Forex trading is neither a game of luck nor is it a get-rich-quick scheme. Your success in Forex trading largely depends on your hard work, research, ability to learn, and having a good, profitable trading system. A profitable trading system ensures that you always know when to exit a bad trade and when to keep in a good trade. A good trading system lets you know the optimum buy and sell triggers and the trade entry and exit points that offer the highest profits.
To set up a trading system is not a necessarily difficult task. One must have a plan and set targets. You should have an effective trading strategy to increase your chances of success and profitability. Your trading strategy should be well thought out and tested before being integrated into your trading system. To set up your system, here are some basic steps you should take.
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Write Down Your Plan
Detail your thought processes in writing and review them. These are the thoughts and considerations that usually go through your head before you decide on entering or exiting a trade.
Pre-Define Your Currency Pairs
You should write down an analysis on the currencies you are considering on trading, and then decide on one currency pair. You should consider the trends associated with your chosen currency pair and the leverage you want to employ in your trades. You should also determine what trade entry and exit points you will be using.
Chart Your Steps
You should chart all the executable steps that you will take as you set up your trading system. Each currency is likely to exhibit repeatable steps that you will be using to determine trade entry and exit points, how and when you will be adjusting your leverage levels and trailing stops. At this point, you should decide the level of leveraging you will be using. For example, for a GBP/USD currency pair, you may decide on a 1:100, 1:1000, or 1:1350 leverage and ensure you put in the chosen parameters into your trading system.
Encode Your System
After charting your steps, the first step is to now encode the trading system into your chosen trade software and onto your trading platform.
Test Your System
After setting up your trade system, you should test it first. Make around 20 trades using low capital amounts to test how your system works. Check your profitability using these small amounts so as to ensure you do not bankrupt yourself in case the system turns out to be faulty.