HOW TO IDENTIFY A PROFITABLE FX TRADING SYSTEM

Traders are always on the look out for that "best" trading system irrespective of their years of experience in the Forex trading. There are certain things that you should be sure of before investing in a trading system.

Of the market being flooded with information regarding various trading systems with reviews and guides each one explaining how perfect they are it is certainly a tough choice for the traders to choose a system that suits their needs. Whatever your need may be there are three special aspects that you have to look out for in any system or strategy to determine whether it is profitable.
These include identifying a market trend through higher time frame like 4hr chart, daily chart, weekly chart. So following these trends is one of the simple ways to make money. Although this is not the ultimate way to make money this is one profitable method for the newcomers. It requires only about 30 minutes of your daily schedule unlike other strategies where you have to spend hours on trading. Therefore you can utilize your free time by learning about the forex trading.

The simplicity of the system also plays a key role in determining success. If the trader is a beginner he has to understand the system and follow the instructions as his knowledge of the Forex trading is limited. A system with no more than three indicators is best to begin with for those who are new to the trading arena. This in a way minimizes confusion and eliminates potential losses as a result of misinformed trading session. So a simpler system is more profitable for a beginner than overloading yourself with a complex one.

The system should be clear of any error or doubts when using an indicator. If only all the conditions are satisfied a trade should be placed. The guidelines also should be clearly mentioned regarding the position size, amount, the stops that should be made and the time to take profit on a trade. It is very important to have a well devised trading plan to avoid time losses.

Winning with a 100% profit should not be criteria but to minimize the loss percentage and to maximize the overall profit is what you should watch out for. Only way to determine a profitable system is to test over a period of time in the live market and determine the kind of profit and loss from the trading system. Although you may lose few trades in the beginning but its part of a trading strategy to increase your profits in the long run.