2Bull Forex Blog

There are plenty of currency trading systems about but very few make money, however there are some great ones to use if you follow the enclosed checklist.

Follow the checklist and the money you spend on a currency trading system will be money well spent and could see you piling up big long term profits.

1. Make Sure You Understand the Logic

You need to understand the logic the system is based on to have confidence to trade any currency trading system.

If you don’t have confidence in a currency trading systems logic you wont be able to trade it for profit, as you will not have the discipline to stick with it through inevitable periods of losses.

Avoid black box systems where the logic is not revealed or just taking signals.

Its simple confidence leads to discipline which is essential to currency trading success.

2. Beware of Optimization

If the logic is sound it should trade every currency to the same rules.

Some vendors simply can’t get their systems to work on all contracts, so tweak the data with unique rules to make it make a profit.

This of course means it won’t work in real life – The same rules should apply to all contracts.

Optimizing is like shooting at a barn door and then making every shot a bull’s eye afterwards by drawing around the holes!

3. Get a simple system

In trading simple systems out perform complicated ones.

Why?

Simply, they are more robust in the face of ever changing brutal market conditions.

There is no correlation between how complicated a system is and how much money it makes.

In fact, the opposite is true and most of the world’s top trading systems are simple.

4. Look for a real track record

Look for independent verification of results and a track record of real money.

If the system is good someone (hopefully the vendor) will have traded the currency trading system and produced a track record

5. Check The vendor

What is his background what support will you receive does he trade himself all these are questions you should ask and any reputable vendor will give you the answers

There are plenty of currency trading systems to choose from but only a few will meet the criteria above.

If you use the above checklist your chances of making money from a currency trading system will be dramatically increased.

FOREX Day trading sounds good in theory, but in practice few succeed as the odds are simply against you.

Let’s look at day trading and see why it is not a good way to trade and some better ways to make profits from FOREX markets

The time span is to short

It is almost impossible to predict which way the market is going to go in one day. Currency markets reflect economic fundamentals and they are longer term.

To try and predict what might happen in a short time is impossible

To Win You Need to do the following and you can’t in FOREX day trading

One of the fundamental rules of trading FOREX markets is run your profits and cut your losses – You simply can’t do this in day trading and your profits are too small to cover your inevitable losses.

And it’s even worse

Transaction costs are more and are reflected in FOREX day trading in a loss that is deducted from your profits and added to your losses and when you trade frequently these add up.

Why do people day trade FOREX

It sounds good in theory and traders think that they are restricting risk but they are actually creating it and making sure that their profits can never cover their inevitable losses.

Brokers love day trading as they make a lot of commission. Course writers love it because it’s a good story, ( and very often they get some pips as a referral commission ) if you buy a course doing day trading ask for a real time track record and see if you get one.

Better ways to trade

You can trade short term and swing trading over a few days can be successful, but perhaps the best way to trade is a long term system (keep in mind many currency trends last for months) this way you will

1. Catch the big trends that make the big profits.
2. Have the opportunity to win on only a small percentage of trades and still make long term profits.
3. Get the odds in your favor.
4. Restrict the impact of transaction costs.

If you want to day trade FOREX You can but the odds are stacked against you maybe you will be one of the lucky ones to make money but don’t bank on it.

If you want to increase your profit potential and achieve currency trading success then the simple tips will help you.

Some are at normal investment wisdom, but as the bulk of traders don’t ever achieve long term currency success, so that’s Good!

Here are your 7 tips for greater currency trading success and bigger profits.

1. Focus on the long term trends

Currency trends mirror the health of the economy generally and economic trends last years and these are reflected in currency trends.

Forget day trading, it’s the equivalent to flipping a coin. You can’t predict such short term movements so don’t try.

When flipping a coin the odds are even, but keep in mind in currency trading the fact that you have to place a stop and you have to overcome both slippage and commission, means you will take a thumping loss.

Day trading won’t lead to currency trading success for you, but will simply make your broker rich.

2. Trade in frequently

Many traders want to be in the market all the time and act like gamblers trading for the sake of trading if you DON’T want currency trading success do this!

Only trade this moves with the best profit potential.

Keep in mind you may need to be patient – You can’t hurry the market, so don’t try.

3. Don’t diversify too much

If you don’t risk anything you won’t make anything.

Diversification is the enemy of making really big gains.

To make really big profits you have to have the courage to take calculated risks on the really good trades and go for maximum profits.

This is the only way you will make really big gains – Period.

4. Use a simple system

There is no correlation between how complicated a system is and how much profit it will make.

On the contrary, simple systems are more robust than complicated ones and will cope better in the face of brutal market conditions.

A good example of a simple system is a breakout system, which anyone can understand.

You must always make sure you understand the system’s logic.

If you do, you will have the discipline to follow it through inevitable losing periods, so never trade a system where the logic is not revealed.

A great method to learn is the Gann method of trading, its different, it’s revealed and it made him $55 million.

In conclusion, get a system you understand, that’s simple and that has been proven to be successful.

5. Never Seek or Give Opinions

If you win at currency trading you will often be trading in the opposite direction to the majority so don’t discuss your trades with other people, they will put you off and don’t give opinions either.

Trade in isolation.

Independent thought, is one of the keys to currency trading success so don’t get distracted.

6. Stay with the majors

Stay with the major currencies: US $, British Pound, Euro Swiss Franc and Japanese yen.

These all have good liquidity and good trends.

Don’t trade minor currencies that can feature erratic moves or currencies that don’t have a long history.

The majors will give you plenty of opportunities so use them.

Above are six general rules for currency trading success and bigger profits.

In part 2 of this article we will look at some others that will help you achieve bigger profit potential from your currency trading. Good luck!