The Secret to Creating Your Own Forex Trading System (1)
So far, you may have learned a lot about how to make a trading platform. You may already know how important trading plans are in forex trading. You also know that the trading style of each trader is different, that’s why you need to have a trading system that suits your trading style.
Well, this time we will share tips for you on how to create your own trading system, especially trading systems in the form of technical analysis, or what is often referred to as ” mechanical trading system “.
What is a mechanical trading system ?
Mechanical trading system is a trading system based on technical analysis and producing trading signals. Called ” mechanical ” because traders who use a trading system like this should make a decision to buy , sell , or close based on the signals that emerge from the system, regardless of any sentiment that develops in the market.
In theory, a trading system like this should eliminate (or at least press down to the lowest point) subjectivity and emotional factors of a trader, because all that is done is to follow the rules of the system ANYTHING HAPPENS .
You may have searched a trading system on the internet. If you type in the keyword ” forex trading system ” or ” forex trading system “, we can be sure you will find many people (even too many!) Who offer a trading system that they claim as a ” holy grail ” at a price of “only” a few million rupiah only.
Holy grail? What is that?
In the world of trading, holy grail is a term given to a trading system that is never wrong and never loses . Such a trading system is claimed to generate profits of thousands of pips per week (even supposedly per day!) And will never produce a losing transaction. They – the sellers of the system – will display a kind of “trading results” based on the “perfect” trading system and guaranteed to make your eyes wide in awe. It is possible that you will immediately conduct internet banking transactions and transfer “a few million” money to the seller of the system, because you think the price is very cheap compared to what you will get.
Uh … wait a minute. Before you have already thrown away your money, think about the last sentence in the paragraph above. Have you ever heard the saying “there is a price, there is a form”? If the trading system is indeed SO, is it reasonable to sell at a low price?
The first fact, yes there may indeed be a trading system that is very extraordinary that can generate profits that are quite inviting admiration. The problem is that such a system is usually stored in meetings by the manufacturer. Even if he “shares it”, there is usually the equivalent “compensation” you have to spend.
The second fact is, instead of having to spend a few million rupiah on a trading system that doesn’t necessarily suit you, you can actually create your own trading system for FREE. If you make your own, it certainly matches your characteristics as a trader. This is what we want to share with you. There are many people in the virtual world or the real world who sell trading systems, but we have never seen anyone who wants to help you create your own trading system.
Actually making the trading system itself is not too difficult. The difficult thing is how to really follow the rules that you have applied when building the trading system.
This first part will provide the information you need to start developing the right trading system for you. At the end of the writing, we will give an example of a trading system.
Determine Your Target Trading System
Maybe you think of making a trading system that can make profits of thousands (or even millions) of dollars. Yes, that’s a very extraordinary thought, but it’s actually not the right target.
When you build a trading system, the target system is actually only two:
– Able to identify trends as early as possible
– Able to avoid whipsaw (fast and extreme up and down price movements)
If your trading system is able to meet these two targets, your chances of becoming a successful trader will become even greater. But the problem is, these two things are often the opposite.
If you have a system whose main target is to identify changes in trends as early as possible, there is a possibility that you will often get false signals. Conversely, if you have a trading system that focuses on avoiding whipsaw , you are likely to be late to take a position and lose the opportunity.
Your task when building a trading system is to find the “middle way” between the two targets. You have to find a way to identify trends as early as possible but can also reduce the appearance of false signals.
In the next article, we will discuss the steps of developing a simple forex trading system .
See you later.