In this lesson of our Forex course we have seen that instead of wasting time looking for an infallible trading system created by someone, the best way to be successful in the long run is to create your own trading system. A system that you have developed yourself based on your personality and profile as a trader, with which you feel comfortable and that gives you confidence after having tried and optimized it.
Creating your own trading system is not impossible, nor is it even that difficult. The main mistake of most traders is that they have little discipline to follow their rules and as a result, they end up losing money.
Your trading system, you must seek to meet two objectives:
Be able to identify trends as soon as possible
Be able to find ways to avoid false signals and losses (confirm trend)
If your system starts to be profitable on a demo account, then you should try to maintain good results for a reasonable time of at least two months. This will help you get an idea of how you will trade with your system when the market is moving into a live trading account.
There are six steps to creating your own trading system:
- Find the amount of time that really works for you.
- Find indicators that help you identify trends early.
- Find indicators that help you confirm trends and avoid false signals.
- Define the level of risk.
- Define inputs and outputs.
- Write down the rules of your trading system and always follow them.
In the last article of the lesson we give you an example of what your own Forex trading system should look like. It’s not about following it to the letter but it can help you to see what you need to define when creating your own and is also a good example of how important simplicity is to have a good system. You will see how a simple system will give you much less headaches and will be much easier for you to follow and optimize.