Trading Systems

Price Following Systems rely on momentum indicators, oscillators and averaging methods to make it easier to follow the market in the direction that it's moving. The most simple of these is to find a suitable moving average(MA) and trade in the direction the MA is pointing, with the price on the correct side of that average. You can add many other indicators including MACD, Stochastics, RSI and Bollinger Bands and get really caught up in analysis tools. Your goal should be to try and keep it simple. Choose a time to trade from and get a simple system that combines no more than two or three indicators. The key is to keep it simple. Remember to stay confident and consistent, even after a loss.

Price Prediction Systems are usually longer term systems such as a session, day or even longer periods of time. In this type of system you have to decide the overall direction of the currency pair over a longer period of time. Depending on the direction you have decided on, you would trade a simple “buy on dips” or “sell on rallies” approach. There are a number of tools to help the strategy trader. These include horizontal lines, trend lines, Fibonacci retracement levels and moving averages. These will help to: identify the direction of trade; identify a logical entry point; identify a logical exit point. Price Prediction trades can be programmed into dealing software and left to fend for themselves. This allows the trader to spend his time doing other things. Price Prediction trading requires more skill and experience, but can be learned with time and practice.