Creating a Simple Forex Trading System

A good, yet simple forex trading system can be based on indicators such as LSS pivots, price momentum, moving averages or active trading hours. All of these provide insights from time to time, as to where the next opportunity will appear. Online trading can be simplified through such a system, so that the trader will cut losses short when wrong, and will not dig much deeper in chasing losses. In the case of CFD trading, which covers perfectly the needs of commodity and currency trading, much more than Futures do. The trader can practice in an online CFD simulator trading platform, and put things to the test. An effective, yet simple forex trading system is all about clarity and efficiency at low overall risk, as long as the system generates enough trades to make the trader’s efforts and time worth devoting. Curious traders will find it difficult to stick to such simple trading system for too long. They always want to dig deeper and look further, as they have a desire to explore more. So then comes the question whether such a simple trading system will keep the trader busy and active enough, so as to maintain an active interest. A simple trading system doesn’t stop the trader from doing their fundamental analysis. This field of research alone is so huge that it can keep the trader fully active, in a creative way, while the trading system will stay as is. If the fundamental analysis over the week or month in focus suggests that the market will go up, then they can simply refrain from taking short trades, even if the system generates such signals. Fundamental analysis is very motivational, and allows for enormous freedom of choice. So there is no excuse for a trader not to be busy, since they could be studying these fundamentals in great depth. Fundamentals cannot easily be quantified and put into equations and charts, or have probability analysis run on them. But they provide an underlying logic, which helps avoid many false signals on the technical side. And a simple trading system is always a technical one. There is no need for these two different concepts to be in conflict.

Improving a Simple Forex Trading System

Improving a simple forex trading system further, is perfectly possible. Again, through the insights the trader finds in fundamental analysis, they can change technical parameters so as to make the signals more accurate. Traders know that a technical system relaying on LSS and moving averages will be wrong at least 40% of the time. This is expected. The improvement is about identifying big losers early, and cutting them short early. This can be done through fundamental analysis and by watching the trade in question for some amount of time. All stable profitable systems do have losing trades, and that’s why they can stand the test of time. Systems that promise very low percentage of losing trades are probably unstable and will suddenly stabilize, out of the blue, by producing too many losers all at once. It’s a law of physics, as things to tend to move towards greater stability. Trading systems that claim to defy this law are not in touch with reality. The trader can be profitable even if their system only produces 30% winning trades. Again, through fundamental analysis, they are able to identify winners and losers as they happen, and handle them accordingly. Whether or not an open trade is profitable is not about the open Profit/Loss figure. But rather it is about whether or not it is in line with short term fundamentals. So is trading online made easy through simple technical trading, filtered through fundamental analysis? The Answer is Yes! And a system of this kind is bound to be stable too.