Forex, just like any other form of trading, has sets of rules that guide the decisions to enter and exit. This is what is called forex trading systems. This system is based on a set of analyses or signals derived from either a technical analysis or a fundamental analysis and in some cases both. News based events also have a bearing.
Forex trading systems can be categorized as manual or automatic. Manual forex trading systems, as the name suggests, involve proactive work. An investor or trader typically has to get down to work. This may involve looking at charts and data with the motive of looking for signals. Another task is interpreting these signals for the purpose of informing a decision to buy or sell.
On the other hand, with an automated trading system, a trader takes a laid-back position. A software is used in this case, and all a trader has to do is to supposedly “teach” it to look for signs and to interpret them.
Both systems are proven in the forex market. However, many trading circles endorse the automated trading system as a better choice because it does not factor in the emotional and psychological aspects that characterize human decisions. It’s often viewed that bad trading decisions are often influenced by emotional and psychological responses of individual traders.
Both automated forex trading systems and manual forex trading systems can be purchased. However, it goes without saying that the best of these proven forex trading systems are reserved. No one would sell to you a proven forex trading system that mints money perfectly. They would rather keep it to themselves. This is the norm with top financial firms when it comes to proven forex trading systems.
The Forex Fibonacci Trading System
The forex Fibonacci trading system is also employed in forex trades with its roots in the Fibonacci retracement ratios. The forex Fibonacci trading system tool is best used when there is a trend in the forex market. Typically, a trader finds the Forex Fibonacci trading system levels by finding the recent swings. These include high and low swings.
The use of forex Fibonacci trading system is gaining much popularity as forex traders have learned that forex markets indeed act to the Forex Fibonacci trading system levels.
Most trading platforms that utilize proven a forex trading system allow traders to draw the Forex Fibonacci trading system levels, and hence they don’t have to calculate them or memorize them at any given time.
Swing trading systems have also been employed as a proven forex trading system. Typically, a swing trading system attempts to identify swings within medium-term trends. A swing trading system informs decisions to enter a trade. This is when there’s a high winning probability. This can be determined swiftly with a swing trading system. When there is an uptrend, one aims to go long (buying) at swing lows. Another scenario would be of going short (selling) at swing lows.
The swing trading system is for the clique of traders who would not mind holding trades for a number of days. The traders should not also mind having large stop losses. With the swing trading system, there are usually larger spreads. However, the larger spreads of the swing trading system do not have a bearing on the overall profits. Thus, the swing trading system has utility in forex.
Simple Moving Average
A Simple Moving Average can be of value as a proven forex trading system. This is because it helps identify current price trends. A Simple Moving Average also checks on the probability of certain trends changing. In forex trading, the Simple Moving Average can be used to identify an uptrend or downtrend. The Simple Moving Average can also be used to smoothen out volatility.
Thus, employing Simple Moving Average is a viable forex trading system. Typically, traders use a 20-day time frame when applying a Simple Moving Average.