How to develop the perfect trading system in Forex market
by Sandip Sarkar
Trading is often considered to be the profession of the elite class people. Everyone wants to become a successful trader but only 5% can full their dream. Majority of the traders start their trading career without knowing about the associated risk in trading. They simply place a trade based on their gut feelings and loses a significant portion of their investment. Some new retail traders often buy other people trading system to change their life. But even if you buy the most successful trading system in the world, you will never be able to make a profit. Every trader is different in the financial industry. Based on your needs and demands, you need to develop your own trading system. But when it comes to crafting your trading system from the scratch it becomes extremely sensitive. But there is nothing to worry. Today we will give you some useful piece of advice which will help you to develop your own trading system.
Learn technical and fundamental analysis
Most of the novice traders start trading the live market based on their technical analysis data. They simply place a trade based on the reliable trading signals formed in their trading platform. But when you consider the technical parameters, you are dealing with a portion of this investment world. You need to learn the fundamental part of this market to execute quality trades in favor of the long-term trend. Once you have developed a strong basis in the fundamental and technical part of the Forex market, it’s time for you to demo trade the market. Some of you might say that demo trading is not useful at all. But this is absolutely wrong. Even the most successful traders at Saxo often use the demo account to fine tune their trading system. Always remember, that demo trading account is the best way to build your trading system.
Read lot of books and articles
You need to become a voracious reader to master the art of trading. If you ask the new traders about the different types of pending orders, they will give you a blank look. Due to their lack of knowledge they fail to utilize their trading platform. But if you start reading books and articles on the trading industry, you will gradually understand how to trade this market with managed risk. The moment you start your trading career is the very moment you start learning new things. As a retail trader, you need to keep yourself updated with the latest market news. News data will significantly help you to find the most profitable trade setups in favor of the long-term trend. So make sure that you are utilizing your time in every single second so that you can easily place your trade in this market.
Trial and error
Trial and error are very crucial for the developing the perfect trading system in the investment world. If you think that you will develop the world best trading system without doing the experiment you are making a big mistake. You need to backtest your trading system so that you can easily identify the faults in your strategy. If possible try to backtest your trading system with different currency pairs as it will help you to eradicate the unnecessary noise in the market. Once you feel confident with your trading system, try to make a profit in the demo account for at least two months. If you are satisfied with the demo trading performance, switch back to your live trading account and trade the market with your new system.
Risk management factors
No matter which trading system you follow, you will always have to face losing trades. Losing trades are nothing but the part and parcel of the trader’s life. So make sure that you are not trading with big lot size. Find your risk tolerance level and based on that determine your stop loss price.