What Are Forex Systems?
Merriam-Webster’s Online Dictionary (www.merriam-webster.com) defines a system as “a regularly interacting or interdependent group of items forming a unified whole”.
Forex online trading systems are just that…a group of interacting components working together as a single entity. This entity is your Forex business.
Your Trading Plan forms the core of your system. It contains the trading strategy that best fits your personality, trading style, and tolerance for risk.
In addition, three other components complement your Trading Plan to complete your forex system:
- Derivatives broker
- Profit Maximization
The figure below illustrates how your Trading Plan and the three components fit together to form a complete Forex Trading System.
Think In Terms of Forex Systems, And You Think In Terms of a Trading Business
Contrary to popular opinion, Forex trading is NOT a way to get rich quick. It’s actually quite difficult to consistently earn profits while trading.
That’s why it’s so important to take trading spot Forex seriously, with discipline and the hard work it deserves.
When you view your trading as a forex system, then it encourages you to treat it as a business. And having an organized, methodical way to trade is the only real path towards long-term success.
When Are Forex Systems Built?
Whether you’ve just begun to learn to day trade forex, or you’ve been trading for a while, a Forex trading system can be built at any time during your Forex journey.
However, it would be ideal to build your system from the very beginning, before you even open up a Forex broker account.
Don’t worry if you already have an existing broker account. You can easily incorporate this account into your system.
Forex Systems Have a Trading Plan At Its Core
So you wanna earn pips, eh? Well, you’re gonna need a plan…
…a Trading Plan, that is. Just like a business needs a Business Plan, your trading system needs a Trading Plan.
Every trading plan is unique to every trader, simply because it contains the trading strategy unique to the trader.
With that said, there are generally three types of plans, depending on your trading strategy:
- Manual Trading
- Signal Trading
- Automated Trading
Only you can determine the trading strategy that best fits you and your own personal style of trading.
Are you a discretionary trader? You’d be using a manual trading strategy.
Or perhaps you’d rather use a signal trading strategy. Software can alert you to the best forex signals, but you will still have ultimate control in executing the trade.
Finally, you may just defer currency trading completely to automated forex robot software. The software will open and close positions for you based on a set of trading rules.
Compared to manual and signal trading, automated trading eliminates the most emotions out of the trading equation.
It doesn’t completely take emotions out, however. Just think of the anxiety you might feel when your trading robot has caused your account to incur a VERY LARGE drawdown.
Check out this trading plan example to learn the basic components that make up a manual trading plan. Of course, these same components can be applied to a signal or automated trading plan as well.
Forex Systems Explained In Further Detail
Explore the rest of this website to get further details of each component of the Forex Trading System Model.
Learn and decide which Trading Plan is best for you. Review Forex brokers to find out which one is best for your plan. Find the best tools to keep your system running smoothly.
And finally, learn and utilize the ways to maximize your profits.
Every trader is unique. Get the right combination that suits you, and you have the potential to build YOUR best forex trading system!