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WHAT ARE THE MOST COMMON TRADING SYSTEMS?
Here are the main trading systems people use nowadays:
TREND TRADING (= SWING TRADING)
- Most popular among beginner traders
- Based on 2-4 indicators (Moving Average, RSI, SAR, Stochastics, etc.)
- Time Frames: 4H to 1W (1D being the most common)
SCALPING (= DAY TRADING) – SIMILAR METHOD AS TREND TRADING, JUST EXECUTED MUCH FASTER ON SMALLER TIME FRAMES
- Most popular among advanced traders
- Also based on 2-4 indicators like in Trend Trading
- Time Frames: 1M to 15M (5M being the most common)
- Very profitable with a proper strategy
- Doesn’t use typical indicators except for FFCal (“Forex Factory Calendar” Indicator)
- Doesn’t use Time Frames either
- For example big weekend gaps, reversals after important news or big candles, etc.
- Those are very rare “opportunities” (once a week or once a month) and still the outcome is not sure and the probability of winning is around 60-70% (which is good, but trades are very rare).
- No Indicators and no Time Frames are used.
- It’s a very rare way of trading used only by very few traders.
- Generally a losing strategy due to doubling the stake each time it loses
- After losing usually 5-7 times in a row (which happens very often) the whole capital is wiped out.
- Very profitable, but disallowed by most brokers.
- However, big banks and brokerage houses use it themselves to make profits by comparing prices from different sources, they just don’t want the “small guys” win like them.
- And some other systems that in general are similar to one of the above or combinations thereof.
Among others the main reason most traders lose no matter which system they use is the following:
The price movements are in fact unpredictable both short and long term.
The chances of winning when you buy or sell are less than 50% (since you pay the spread or commission each time).
This is a mathematical fact and no matter what you were told by various Forex gurus, what you think or what kind of experience you have, you cannot change this ratio no matter how many years you trade, how many indicators you use, or how smart you are.
50% or less! That’s a mathematical probability of a trade to be closed with a profit.
It’s similar to flipping a coin, but here your chances are 50/50, no less, no more.
No matter how hard you try the statistical chances are always 50/50.
In Forex it was less than 50/50, remember?
I don’t say Forex trading is same as flipping a coin or your chances to win are less or equal 50%, quite opposite.
You have no influence to increase your chances when you flip a coin, but when you trade Forex you can increase your chances of winning to 70-80% or even more using a good system or EA, educating yourself, etc.
Statistical chances are 50% but your real chances can be and should be much higher!
But let’s say 75% is an ideal winning ratio to become a successful trader.
Go to the “METHOD” page to find out how our FX NEWS TRADER works exactly.
It’s simple, but very powerful and you can check results when you login to an account or see MYFXBOOK results.