FOREX TRADING SYSTEMS

A FOREX Trading system is a very short-term investment strategy in relation to other investment vehicles. Trades may last a few minutes to several days, or sometimes a few weeks when Position Trading. The goal is to increase daily profits in your FOREX brokerage account, compared to long-term growth investments like stocks, mutual funds, bonds. FOREX traders frequently jump in and out of the market and closely monitor their positions throughout the day. Generally very low capital as less as 2,000$ can get you started. A good forex trading system should yield between 3% and 5% per month.

In A Forex Trading System, we trade major currencies from over the world like US dollar (USD), Eurodollar (EUR), etc. There is no stock trading in that kind of trading system.

To limit risk and create consistent profit, trading is always done by pair. For example we can Buy the US dollar and sell in the same trade the EuroDollar. In a Forex Trading System we work on the spread gained or lost between each part of the pair.

Each point gained or lost from the spread on a pair is called a PIP point. Each PIP point worths 10$ USD.

In a Forex Trading System we can use leverage. Here is an example. If you are trading 6 lots of $10,000 for a total of $60,000 in open trades and you have $20,000 on deposit in your account, you would be trading at 3:1 leverage. Some brokers allows as much as 100:1 leverage. At this level it is getting too dangerous and you must choose a more comfortable leverage.

With a good Forex Trading System you should be able to perform day trading as well as position trading. Either get in and out in the same day or you could trade over a few days sometimes weeks. Basicly we use a Forex Trading System with short term trading in mind.

To be able to use a Forex Trading System you must fulfill basic requirements :

Find a good trading software. This kind of software can be very costly since it must support day trading. So you can expect a good 1,000$ up front or high monthly charge to use such software.

You will also need a data feed such as quote.com, signals, etc. This is another charge of between 100-300 per month depending on the service used.

You will also need solid education to learn how to perform with a Forex Trading System. This could also costs quite a bit of money. For those interested in very explicite courses either in class or on DVD Click here for trading materials at Online Trading Academy.

Finally you will need some capital in a brokerage account to start trading for real. It is recommended to fund your account with at least 2,000$.