Working the Numbers with Mechanical System Trading

The key element of making profits consistently over the long run in trading is to work the numbers. What I mean by this is to allow the probability of your system to work to produce an overall profit for your portfolio. You will have winning trades and you will have losing trades. This is an aspect of currency trading that you cannot avoid.

The question is whether you will be profitable at the end of any given period!

In forex mechanical system trading, you trade the market with essentially the same trading set-up and the same trade management plan over and over again.

Getting Through A Period of Losing Trades

When you know that the forex system that you are using is based on sound trading principles that have proven themselves to work since the markets began, going through a string of losing trades is much easier because you know eventually the market must return to trends after a period of consolidation.

Trading the forex currency markets in a mechanical way also reduces the impact of emotions on your trading activities. Being a human being, it is virtually impossible to not have any emotion at all. It boils down to the question of how you handle yourself when you are emotional.

Which, of course, is much easier said than done.

Forex Mechanical System Trading Strategies

It is for this major reason that so many forex trading systems have been created and made commercially available to traders like you and I. And out of the thousands that litter the landscape of the forex trading scene, there truly are only a few systems that work the probabilities based on sound trading principles.

Top Rated Forex Mechanical Trend Trading System

If you are a manual trader who likes to utilize automation to identify trading opportunities, one of the better forex systems for position or swing trading is the LMT Forex Formula. It utilizes trend trading to increase the probability of a successful trade by 20% – 30%, and identifies an ideal moment to enter the market together with the main trend.

Check out the Official LMT Forex Formula Website >>

Top Rated Forex Mechanical Day Trading System

If you are a manual trader who prefers to day trade the forex markets instead, you can check out the 4x Pip Snager trading system. There are several systems for trading different time-frames in that strategy, and many users have also reported success with the 4x Pip Snager as a forex day trading strategy.

Check out the official 4x Pip Snager website >>

Top Rated Forex Mechanical Robot Trading System

With so many forex trading robots available, it gets pretty difficult to tell which ones can last the distance. It’s far easier to get extremely profitable results in the short run, but it’s another thing to still be profitable over the long run. A forex trading robot that has proven itself since the 1st of January 2009 up to this day is the Forex Megadroid.

While other forex trading robots may have a lot of parameters that you need to tweak for it to stay profitable, the Forex MegaDroid only has a few. And in fact, you can trade the default settings right out of the box without changing anything except for the amount of risk you want to take.

They run a live trading statement that is updated regularly on their website, and you can check out their up-to-date results.

Check out the official Forex MegaDroid website >>

It’s a buy trade that’s bouncing off a Support and Resistance line when the BUY signal came in.

LMT Forex Formula Conservative Trade Management Strategy

I used the conservative trade management rules to exit half the position at the first profit target, and then shifting the stops to break-even. In other words, this has now become a No-Lose trade with the potential of it running into several hundred pips in profit.

LMT Forex Formula Reward-Risk Ratio

The Initial Stop Loss was 66 pips, and if the USDCHF runs all the way to a couple of hundred pips or more, that’s a great risk reward ratio. The next possible resistance level is at 1.0960, which if hit would give a potential of +299 pips.

That gives us a Reward-Risk ratio of 4.5 (299 pips / 66 pips = 4.5).

That’s a pretty awesome Reward-Risk ratio. Of course, with the trade management strategy that I’m using to let the position run, I could end up with a whole lot more than 299 pips, or a lot less than that. But right now, being in a risk-free position is a great place to be.

Another great thing about being in a NO-LOSE Trade is the fact I can now shift my attention to finding another good trade to enter.

For More Information on the LMT Forex Formula System

For more information on this particular forex trading system, read the LMT Forex Formula Review.

You can also check out the official website for the LMT Forex Formula. There’s that usual hype that comes with selling these forex trading systems, but when you cut through to the actual stuff, it’s a pretty decent forex trading strategy for people with limited time.

The Official LMT Forex Formula Website >>

Trading the forex currency markets is one of the most interesting, yet also one of the most excitingly boring professions in the world. And that’s probably when you are doing it right.

I’m using the LMT Forex Formula system to identify high probability trade set-ups that run with the trend for larger profit potential. In the course of trading with the LMT Forex Formula, I realized that a lot of the things that I take for granted aren’t covered in the manual. Skills like:

• The ability to identify Support and Resistance Levels
• Reading candlesticks to identify high probability market turning points
• Being able to identify trends and trading ranges
• And a host of other skills that I’m probably not even aware of when I look at the charts, like Elliott Waves, Momentum, Market Psychology, etc.

But then again, you probably don’t even need to confuse yourself with trading knowledge that like to be profitable. Sometimes, I have to be consciously aware to not let existing knowledge interfere with the current trading system rules!

Does this mean that the LMT Forex Formula is a flop?

