Forex Trading System - Tips for Building your Own for Big Gains

August 29, 2008

Many forex traders think they cant build a forex trading system but they can you can easily do it and within a week or two be ready to trade for big profits. Here we will look at a system that will work for anyone and how to build it.

There are many ways to trade forex but this is a simple system anyone can understand and use - its timeless and it WORKS.

1. Support and Resistance

All successful systems are based on the concept of support and resistance and these are levels that if broken are considered valid by the market participants. Generally you are looking for several tests preferably in two or more time periods that are widely spaced i.e. weeks or months between them.

2, Breakouts

One of the biggest myths of currency trading is you should buy low or sell high to make money - this is not the way to catch the big moves.

The majority of big moves start from new market highs or lows and you need to buy or sell the breakout. When these moves occur the supply and demand equation has gone in favour of the break and you need to go with it.

Most traders cant do this!

They want to buy or sell at a better price and wait for a pullback which never occurs and prices sail over the horizon and the trader never gets on board and misses a great move

3. Trade the Reality

Another myth is you have to predict where prices are going - well thats just hoping or guessing and you dont get rewarded for that in any venture let alone forex trading.

If you buy a breakout there is no hoping or guessing you are buying the reality of price change and have the odds on your side - and thats the only way to win.

4. Confirm Confirm Confirm

When a break occurs you need to decide whether its a false break or a valid one and here you need to understand price momentum which should support the break.

If you dont know about momentum oscillators you need top learn (look up our other articles) and great ones for confirming a move are:

RSI The stochastic and the ADX Line

5. Stops

The stop on a breakout is obvious behind the breakout point and you then need to hold it back (dont trail too quickly) so that you are behind normal volatility and dont get stopped out to soon - when the trend is underway you can start to trail your stop up - dont move to quickly.

6. Patience

The big breakouts dont come that often only a few times in each currency per annum but you dont get rewarded for how often you trade your forex trading system - you get rewarded for being right.

If you trade the big breakouts you can be in on all the best trends and make huge profits and you will know most traders dont like buying or selling them - if you do then you can make a lot of money

Finally!

You may think that all sounds very simple and it is - but it works.

Do not confuse complicated trading strategies with success.

Its a fact that all the best forex trading systems are simple as they are very robust in the face of ever changing brutal market conditions.

A simple method with discipline can lead you to success with your forex trading system and the above system is simple to learn, easy to understand and can be applied in 30 minutes or less a day.

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