This article looks at the points that make up your forex trading systems.
When you set up your forex trading systems you need to consider the different parts that you need to include. If you do not include all the parts then you will not have forex trading systems that cover all aspects of your trading. The parts that you need to include are the trading plan, the strategy, the risks management and the money management. If you do not have all of this in your forex trading system then you are not going to be able to trade successfully on the market.
The Trading Plan in Forex Trading Systems
There are some traders who think that forex trading systems are the same as trading plans. This is not true as the trading plan generally makes up a small part of the trading system. The system is a more encompassing plan than the trading plan.
When you create the trading plan you will need to consider all your trading goals and the methods of your trading. The trading goals that you have need to be realistic expectations of what you can do and make on the market. The methods of your trading will not be the strategy that you use, but rather the way that you are going to approach the market.
The Strategy You Trade With
The strategy that you trade with is the next part of the forex trading system. The strategy that you use must be one that you are completely comfortable with and that you completely understand. If you are not comfortable with the strategy then you are more likely to divert form this and complete emotional trading.
When you detail the strategy that you are going to be using you should state all the different points. It is important that you are as detailed as possible when you complete this. When you detail all the aspects of the strategy you will be able to determine whether or not this the right one for you and whether you can comfortably use it on the market.
The Risk Management
All traders need to have a risk management plan as part of their forex trading system. The risk management plan helps you limit the impact of risks on your trading and the losses that you can make. There are many traders who assume that risk management is just the placement of stop loss orders. This is not true as there are a number of other points that you need to look at.
When you detail your risk management plan you need to state the risk capacity that you have. The risks capacity that you are trading with will be a combination of your risk tolerance and the capital that you have.
The Money Management
Money management is another important part of your trading system. When you look at money management you need to consider all the transaction that you complete on the market and the way that they affect the money you have. You also need to list what your maximum allowance is for monthly loss. This is often set at 6% of the trading account balance as per the start of the month.
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