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6 Quick Tips to Empower Your Trading System

March 22, 2018 10:40

Source: Shutterstock

Dear traders,

When it comes to selecting a Forex trading system, you have a choice between buying a system and looking for a free one.

The biggest issue with free Forex trading strategies is that they are not time-tested.

As for PDF systems, in my opinion, they tend to be worth as much as you pay for them. However, having a trading system is not the only factor to decide your success.

Many beginner traders rely too much on their setups, which leads to one problem: as soon as the market changes and their system starts losing money, the trader wants to change their strategy entirely. The fact is, you don't change your system just because of a few losing trades. For that particular reason, I'm going to share some quick tips to adjust and empower your existing system.

Trading is a Learning Process

Learning how to trade is not a matter of finding the ideal system, indicator, or trading pattern. Trading is a skill, and every skill needs practice. Read up on trading psychology, register for some trading webinars, and work on your risk management. Find what your system is lacking, and improve it.

free live education

Changing Market Conditions

The market changes all the time, so we must adjust accordingly. The nature of financial instruments largely depends on the macro environment at the time. Traders change their behaviour according to the broader economic climate. A currency may react to a news release, technical level, or manipulation.

The nature and severity of this reaction depend on many things, such as:

  1. inflationary cycles;
  2. bull/bear market conditions in equities;
  3. global macro themes.

A lot of perfectly fine trading systems suddenly stop working due to changing market conditions. You have to take this into account if you want an effective trading system.

Adapt your system to the current market conditions, by tweaking your system's indicator parameters. If you trade solely by price action, try following near term historical patterns.

Trusting Your System

When you begin trading live, you may find yourself in the following situation: as soon as you experience a few losing trades, you start questioning your system's reliability. Changing an ineffective system sounds obvious, but be careful. As I mentioned above, the Forex market is changing all the time, and you should adapt to it. However, you also need to give your system a chance to prove itself.

Otherwise, you will end up starting from scratch every time you make a losing trade. Bottom line – you have to trust your trading system.

Switching Between Time Frames

Trading capital pushes market one way or another. When the price is not balanced, it might create oversupply on a particular time frame. When you see accumulation, the price not moving much, it tells us that market participants are happy with the current bid and offer. It is time to change your time frame. The price may be moving in trend motion on other time frames. Remember – the market is a shark, and you are a fish following the shark.

Watching Candlestick Wicks

The bigger the candlestick wick (the shadow), the higher the chance of a possible reversal. Try to spot a hammer, pinbar, or shooting star. Follow the daily candle. If you spot any of these two patterns bouncing off support or rejecting resistance, think about a potential reversal day.

Source: Dax30 daily chart, Admiral Markets Pivot, MT5 with MT5SE add-on, Sep 2017-Mar 2018

Using H8 Time Frame

MT5 offers different time frames compared to the MT4 platform. I prefer the H8 time frame. This particular time frame is a great compromise for swing traders as it sits between the 4h and Daily time frames. It's very useful for day traders due to the fact that it tells us the prevailing market direction. Intraday traders should be paying attention to this time frame, no matter which market they trade.

I hope that you enjoyed my professional tips. If you have any comment or question, feel free to ask me in the section below!

Cheers and safe trading,

Nenad

trade forex and cfd


Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.