Forex Trading Guide Bookmark This Page
Forex trading Navigation
Forex Broker Compare
Forex Software
Arbitrage Forex
Forex Charting
Global Forex Trading
Forex Trendline Software
Forex Prediction
Forex Day Trading Training
Tradestation System Forex
Best Time To Trade Forex
Forex Futures Trading
Forex Trading Software
Forex Bureau
Forex Introducing Broker
Forex Technical Analysis
Forex Exit Limit Price
Forex Exchange
Dangers Of Forex Trading
Trade Forex
Easy Forex Strategy
Easy Forex
Forex Rates
Forex Networking
Forex Forecast Software
Forex trading Links
2005 Best Seller!
Best Forex trading products
Free Government Grants And Loans.
The Best Selling Government Grants and Loans Information Program On the Web.
Governmentgrants.Com - Government Grants.
The original government online government grants and loans directory.
The Day Trade Forex System.
The Ultimate, Step-By-Step Guide To Online Currency Trading.
Get Rich Trading E-Currency.
Trade E-Currency On The Internet For Huge Profits! Here are the Proven Money Making Secrets! Receive 60% Commission+Free Bonuses.
Trade The Nasdaq.
Trade the Nasdaq with Alan Rich.
Main Forex trading resources
Welcome to Forex Trading Guide
Article
There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? These are the answers we will try to answer on this article. About the Author: Raul Lopez is a full time Forex trader, his trades are based on a price behavior approach. Raul is also founder of http://www.straightforex.com a high quality Forex training company.
We will first analyze the pros and cons about each system approach.
Mechanical systems
Advantages
This kind of system can be automated and backtested efficiently.
It has very rigid rules. Either, there is a trade or there isn’t.
Mechanical traders are less susceptible to emotions than discretionary traders.
Disadvantages
Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data.
The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same.
A system that worked successfully the past year doesn’t necessary mean it will work this year.
Discretionary systems
Advantages
Discretionary systems are easily adaptable to new market conditions.
Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.
Disadvantages
They cannot be backtested or automated, since there is always a thought decision to be made.
It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.
Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won’t play an important role in your system. You only take the trades that your system signals.
If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.
On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.
Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.
I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.
Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:
1. You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system.
2. You also need to have some rules and most importantly have the discipline to follow them.
3. Take your time to build the perfect system for you. It’s not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
4. Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.)
Forex trading News
Forex trading
A Japanese man makes his way past an electric market board in central Tokyo, Tuesday, Dec. 2, 2008. Japan's Nikkei stock index tumbled more than 5 percent in early trade Tuesday following massive losses on Wall Street amid growing gloom over the ...
Read moreNikkei index falls sharply after US plunge - WTOP Radio
Dec 01 - Euro Quietly Makes Higher Lows in November Nov 30 - Forex Automated Trading Signals Sell EUR/USD Using Breakout2 in Final Week of Free Trial Nov 30 - Forex Automated Trading Signals Buy GBP/JPY Using Breakout2 in Final Week of Free Trial Nov ...
Read moreEuro Quietly Makes Higher Lows in November - DailyFx
Dec 01 - Currency Trading Market Conditions Remain Challenging: Breakout Strategies Prove Profitable Nov 24 - Currency Trading Market Conditions Difficult to Forecast: Look for Good Range Trading Strategies Nov 20 - Forex Trading Signals Update ...
Read moreCurrency Trading Market Conditions Remain Challenging: Breakout ... - DailyFx
Synopsis : This book shows readers how to successfully trade the Forex market on their own. FX Bootcamp's Guide to Strategic and Tactical Forex Trading skillfully explains how to combine popular technical indicators to formulate a comprehensive ...
Read moreForex Books - FXStreet.com
(*) This is the password you need to enter the hotComm room, not your FXstreet.com user account password. In this long-term educational series, called "FX Bootcamp Basic Training", we will start you at the very beginning: teaching you how to crawl ...
Read moreThe Forex Basic Training Program - Chapter IX - FXStreet.com
Welcome to Part IV of a four part series discussing the current state of the foreign exchange markets and the future problems and issues that will surround it. Part I of this series explained the general relationship between commodities, the Euro and ...
Read moreForex Markets: A Look into the Dollar Part IV - Seekingalpha.com
Mumbai: India's rupee fell towards a recent record low on Monday, weighed down by losses in the domestic equity market, but state-run banks capped losses by selling dollars, probably on behalf of the central bank. The partially convertible rupee ...
Read moreIndian rupee plummets - Gulf News
Forex day trading is something that appeals to a lot of forex traders and it's easy to see why. Currencies trade in quite a wide range every single trading day so there are always good profits to be made. However forex day trading is definitely not ...
Read moreForex Day Trading - Is It Right For You? - Best Syndication
TOKYO, Nov 27 (Reuters) - The dollar fell against the euro on Thursday, reversing some of the previous day's gains on a string of weak U.S. economic reports that renewed worries about a deepening economic recession and revived safe-haven flows into ...
Read moreFOREX-Dollar slips vs euro before U.S. holiday - Forbes
DUBAI - Alpari, one of the retail providers of online forex trading services, plans to launch a regional office in Dubai to tap the growing potentials for the equity and bond markets and to boost its operations in the Middle East region. The move ...
Read more
Home | Blog | Partners | Add Url | Site Directory | Search this Site | Bookmark This Page