Forex Blog

What is a profitable forex system?

What is the Forex system (1)

A forex trading system is a method of trading forex that is based on a series of analyses to determine whether to buy or sell a currency paired with pre-set procedures to determine the entry and exit points as well as risk management criteria.

One that makes you money!!!… it must have;

1. Good risk management principles e.g. never risk more than 1% of the account per trade, and also after every loss, you incur cut down your risk per trade by half, till you have a winning trade again, then you multiply by 2 for every subsequent winning trades till you get back to your original 1% risk per trade.

2. Must have a good risk-to-reward ratio e.g 1:2, meaning for every 1% risk you must get at least a 2% reward, for me, 1:2 is the bare minimum.

3. A good or average win-loss ratio, anywhere within 40-70% win rate is good.

A profitable Forex strategy is a kind of instruction for a trader, helping to follow a well-defined algorithm and protect his deposit from the emotional mistakes and consequences of the unpredictability of the Forex market.

A forex trading system is a rules-based approach to trading currencies. Forex trading systems can be automated as they are essentially just algorithms that a trader runs based on market signals. Forex traders often find developing and tweaking their own systems an important part of the learning curve.

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