Which Forex system to use to trade currency crosses
The BIG Forex question
I recently had a Forex question about “What is the best forex system I can use to gain the market and yet stay safe”. Although this is briefly covered in the Long Candle course the best system you could use is a market evaluation approach or system. We sometimes call this the environmental scan before trading system.
The Market Evaluation
This system involves “reading and interpreting” the market very thoroughly before deciding which of many trading technique to use. This is the biggest mistake traders make – they try to force their favourite Forex technique on the Forex market whereas if they just took the time and observed what is going on in the Forex market, the Forex Market will literally tell them how it wants to be traded. Using a routine of being in tune with the way the Forex Market wants to be traded is using the very best Forex system there is.
Phases of the Market
The Forex Market is dynamic. Sometimes it is trending, sometimes it is consolidating, sometimes strong trend reversals are happening. Market behaviour is clear in the charts – it is not hidden. It is the ability to read these phases of the market that turns a potentially good Forex trader into a great Forex trader.
The Free Multiple MA course and indicator goes a long way to identify these phases of the market.
It is also the ability to know the relative strength of currencies and the reasons why the currencies are strong or weak that gives great traders the upper hand over traders who trade one system day in and day out and who mindlessly rely purely on technical analysis. Fundamentals drive direction and trends – technical analysis helps you get into and out of the market at opportune moments.
More information on free trading tools provided on the Expert4x website please click on Forex Tools of the Expert4x menu above:
- the Relative strength of currencies,
- economic announcements,
- Currency volatility
- Currency correlation
- Streaming Forex news
- Daily Pivot levels
- Currency heat maps
- Trading strategies
- Technical summaries of Major currencies
So once you have established the phase of the market or currency trading becomes much easier. There is only 3 ways of trading trending markets:
- Catch the Breakout
- and in an up market buy the dips
- and enter on new highs.
There is more on this in the Expert4x LONG CANDLE FOREX TRADING COURSE and MAGIC MA course. The Expert4x WATO technique principles can also be used. The GRID TREND EA will help you make the most of trends.
There are numerous ways of trading wave consolidating ranging markets – retracement trade using channel trading, support and resistance levels, candle and price formations.
The Expert4x FINANCIAL TURNING POINT, FOREX GOOD VIBRATIONS, MAGIC MOMENTUM, SIMPLE-N-EASY ENTRIES, TIMES and TURNING POINTS Course are examples of techniques you can use. The free CHANNEL trading discussions are also handy.
The NO STOP, HEDGED, GRID EA will work well in ranging markets of up to 600 pips.
When the Forex market changes trends
The skill is to be able to identify the exact point when the market is at the end of one phase and is going into another phase. This is where BIG, BIG money is lost. Retracement traders keep on trading against the trend in spite of all the signals. Breakout, trend traders take every false breakout in a range bound market and encounter loss after loss. Again economic news and realities, world events and mega institution orders drive trends. When they happen there is a good chance of a trend.
When nothing much is happening in terms of fundamental information expect uncertainty and sideway movements.
The market is always trying to talk to us and trying to guide us as to what to do.
Multi skilled Forex traders
Most traders are so sold on technical analysis as being the answer to all trading questions. The true answer is not far away. It is in marrying technical analysis, with the ability to read the phases of currency crosses and paying attention to fundamental driving the direction of individual currencies. This does not mean we all have to become economists. Just pay attention to announcements and large extraordinary volume spikes that bounce the market.
Basic Forex trading skills
You will still fail with your forex system if you haven’t mastered the basic Forex trading skills of risk control, stop loss management, lot sizing, back trading/testing and psychological aspects of trading (stay objective) but that to beyond the scope of article. Using the risk/reward ratio appropriate to your technique is also important.
I hope this puts the personal Forex trading challenges and opportunities in terms of a forex system into perspective.