Forex Trading Systems
Forex trading systems are platforms based on a series of analyses that determine whether to buy or sell currencies at a particular time. Forex trading systems base their analyses on a set of signals obtained from technical analysis tools or news-based events. A Forex trading system consists of forex signals that help traders develop forex trading strategies to make buy or sell decisions.
There are two main categories of Forex trading systems: Trend-following trading systems and counter-trend trading systems and both are useful for day traders and long term investors.
Trend Following Systems
These are the most widely used Forex trading systems. As can be worked out from its name, trend following trading systems focus on assisting traders in determining market trends via the various trading charts. These platforms provide buy and sell signals based on the direction the trader wants to trade-in. There are two main types of trend following trading systems: (a) moving averages that are a common technical indicator, more specifically where moving averages crossover it implies that a shorter period moving average line crosses a longer period moving average line. (b) ones that rely on Bollinger bands, which characterize price and volatility over time to determine market trends.
Like other types of trading platforms, a trend following trading systems has their weaknesses. The trend-following trading platform is a lagging system, which means that it does not offer traders the ability to accurately hit the peak or trough of a trend. Trend following trading platforms is not suitable for markets that trend sideways. Also, this system requires traders to make discretionary decisions about various aspects of the trading platform’s operating parameters.
Counter Trend Systems
These systems enable traders to sell high and buy low. However, in contrast with the trend following systems, counter-trend systems don’t correct themselves. This is the main drawback of counter-trend systems, as they do not provide a time frame for exiting a position.
Both trend following and counter trend systems are used in various FX markets. There is no simple answer as to which trading system is better than the other. Both trend following and counter trend systems require some discretionary input on the trader’s part. The most important factor when trading foreign exchange is to have the resolve to stick to your trading system regardless of the trading conditions.
Features of A Good Trading System
A top Forex trading system should at least promote the following features:
The whole idea behind Forex trading systems is to make more money on profit. Therefore, if you cannot get worthwhile profits from your Forex trading system, then there is no point in even utilising it.
Forex markets are incredibly volatile. It is quite normal to find prices in various Forex markets fluctuating wildly. Trading in such volatile markets requires great mental strength. A good Forex trading system you can find when you learn forex should lessen the risk of trading currency pairs by helping traders determine ‘the right’ entry and exit points to execute profitable trades.
FX trading systems should have two main viability features: construct viability and usage feasibility. Construct viability refers to how simple it is to develop the system. If a Forex trading system costs a lot of money to develop, it might be advisable to develop an alternative system.
Usage feasibility is all about how cheap it is to use a particular trading system. A trading system is feasible if it does not require too many inputs from the trader. A good trading system requires few inputs from the trader and allows him to have the concentration he needs to focus on his trading.
Many trading systems are designed to hold up to the different trading scenarios in the financial markets. A trading system that works well in an up-trending market but poorly in a down-trending market has a design flaw. The best trading systems are flexible enough to accommodate the broadening of trading parameters without requiring much optimisation.
Different Types of Forex Trading Software
Web-based trading applications make it possible to trade currencies from any computer, laptop or portable device provided it is connected to the Internet. Web-based trading software works much like email accounts and makes it possible for traders to log in to their Forex trading accounts and free demo accounts using their unique usernames and passwords.
To access your Forex trading Australia account through a desktop or laptop, consider installing computer-based FX software on your computer or laptop. Examples of computer-based FX trading software include VT Trader and MetaTrader. Both applications offer automated trading solutions.
Automated Trading Software
Some traders use various strategies to trade currencies. Such traders can automatically execute their strategies by using automated trading software, which includes employing stop-loss features. VT Trader and Meta Trader offer automated trading however, VT Trader is recommended only for experienced traders. Traders who are new to FX trading should consider purchasing MetaTrader popularly offered by top forex brokers.
Managed Account Software
FX traders who have no interest in installing FX trading software can use managed account software to manage their accounts on their behalf. Many managed account software does not require technical knowledge or software installation; all you need is a username and password to check the balance of your account. Automated account software lets you pick the trader and program that best matches your goals.
Some Top Trading Platforms From Around The World
This FX trading platform provides accurate analyses of the financial markets. It can be integrated into mobile devices and provides an enhanced trading experience. Meta Trader provides flexible trading systems, algorithmic trading, and mobile trading applications.
This trading application route trades using the STP network, which allows traders to trade directly with leading banks. This frees traders from the inefficiencies of market maker models and opens new trading opportunities in live environments.
FXPro has received many distinctions including being named the best FX broker for 2009 by World Finance Magazine. FXPro offers trading vehicles in the Forex market as well as the futures and stocks or equities markets. Also, traders benefit from 24-hour technical support as well as live news feeds pulled in from Dow Jones.
This trading platform has earned the top spot in various trading platform reviews. ForexYard is ideal for novice Forex traders. It provides an easy forex platform and tutorials to give new traders the knowledge they need to effectively trade currencies. New traders get free training and practice accounts. ForexYard offers 24-hours support and extends various promotions to new traders including cashback options upon deposit of initial funds.
A Summary of Forex Trading Systems
There are a wide number of platforms and forex systems available on the web nowadays for retail traders when currency trading. Find a platform that meets your trading needs and desires by researching them closely and effectively. The beauty of trading today is that there’s no shortage of competition. With stacks of systems and brokers about, if you’re unhappy with one just move onto the next system.