| Currency trading systems have become more | | | | system and went on to make millions of dollars. |
| popular than ever in recent years. | | | | Technical Analysis |
| Here we will look at the advantages of currency | | | | The developments in terms of computer software |
| trading systems and how to pick one that's right for | | | | and the growth of the Net have seen system trading |
| you. | | | | reach a wider audience than ever before. |
| Trend Following the Key to Big Profits | | | | For example, packages such as Tradestation and |
| As economic cycles of boom and bust take years, | | | | Supercharts, allow traders to build and test their own |
| so do currency trends that mirror the health of the | | | | systems using technical indicators such as stochastics, |
| economy. | | | | bollinger bands, moving averages and candlestick |
| Traders who can spot and lock into these trends can | | | | charting patterns. |
| make substantial profits. | | | | You can test these indicators in various combinations |
| The major currencies traded include: | | | | over historical data to see which combinations are |
| US Dollar | | | | successful. Traders who do not wish to do this able |
| Japanese Yen | | | | to buy ready made packages from vendors. |
| Euro | | | | Finding a Technical Trading System that Makes Big |
| British Pound | | | | Profits |
| These currencies have good trends, and have high | | | | If you choose to buy a ready-made currency |
| liquidity - which is essential when exiting markets | | | | system, these six guidelines will help you. |
| quickly to lock in profits and more importantly, cut | | | | 1. Understand the basis of the logic of the system. If |
| losses. | | | | you don't understand and believe in the logic, you will |
| A Disciplined Approach to Trading Profits | | | | not have the discipline to follow it. |
| Currency trading systems remove the emotional | | | | 2. The system should aim to catch the long-term |
| component from trading, which is the major reason | | | | trends; day trading currencies has less probability of |
| most traders lose. | | | | success than long term trading. |
| A currency trading system has no emotions, will | | | | 3. Simple systems tend to work best, as they are |
| trade in a mechanical disciplined fashion, cutting losses | | | | more robust in the face of changing market |
| and running the big profitable trends for maximum | | | | conditions. There is no link in currency trading |
| long-term profitability. | | | | systems between complexity of systems and their |
| Emotions - The #1 Major Reason Traders Lose | | | | success. |
| The definitive book on the subject was Edwin Le | | | | 4. Look at the maximum drawdown from peak |
| Feuvre's, 'Reminiscences of a Stock Operator', which | | | | equity. This is important in terms of money |
| was based on the trading experiences of legendary | | | | management, as you need to expect your biggest |
| trader Jessie Livermore. | | | | drawdown is ahead and commit sufficient funds to |
| If you don't think emotions will interfere with your | | | | cover these downturns. |
| trading then you need to read it! | | | | 5. Not all systems come with real trading records; |
| Other authors to discuss trading systems and | | | | they can come with simulations over historical data. |
| emotions include: Jake Bernstein, Larry Williams and | | | | Don't discount simulations; if the basis is soundly |
| Jack Shwager and the latter's book "Market Wizards" | | | | based logic then they can still work well. |
| is essential reading for any trader. | | | | 6. Finally, judge a system over years not months. All |
| Just how effective a system can be was proved by | | | | systems can and do have periods of losses. |
| "The Turtles", a group of traders who had never | | | | Currency trading systems give anyone the potential |
| traded before, but who all were given access to a | | | | to make big profits in the currency markets. |