Many traders look to buy a currency trading system and don't realize how easy it is to build their own. Here we want to look at building a sample trading system for huge profits.Before we look at an actual system a couple of points need to be stressed:
1. The system we are going to look at is simpleIt's a known fact that simple systems work better than complicated ones, as there are less elements to break and they are more robust.
You don't get paid for effort in currency trading you get paid for being right.
2. Because you built it you will Have ConfidenceYou will understand it and this understanding leads to confidence which leads onto discipline. People who buy ready made systems don't understand what their doing their just following and have no confidence.Here is your simple 1 2 3 currency trading method.
Step 1 Methodology
You need to base it on a methodology and here we are gong to base it on simple support and resistance and a breakout methodology.The fact is most big currency moves start from new market highs NOT market lows so were going to look at buying breaks of these. All you need to do is look at valid resistance or support and trade the breakout.Very Important!You want the odds on your side so be very selective of the breakouts you trade - trade only ones that are valid and considered important by the market.You don't get paid for how often you trade in forex you get paid for being right.Have patience and only trade the high odds trades and you will increase you chances of winning dramatically.
Step 2 Confirm - Confirm - Confirm
Now breakouts don't always carry on so how do you spot the ones that do - you confirm them.If you don't know anything about price momentum you should learn.Once a break occurs you need it to make sure momentum oscillators confirm the break.You can look up several good ones on the net or in our other articles and a couple of good ones are the RSI and stochastic - check them out and use them to confirm every trade.
Step 3 Stops and Money Management
If you trade stops the stop is behind the break and you should hold it their until the trade is well under way.You're not looking for small moves so don't trail your stop up to soon.When you trail your stop do so behind key moving averages or support way behind the noise of the market i.e. the short term volatility.
How much should you risk per trade?We would say 10 -20% - hang you might say most traders tell me only 2%. Well you can - but if you are a small trader i.e. $10,000 or less account that's $200 and if you don't risk much you wont make much - PERIODYou're trading high odds trades so only trade one at a time and hit them hard.Don't be tempted to diversify that's just another word for diluting profits. If you have a high odds trade focus on it.So there you have a simple system for profit - its easy to understand easy to build and easy to apply.All the best Currency trading systems are simple robust, easy to understand and apply and generate high odds trades and the above one will help you enjoy currency trading success.