What is the Best Forex Trading System to Use!
When you’re deciding what the best forex trading system to help you succeed as a currency trader is, one of the best ways to help you choose is to look at the different types of systems that are available. Forex trading systems can be divided in different ways but the most common ones are based on how much control the trader gives to the system. Here is a short overview of the two types of forex trading systems that you can choose from:
- Mechanical systems. These are also known as computerized systems or forex robots. With this system, all the trader has to do is activate the software and it will do all the trading for them. This is the best forex trading system for people who are just starting to get into currency trading since it requires little experience to use. It is also good for many veteran traders who want to trade with more discipline since it removes all emotion from the trading process. It simply makes the trade based on the signals it detects without chasing losing trades or making other counterproductive trading mistakes. On the other hand, these systems may have trouble adapting to changing market conditions.
- Discretionary systems. These systems may be a better choice for veteran traders who have already developed their own trading strategies since they can program these into the software. However, they require more self-discipline on the part of the trader since they have to be the one to set the stop-losses and decide when to exit a trade. Thus, there is a risk that the trader may get carried away by his emotions when trading.
In addition, forex trading systems can also be distinguished by the type of trading strategy they utilize.
- Trend following systems. These trading systems work by waiting for significant price movements which will provide a signal to either enter or exit a position. The main assumption underlying this system is that prices will maintain the direction of the price movements. The two types of trend following systems are moving average and breakout systems. Moving averages depend on the trader determining the average price during a particular time frame which represents the existing trend, and then waiting for a new trend to be established when the price falls above or below it. Breakouts, on the other hand, wait for a new high or low price to be established, since the price trend is likely to continue moving in that direction.
- Countertrend systems. These systems work in the opposite way from trend following in that they wait for the lowest or highest prices as trading signals and then buy or sell accordingly. This is a riskier system than a trend following one because it is difficult to set stop losses to exit positions and the trader has to decide when to close the trade. This is the best forex trading system for a trader who has a high risk tolerance since the system has a high downside potential although overall winning trade percentages are higher.
Which of these is the best forex trading system? There is no one correct answer since it ultimately depends on the strengths and weaknesses of the forex traders using them.
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