When you complete your forex training course, you will realise that forex trading is a discipline where it is impossible to succeed without having structurally sound methods. What this essentially means is that you cannot succeed in forex trading without good forex trading systems on your side.
For instance, even if you are good at implementing individual techniques, you will need to combine them into coherent trading systems so that you end up with structures that are more than just the sum of their parts.
The Relevance of Good Forex Trading Systems
The primary purpose of creating systems out of individual techniques and methods is that it makes your entire effort to make money more synergistic in nature. If you were to use techniques on an individual basis then you would be unable to give an overall direction to your efforts.
In contrast, when you create a system you pick and choose techniques on the basis of various aspects such as compatibility with each other, suitability to your personality, and even relevance to your overall goal. There are a few things that should especially be in your systems whether you devise or acquire them.
Equity Percentage to Be Risked
You need to figure out how much money you can afford to lose in the market because this is one of the most important things that forex trading systems can help forex traders with.
If you specify the amount of money beyond which you cannot afford to take risk then your system would help you stay within that amount. In order to decide this amount, you will have to assess three things i.e. your account size, your expectations, and your personal risk tolerance levels.
Number of Lots to Be Traded
The maximum percentage that you can risk from your account will also define how many lots you can trade with your trading systems. Oftentimes, traders get carried away with the number of lots and find themselves in a soup when their margin levels start dropping alarmingly low.
By including the maximum number of lots you will allow yourself to trade in your forex trading systems, you are protecting yourself from margin calls.
Time Frames to Be Focused On
Your forex trading style and myriad other facets will determine which time frames you base your analysis on. You can choose from anything between a minute to a few days.
Most strategies employ around two to three time frames so as to gain a more comprehensive view of the market. It is better to specify which time frames you will be using in your forex trading systems for greater clarity in times of need.
Trigger Points for Entries and Exits
There will be some trigger points on the basis of which you open and close your trades in the market. These trigger points should be well defined and predetermined in your forex trading systems. If they are not then your forex trading would become discretionary in nature and will lead to losses.