Mechancial Trading System

Here we will look at to use a mechanical trading system correctly, so it leads you to Forex trading success.

There are two points you need to keep in mind when using a mechanical trading system to trade Forex and that's, you need to find a good system (we will give you a checklist in a moment) and then, you need to prepare yourself to follow the trading signals with discipline. It's a fact that many traders have good systems which can make money but can't follow their system with discipline and lose.

When choosing a Forex trading system, use the following checklist so you will find one that is likely to lead you to success and is based on sound logic:

1. Avoid all the heavily sold Forex robots and Expert Advisors which cost a few hundred dollars or less – they don't work. They never have track records which have been verified by a third party and present gains you know are not true. For example, most claim 100 – 300% annual gains and drawdown of less than 1%! This is fantasy not reality.

2. Avoid any day trading or scalping systems, they don't work – why? Because the time period is to short, all short term volatility is random and this means you will lose.

3. Choose a trading system which is either based on swing trading or long term trend following.

4. Get a Forex trading system which has a track record over at least 2 years which has been independently checked and verified.

5. Always look at the system from the point of view of its worst peak to valley drawdown and assume you joined it on the worst day and then ask your self this question – Can you stand the drawdown and it's time to recovery? Always assume your worst drawdown is ahead of you and be mentally prepared for it.

Now you have a trading system you are going to have to follow it with discipline. This means following the system exactly as per its rules and executing your trading signals when it tells you to do so with no human input. You are effectively trusting the system to make money for you and to trust it, you need confidence in it, to get confidence in it, you need to do the following:

1. You need to check and agree with the logic and never by a “black box” system where the logic is not revealed, because if you don't know the logic, you won't have the discipline to follow the system through periods of losses.

2. When following a system you need to focus on the long term and that means judging your system over a period of 1 – 2 years. Any system, can show losses or marginal performance in the short term and this can be weeks or months, so focus on the long term, if your system is soundly based, it should make some great Forex profits longer term.

A good mechanical system can make you money long term, if you choose one wisely and have the confidence to follow it with discipline, you can enjoy long term Forex success in around 30 minutes a day.