Friday, October 21, 2016

Which is Better? An Automated Forex Trading System Or Semi-Automated System?

What do you think is better an automated Forex trading system or an Semi-Automated Forex trading system?

If you are like many Forex traders you have contemplated or are contemplating the purchase of an automated trading system. The advantages are very simple to enumerate. First, you turn it on and theoretically it makes money for you even while you sleep. And second, they aren't that expensive.

But then there are disadvantages:

1. Not knowing exactly what is under the hood and who built it.

2. Many of automated systems on the market at the same time can contradict one another making them compete with one another in particular if they trade often.

3. Most of the sales lingo is snake-oil type language that doesn't allow you to get a handle on the idea behind the trading method.

4. The best automated system seem to work well in the very beginning like network marketing however too many traders using the same system suck the liquidity out of the market.

Any well known automated trading system is going to have a forum of followers. You will be able to tell how it is doing by reading those posts. In my 5 years of trading there was on system that had a shelf-life of about a year.

The bottom-line is that if many of the greatest minds in economics, physics, math and finance cannot program a computer to trade successfully what makes us think that even a couple of brilliant students at MIT can do it. And if they did, do you seriously think they would sell it for $149.00? No, they would borrow as much money as they could at the lowest interest they could and become rich.

The search for the holy grail of automated trading systems is just that, a search for the holy grail.

If you want to make money in the Forex market you can but you will have to do it in a way that allows you to find imbalances in the market.

There is a way to trade with an Semi-Automated Forex Trading System. Here's how.

1. Create or find a signal that is algorithmic or automatic. You can find these or come up with your own idea and find a programmer. Some simple examples would be moving average crosses, RSI or MACD divergences, etc. Make sure you or someone has done the research on your signal so that it is a good one.

2. Make your signal alert you to your computer, you email and/or your cell phone.

3. Decide if your signal will place a trade or if you will review the signal and place the trade according to a set of rules that you have created.

4. Place your stop and take profit and let the trade run out. If the trade is short-term meaning it has a tighter stop and take profit then you will not need to do much after the trade. If your trade is more long-term as in hours or days you may want to review the trade.

5. Last make sure that the trading system you have can be evaluated statistically so that you can make changes to it as the market changes or to improve it.