Trading System

It seems that everywhere you look, you see advertisements for software promising accurate buy
and sell signals and profits with every trade. Just have a look at some captions of the adverts I
have seen!
“I’ve Finally Cracked the Forex Code”
“ Make thousand pips every month”
“ Trade Forex with a secret formula that only a handful of Traders use”
The list is endless.. These so-called killer systems don’t come cheap, costing you thousands to
buy. However with just a little bit of effort, you too can “crack this secret code” yourself.
Once again let me assure you, from my experience and knowledge of being a trader for the past
20 years, that there is “NO Secret Code”, “NO Killer Systems”, “NO Holy Grail”, and “No Unique
Discoveries”.
In my opinion most of these adverts are no more than scams. It may not make YOU rich, but it
will certainly make the Vendor’s millionaires. Most of these secrets and codes or discoveries are
readily available to you. The only secret is that YOU don’t know how to use these simple
strategies! Or nobody has shown you how to use them correctly.
This is precisely what I am going to do in my book – “ The way to Trade Forex”, I hope to hold
your hand and show you step by step how to create a killer trading system of your own. However,
the fact is that many traders are simply lazy and cannot make time to plan or create a system.
YOU have a choice, either become a winning trader or continue to lose money!
What Is a Trading System?
A trading system is simply a group of specific rules, or parameters, that determine entry and exit
points for your trade. These points, known as signals, are often marked on a chart in real time
and will prompt you to pull the trigger.
Here are some of the most common tools used to construct a trading system-
1. Chart Patterns
1. Moving Averages
1. Stochastics
1. Oscillators
1. Relative Strength
1. Bollinger Bands

1. Elliott Wave
Often, two or more of these forms of indicators will be combined in the creation of a rule. For
example, the MA crossover system uses two moving average parameters, the long-term and the
short-term, to create a rule:
Advantages
So, why might you want to adopt a trading system?
· It takes all emotion out of trading - Emotion is often cited as one of the biggest flaws of
individual investors. By cutting down on these human inefficiencies, system traders can
increase profits. Apart from going through lot of strategies in this book so that you can
construct your own Trading System, I am also devoting lot of space in psychology of
trading, without which a trader can simply not succeed.
· It can save a lot of time - Once an effective system is developed and optimised, there is
little to no effort necessary on the part of the trader. Computers are often used to
automate the signal generation.
Developing an effective trading system is by no means an easy task. It requires a solid
understanding of the many parameters available, the ability to make realistic assumptions, and
the time and dedication to develop the system. However, if developed and deployed properly, a
trading system can yield many advantages. It can increase efficiency, free up-time and, most
importantly, increase your profits.
Designing a Trading System
In my book “The Way to Trade FOREX”, I discuss many of the successful and profitable trading
strategies that I have made use of from most of the Tools mentioned above. In addition as a follow
up service, I am also extending a free 1 month mentoring so as to help you not only devise a
Trading system, but also help you in preparing a Trader’s Plan or assist with your Trader
Psychology.
Here are some of the key factors to keep in mind when designing a trading system in the
FOREX:
1. The liquidity and the volume in the Forex market is huge, therefore making trading
systems more accurate and effective.
2. Most brokers do not charge commissions in this market, only spreads Therefore, it's
much easier to make many transactions without increasing costs. Some brokers offer a
very low pip spread.
3. Compared to the amount of equities or commodities available, the number of
currencies to trade is limited. But because of the availability of 'exotic currency
pairs'--that is, currencies from smaller countries--the range is not limited.
4. The main trading systems used in FOREX are those that follow trends (a popular
saying in the market is "the trend is your friend"), or systems that buy or sell on
breakouts. This is because economic indicators often cause large price movements at one
time.

5. A good quality charting package, I use the eSignal and would highly recommend this
package to any readers.
In my long experience of Trading, I have read many books on trading and technical
analysis. I have come across very few books, which focus on the importance of trading
plans and trading systems and assisting their readers in creating such a system.
This is precisely what this book is aimed at, i.e. assist you in creating your own killer
trading system, having a trading plan, and finally a follow-up service.

By Jay Lakhani, Forex Trader.