There are two basic ways to approach trading currencies online: you can do it manually or find a way to automate your trading. Which is better? In this article we explore the options available.
Manual Forex trading systems are completely discretionary and utilize tried and true strategies refined through years of trading experience, but unlike automated trading systems, they rely on the trader to actually follow the advice and strategies given. That’s often harder than it sounds.
The 5EMA’s and Forex Rambo systems are good examples of this type of system. These systems work well for experienced traders who have been watching the charts for years and are well able to interpret the necessary signals and factors but it would not work for beginners.
They provide the rules, strategies and formulas for successful trading, but leave the actual execution to the trader themselves. All traders are different and finding a Forex trading system that works for you is vital if you plan to stay in the game.
Effective Forex Trading System Strategies
Most people will tell you to watch the Forex news calendar and not trade during news releases – and this is good advice – as most of these trading systems don’t watch over the sudden movements and may or may not work the way you would want them to during these periods.
Many traders use backtesting Forex software to check their systems going back several years but even so, the data might not be accurate or they are not able to adjust quickly enough in times of rapid volatility such as during economic or fiscal policy statements by key officials.
A Forex trading system, especially automated Forex systems, needs to be well evaluated over time to assess its effectiveness as a total strategy. As a beginner it is costly to pay for high priced systems and lose your capital, so feedback from online communities etc is often very useful. Another factor is discipline and consistency. You must have a system which works consistently year after year.
You may find a trading system that works quite well but then find out that you are not following the rules. Instead of waiting for the correct signal you may jump in suddenly.
So when deciding which approach to take toward trading, be sure to test, test, test before entrusting yourself to one strategy or the other. You may find that automated trading is a good fit, especially if you tend to make emotional decisions. If you can be an absolute robot, however, then maintaining an active approach to account management is an option. Once you find something that works for you, stick with it. That’s how you become profitable month after month.