What System For Trading Forex?

For the beginner who wants to trade on the Forex market it is essential to decide on what your trading strategy ought to be. There are many trading systems which suggest fantastic things but I should sound a word of caution. Many systems do perform, or at least they work for the person who devised them. But it might well mean it does not work for you. We all possess an different methodology to everything that we undertake and one persons approach in the developing of a trading system might not suit another. One tactic might rely on following a trending indicator for example. Practically all indicators are lagging, that is to say they tell you what has happened after the event. They will not tell you what is around the next corner. So such an approach is likely to be wanting in several areas.

The soundest method when trading is to look for either continuation or reversal patterns. These are patterns, which historically have shown that the price is most likely to move either up or down. I say most likely quite deliberately. Remember, no one really knows which way the price will move. We are looking simply at probability and various patterns confirm a higher level of probability than others. There is nothing puzzling about price movement despite what some would have you believe. Remember, it is a constant battle involving buyers pushing the price up and sellers pushing the price down. Just like buying and selling fruit and vegetables from a market stall. It is a easy as that.

You will need some form of charting package if you are intending to trade but be wary not to get carried away with the array of indicators on offer. They may well look very high tech but the majority of them are not. Remember, they are indicators, they can merely help to confirm or otherwise a specific price movement. As I mentioned above virtually all indicators are lagging and only show you what has happened (which you can already tell from the price movement). They are all based on price and/or volume data, although there is no volume on the Forex market.

So do not get carried away with indicators simply focus on price movement and chart patterns instead. There are just 3 indicators that I can think of that are leading indicators. These are fibonacci retracements and projections, pivot points and the Gartley pattern. I am a great believer in fibonacci patterns simply because they have a tendency to perform and I employ them routinely. Many traders place major significance on pivot points. Consider this though. Pivot points are derived from a mathematical calculation taking the high and low price from the preceding day or so. I can see no technical rationale why that can mean something. All you can say is that if lots of traders employ it and respond to it the movement of price based on this can be a self- fulfilling prophesy. You decide. The Gartley pattern is a little known pattern that is relatively tricky to put into words. However as soon as one does present itself a highly profitable trade can result.