example, again if we see a bullish signal created by the
intersection of muffin lines as the pair approaches one of the important lines
of resistance. If the price suddenly starts to rebound against this important
level, there is no point in taking this bullish signal into account, because
the evolution of prices indicates in the meantime that the market will not go
higher. Under these circumstances, the market will continue to collapse,
ignoring the intersection of muffin lines.
Do not get me wrong, technical
indicators are one of the most important aspects of trading. This helps us
identify some conditions that will be difficult to detect simply by observing
price developments. But when it comes to triggering a compression, the
combination of prices in our Forex trading system will certainly put the odds
on our side because it will generate more profitable trading signals.
So, how do you create a perfect
forex trading system?
First of all, you have to make sure
that the trading system suits your personality, otherwise you will have trouble
following this system. Each trader has different objectives and needs, so there
is no system that is suitable for all traders. You will always need to do your
own research on different trading techniques and technical indicators to find a
concept that suits you. Make sure you understand the nature of the technical
indicator you will use.
Second, combine price action into
your trading system. Therefore, consider buying signals only if the price
action suggests that the market will go up, and in the same direction, the
sales signals will become more serious if the market receives the signal to go
down.
The third and most important thing
is that you will always need to follow the trading system you have chosen with
precision. Try it on a demo account first. Then open a mini account to work on
it and when you finally feel the profitability of dealing with this system and
the possibility of obtaining results of continuous profitability, apply it to
the detriment of your usual transactions.
Forex Trading:
The Perfect Forex Trading System
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