The aim of any Forex trading systems is simply, to give the user a set of rules which can be used to make trading decisions and time market entry and exits. An FX trading system, can either be totally mechanical or it can be a discretionary set of rules, used to help the trader but the trader, actually pulls the trigger and may also have discretion over exposure in the market and money management parameters.

The advantage of using any rule based system if its totally mechanical or discretionary is to help keep a trader to keep his emotions in check. A trading system helps you be objective rather than emotional and this is the huge advantage of system trading.

What is the Best Forex Trading System?

Of course there is no best trading system and the one which you will choose to integrate into your trading strategy will depend on your personality and trading objectives.Whether you're looking into Forex or you're a veteran of BullionVault.com it's important to remember that all systems have their specific advantages. The key when using any trading system is to have confidence in its ability to make long term profits. You need to understand the logic of the trading system you are using and believe that it will make you money. If you fail to have confidence, in your system, you will never be able to follow it through periods of draw down with discipline and if you can't trade your system with discipline – You have no system!

There are Many Ways to Make Money But …

There is a sure fire way to lose it and all good trading systems will have one thing in common which is strong money management. If you fail to keep your losses under control you will fail to make money trading currencies. You will have long periods of draw down and they can last for weeks or months and this happens with all the best trading systems and will happen to you. You must ensure that you stay in the game while you are losing and preserve your account equity, because this is the foundation ANY successful system is based upon.

You it rate or how many trading signals you get right is of no consequence – its the difference between the size of your winning and losing trades which is the key to long term profitability. Most of the best trading systems in the world, operate on the basis of winning on just 30 – 50% of there trades but there winners are much bigger than losers, so they can still achieve triple digit gains over the longer term.

Scam Forex Trading Systems

We have covered this in other areas of the site but in terms of sold systems most fail to make money. There are a huge number of Forex Robots or Forex Expert Advisors Which are sold cheaply and make ridiculous claims like they can make you a regular income, trading with 90% accuracy or make 1,000% per annum – these automated FX trading systems, give currency trading a bad name and should be avoided at all costs.

There are many traders who see perfect market timing and making money with little or now equity losses as achievable and this is not the real world o Forex trading. So ignore any system which looks to good to be true and think about it, if you really could buy currency trading success, for a hundred dollars or so and get rich, no one would bother to work and everyone would be trading for a living.

Different Forex Trading Systems

There are many different trading methodologies you can use to make money and the most popular are systems based on:

Price Action Trading

Breakout Trading

Momentum Trading

Contrary Trading

Which is The Best Trading System for You?

This will simply depend on your personal view but you should when using any trading system avoid the following systems:

Systems To Avoid

Predictive trading systems need to be avoided such as - the ones based on Gann trading methods, Elliot Wave theory and Fibonacci. These systems all claim markets move to natural order which of course they don't - so avoid them or lose your money. Also avoid any mathematical system which claims to predict the future and systems based on neural networks, artificial intelligence etc, also need to be avoided because these systems, based on mathematics will never give you an edge in an odds based market.

The Importance of Time Frame

The time frame you choose is also important – Never use systems based on short term frames that scalp or are involved in high frequency trading they will lose you money. All price movements in sort term time frames are random, so you should look to trade longer term time frames so either base your strategy on swing trading or long term trend following. Both methods work and the one you decide to use, will be dictated by your personality.

Successful System Trading

In conclusion, a successful Forex trading system will be based on following longer term trends, will trade price action and not be predictive and will be simple and robust, with solid money management parameters to ensure preservation of equity. You also need to have total confidence in your trading system and trade with discipline at all times. System trading can be very rewarding and with the right mental attitude and system, you could soon be making triple digit profits in around 30 minutes a day.