Forex Trading Systems : The good, the Bad, and the Ugly

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Why you need Forex Trading systems and strategies.
Learning how to trade of course profitably requires you to learn and master a few Forex Trading systems. The key to trading is becoming a master of a few trading strategies not the jack of all. Forex Trading systems are important as they offers you structure, a couple of rules and a decide to follow. This article will discuss some of the different types of Forex Trading strategies that are currently in the forex market and coach you on how to identify what makes the best Foreign currency trading system.

Indicator Driven Trading Systems.
Approach with notify, indicator driven Genesis11 strategies are often designed by someone who is aware of that this set up is currently working right now. The problem is just that, it’s doing work for that present moment and often very little analysis has been done to understand the longevity of this Forex Trading system.

The biggest issue with Indicator based Forex Trading systems is that it uses indicators to generate a trading signal as opposed to pure price action. Indicators are lagging and therefore tend to give poorer and late signals than pure price action which is most up to date information on the chart.

However, as this trading system often looks exciting and ‘sexy’ on the chart many amateur traders find this trading strategy far too tempting.

Some guru’s latest flash in the griddle trading strategy.
A trading system which comes with the guaranteed promise that you’re going to ‘never lose again and will turn your personal computer into an automated cash machine’; unfortunately the world is filled with these so called ‘guru’s’ and their millionaire making Forex Trading systems. Experienced traders know that losing trades is area of the game, you will have losers and winner’s you must be prepared to take loses. Professional traders understand no Forex Trading strategy is ever guaranteed, however with trading results and back tested performance figures they focus on the overall picture of success. The best way to avoid falling victim to these scams when finding a Forex training company is to have proof their strategies live trading results. This way you will understand the realistic and honest performance of their strategies.

Trading systems that truly work…

Harmonic trading patterns.
Harmonic trading is the art of recognizing particular price patterns in accordance with Fibonacci extensions and retracements to calculate turning points in the financial markets. Confused yet? Harmonic trading is complex and requires a lot of time and practice to find out, yet it could be one of the best trading systems because it offers high reward compared to risk ratios and it is very versatile. It can be bought and sold on any market on any schedule.

If you are just starting learning how to trade the market your initial focus should not be on harmonic trading patterns as they will take a lot of time and focus to understand. However for more experienced traders looking for a new trading system to add under their belt, harmonic trading is worth a look.

Old school technical analysis trading strategies.
This particular trading system is well known and well bought and sold throughout the Forex community for many years. Technical analysis includes; ascending triangles, combination acne outbreaks plus head & neck patterns, flag patterns to call a few. The power in learning these trading systems is that they do work and they have decades of data to prove it.

The downside to these systems is many newer traders find this process to trading dull and perceive it as old fashioned. It lacks the glamor and excitement of indicator driven system. It’s not busy and flashy and unfortunately, newbie traders often mistake difficulty as a sign of better performance and higher probability. However the reason old school technical analysis is still around is really because it works, and plenty of experienced profitable traders use it in their own trading style. Other than lacking the excitement, old school technical analysis trading systems tends to have a lower success rate, which a lot of people are reluctant or ineffectual to deal with. A lower success rate does mean the winning trades are typically huge, that produces the device profitable and worth learning as it gives you a solid foundation in learning the Forex markets.

Price action trading strategies.
Now what you have been waiting for, I reveal the best Forex Trading system you can learn is price action. Price action trading is the reading of the raw price action on a chart. The price is the most up to date information on the chart, so it will give you the most current situation when reading the chart. Price action as a Forex Trading system is an incredibly simple method that is effective and functional as it works in both trending and ranging markets, with and up against the trend. Learning price action can de-stress your Forex Trading and dramatically improve your results. With price action a dealer has the advantage to trade any market on any schedule, as price action setups work well in all market conditions.

Price action trading systems to learn:

  1. Pin Bar Setup.

The pin bar price action Forex Trading strategy is a letting go system. It is designed to trade tops and bottoms of markets and can also be used in trend continuation by buying dips in upward trends, and selling peaks in downtrends.

  1. Inside Bar Setup

Inside bars can be used very effectively when trading Forex. They are primarily used when trading strong trending markets as a trend continuation strategy.

  1. Engulfing Bar Setup

Engulfing bars are an excellent option for trend reversals. They are rare, but a very strong price action letting go signal. Can be used when trading trends, but typically at end of trend reversals.

  1. Fakey Setup

The fakey setup is a trend based trading approach that watches for a false breakout of an inside bar formation. This setup can usually be at levels of support and resistance, nearly the same as the pin bar setup. Fakey’s are used to buy dips in upward trend, and sell peaks in downtrend.

Price Action Trading Systems… Your first step.
Do not get overwhelmed focus on a few price action trading strategies only. Trade these setups on a few different currency pairs. Grow your confidence. Become comfortable with identifying setups and really understand how to enter the trade step by step. Start with one price action Forex Trading system and only when you are completely comfortable add another trading system.

Conclusion.
It’s fair to say that when you stick to a product like price action trading or old school technical analysis you can’t go far wrong. Be warned about all those different indicator systems out there in the community forums, and make sure that you get your Forex Trading education from a company with live trading results, and experienced traders.

One of the biggest challenges inexperienced traders create is chopping and changing between different trading strategies. Choose a Forex Trading system and strategy that matches your personality. It could take a couple of attempts, but once you find one which you want and can become consistent trading it, stick with it.

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