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Make Big Profits using Currency Trading Systems
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Make Big Profits using Currency Trading Systems
Here we will look at how to use currency-trading systems
to catch the big profits from the big moves, and how to pick
a currency trading system that will be successful.
There are many currency-trading systems for sale, but many
don’t live up to the hype in the sales literature, but finding
one that makes money is easy - if you know what to look for.
Trend Following - The Key to Big Profits
As economic cycles of boom and bust in countries, take years,
so do the currency trends that reflect these cycles.
The big profits are made by traders who can spot and trade
these big trends for big profits.
There is no better way of doing this than using a currency
trading system that can lock in, and hold these long-term trends
for maximum profitability.
A Mechanical Approach to Profits
Currency trading systems remove the emotional component
from trading - they don’t care why currencies move they just
attempt to make a profit when they do!
Many traders have a problem with emotions when trading,
rather than running profits and cutting loses, they snatch profits
early (simply to bank a profit) and run losses (as they hope
they will turn around) and of course, this strategy will lead
to losses over the longer term.
A trading system gives you discipline, which is vital to
trading success.
Don’t underestimate the effect of a lack of discipline -
it’s the major reason traders lose!
The Growth in Computerized Trading
The developments in computer software, and the rise in popularity
of the Internet, have seen system trading become more popular
than ever.
For example, packages such as Tradestation and Supercharts,
allow traders to build and test systems using a variety of technical
indicators, however today more traders are buying systems that
are ready made.
The idea is they load the program, follow the signals, make
big profits, and don’t have to employ the services of a fund
manager.
There are some excellent currency trading systems out there,
and the following checklist will help you find one that can
make big profits longer term.
Finding a Technical Trading System that Makes Big Profits
Always follow this checklist when buying a currency trading
system.
1. Understand the logic of the system - if you don’t understand
the logic, you won’t have the discipline to follow the system.
Also, avoid “black box” systems where the logic is not revealed.
2. The system should aim to catch the long-term trends,
not short term moves. It’s the longer-term trends that make
the profits, so buy a system that targets them.
3. Simple systems are best – there’s no correlation in currency
trading systems, between complexities and making money. A system’s
rules should easily be understood, and not require a degree
in mathematics!
4. Study drawdown from peak equity and overall profitability
over time. Always assume your worst drawdown is ahead of you,
and be prepared mentally to take it.
Also be aware of simulated track records that have little
drawdown, they probably won’t work in practice - anyone can
simulate profits with hindsight!
Warning! - Beware of “curve fitting” This is where
a simulated track record is produced and the system is then
“fitted” to past data to ensure profits. One trader likened
this to shooting at a barn door and drawing circles around each
shot afterwards to make a bull’s-eye.
A clue to a “curve fitted” system is one that has little
or no drawdown and huge profits, or has a huge amount of optimization
and variables instead of ONE straight set of rules.
5. Don't ignore simulations totally; if the logic is soundly
based, they may work, and many do.
6. Get to know the vendor selling the system - ask as many
questions as you can, and check out his record, and philosophy
of trading.
Make sure you feel comfortable in the system and the support
you will receive before buying.
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