How to create your own forex system

Every trader is a unique person with unique requirements and unique style. Each trader will therefore need a unique forex trading system that fits his or her own life style, which is why forex training has to be personal. It’s important that this forex trading system is studied, back tested and proven to be profitable, or else it’s totally worthless. Once the trader has identified his forex system requirements, he will start writing down the rules of his system in a manner that fits his own lifestyle.

Here are a few things you need not to forget when you want to create your own forex system:

Pairs - The forex market runs worldwide and around the clock. Depending on where you live and when you are awake, certain pairs will be more active than others. Define the times you want to trade, and then define which pairs are the more adequate to be traded during that time.

Risk – A good trader knows how much he wants to risk per trade, and his forex system follows this rule. You need to know if you will risk 0.50% per trade or 20% per trade, consider it in your forex system and then stick to it.

Chart analysis – Whatever you do, you will need charts. During the making of your trading system, you will spend a lot of time looking at charts and taking notes of what you’re seeing. Your edge in the forex market will come from a keen observation of the market and what it is doing, and how you can exploit that.

Losing trades – There is no way around it, you will endure losses. Every single trading system in the whole world endures losses. If you think that yours won’t, you’re sadly mistaken. The important point to remember is that they will occur; therefore you need to have losses factored into your system. How will they affect your risk management? What kind of measures will you take if you’re getting multiple losses in a row? During your back testing, what was your maximum drawdown? All these questions need to be answered before even considering trading your system.