Forex Arbitrage Between Brokers
Tuesday, January 6th, 2009
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This article discusses whether or not there is any such thing as the perfect forex trading system.
Many people spend a large part of their lives searching for the perfect forex trading system because after all if you can consistently make winning calls then your bank could potentially grow exponentially using leverage. However does this holy grail actually exist?
If you visit any forex forum you will often find many questions from newbies asking about the perfect forex trading system and how to consistently make money from forex trading. The response from others is nearly always the same – there is no such thing as the perfect trading system. It’s a sad fact but unfortunately it’s completely true.
Similarly on the same forums you will often find traders starting a new thread just to boast about their new trading system which they claim to be their most profitable yet. Unfortunately with almost all of these systems, they may be profitable initially, but over a period of time they nearly always lose money overall.
It’s the same with the vast majority of commercial trading systems available to buy online. They all have fantastic sales pages, probably written by expensive copywriters, and all claim excellent trading records. However once you actually buy the system and start trading it yourself on a live account it’s very often a different matter. Which is of course the main reason the seller prefers to make loads of money selling the product rather than trading the system themselves.
The fact is that there is no holy grail trading system that will consistently make winning calls, however you can of course make consistent profits from forex trading without having the perfect system. The key is to devise a system where the probability of making a profit is always in your favor for every trade you make.
So for example you could devise a system using a number of technical indicators and only trade long or short when they are all in agreement with each other, so statistically you are more likely to make a profit than a loss. Similarly you could use 3 time frames, and look for a trend in the same direction on the 2 longer time frames, and look to enter a high probability position on the shorter time frame. For instance if the 1 hour chart and 4 hour chart are trending upwards, you could look to go long on any oversold positions on the 15 minute chart.
These are all examples of how you can trade positions where the probabilities are on your side, which is the cornerstone of so many successful trading systems. You don’t necessarily need to make winning calls 70-100% of the time either. Even a trading system that boasts a 30 or 40% success rate can be profitable over time if a good stop loss policy is used and winning positions are allowed to run.
So stop wasting your time buying the latest and greatest trading system and going to forex forums in the hope that you’ll find the perfect trading system, because it doesn’t exist. Instead focus on developing your own forex system based on probability trading that will generate steady profits for years to come. It is possible because I’ve been using the same basic system for ages now and I make consistent profits month after month.
Click here to learn more about James Woolley’s forex trading system and to read a review of Zulu Trade, the revolutionary forex signals service.
| By James Woolley Published: 7/7/2008 |
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