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Forex trading system

Fibonacci studies are used by large amount of Forex traders worldwide dealing professionally and they are the basis of a number of Forex trading systems. A series of numbers forms Fibonacci studies. In this series, each number is formed by summing two previous numbers: 1, 1, 2, 3, 5, 8, and 13. Currency trading considers ratios of Fibonacci more significant. They are the derivatives out of this row of numbers, like 0.236, 0.50, 0.382, 0.618, etc.

Fibonacci levels (or price points) are computed in advance for each pair of Forex in order to let the trader know the moments of entering or exit the market seeing that the forecasts of his Fibonacci day trading system are coming true.

Building a Forex Trading System

Building Forex trading system is understood to be a certain process created by the majority of the charts step by step. It is important for traders to understand.

1) Build

Two important decisions are required from the trader at this first step: what pair of currencies he decides to trade and whether trending will be the basis of the system or not. The movement of each currency pair differs much. Some systems are strongly dependant on the trends whether others don't lose their effectiveness both at bearish and at bullish movements. The entry expertise may seem completely useless in case the trader doesn't know how to book the profit (exit trades).

2) Trading system valuation

There is a bottom line concerning potential value and the one leveraged at each Forex trading system. Historical testing seems to be the best method of estimating the system value. During this check you can understand whether this system deserves following.

3) Fine Tune

You are likely to have some mishaps at your firs system design. In order to find them all out and reach the maximum performance you should use the historical test. Tighter entry schedule will let you minimize losing trades. To avoid frequent stop hits consider a stop limit. In case the losing trades exceed the pips produced on average during the trade, you should use the exit signal.

4) Duplicate the system

Duplicate the system into a number of the same ones after building the basic so that to be able to split duplicates into a set of components available for forming a new one having another setup.

5) Monitor

The final step to take after the system is ready is its test trades monitoring in the demo account. That would be useful before you apply the system in a real account.

Written by: Natali Ya

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