Far from it. I believe that the LMT Forex System by Dean Saunders gives you a very solid and robust trading system for high probability trades. The element, in my personal opinion, that makes Dean Saunder’s Forex Formula a very good forex trading system is the custom indicator that calculates the Stop Loss and Take Profit levels based on market volatility.

Together with those elements, and the trade management strategy of when to move your stop losses and close out your trade for profits, makes the LMT Forex Formula a very powerful forex trading strategy.

On the other hand, it doesn’t mean that purchasing the system will make you a very profitable trader straight away. Like all things, there is the ability to manage your emotions and trading decisions.

Here’s a trade on the EURCAD that the LMT Forex Formula system identified. I was already in another trade at that time, and didn’t take this one. But here’s what it looks like:

Managing the Trade with the LMT Forex Formula System

These were the following levels based on the LMT Custom Indicator:

• Initial Stop Loss: 115 Pips
• First Target: 58 Pips

If you followed the rules on this, you would either have made a profit or had broke even on this trade.

It would have been nice to be still in this trade as it approaches the floor of the trading range (in yellow), but sometimes that’s just the way things are. If you had followed the rules right to the letter, the market ticked right to your exact Stop Loss level once you moved the stop to Break-Even (based on the first target level) before heading back downwards.

But that’s the breaks as a trader. Sometimes you win, sometimes you don’t. But if you follow Warren Buffet’s trading rules, I believe that with a solid trading system you’ll end up profitable in the long run.

Oh yeah, what’s Warren Buffet’s rule about investing money?

Rule No. 1: Don’t Lose Money.

Rule No 2: Look at Rule #1.

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EURCAD SELL TRADE UPDATE

5th February 2010 – Update on the EURCAD LMT Forex Formula Sell Trade

Here’s an update on the EURCAD Sell Trade. It’s broken past the support levels and looks like it might just continue headed down for a while.

If you want to read a little more about the LMT Forex Formula, you can check out my review of it here:

The LMT Forex Formula Review

Or

Visit the official LMT Forex Formula Website >>

I’ve been contemplating on this question for quite some time now. With the wealth of information, strategies and systems available for any aspiring trader, why is it still so difficult for someone to break into forex currency trading and make it?

When you look at the activity of trading on the surface, all you really need to do is to analyze the markets with simple and proven methods. When you have come to a decision on which way the market is most likely to move, you click on a button to either buy or sell.

Is The Problem In The Lack of Good Forex Trading Strategies?

In this case, I believe that it’s more like an overload of information when it comes to forex trading strategies and systems. While there are several unproven and overly complicated trading systems in the market, there are a couple of really good systems based on principles that have stood the test of time.

There are so many forex trading systems coming online all the time that it only encourages the worst habits in novices. To constantly jump from system to system is a sure recipe for failure as a trader. With system jumping, there just isn’t enough trades taken for the probability of the forex trading system to work in your favor.

My personal preference for trading forex manually is to trade on the longer time frames like the daily and 4H charts. Anything lower than that, I feel that the risk increases due to randomness as well as a corresponding increase in the amount of management needed. If you are searching for solid and robust trading strategies that trade on the daily and 4H charts, I personally prefer the LMT Forex Formula by Dean Saunders.

If I were to go into forex day trading or scalping, then I personally wouldn’t build my trading around discretionary systems. I’d go with a forex trading robot like the Forex MegaDroid, and only with a small portion of my overall trading portfolio.

This way, I’d be spared a lot of the emotional stress that comes with having my finger over the buy and sell button.

So Why Aren’t More People Consistently Profitable as Forex Traders?

Other than the learning curve to understand the basics of technical analysis and using a good forex trading platform, I believe that the main reason lies in the forex trader himself. If someone else has managed to consistently make money in forex currency trader, then it is definitely an activity that can be duplicated successfully.

It’s a question of knowing what the right things to do are, and actually doing them.

And therein lies the problem. Even if a novice trader were to know what to do, it’s another question of actually doing it.

The issue of managing your own emotions and actions become paramount in your success as a trader. I know that I’ve fiddled with open trades often enough, and it’s still tempting to adjust stop losses and take profit targets. It’s understanding this “failing” in myself as a forex trader that I prefer to trade on the longer time frames where I don’t have to stare at the market prices ticking up and down causing my account equity to fluctuate. And have my emotions fluctuate with it.

It’s also for this reason that I now stay away from forex day trading as much as possible. Especially trying to scalp the forex markets manually for that 5 or 10 pip move several times a day. It’s not a life that I want to live because I believe that I should be the one in charge of my money, and not have my money in charge of me.

The Hardest Part of Becoming A Profitable Forex Trader

The hardest part of becoming a profitable trader is having to go through the learning curve. Not only of the markets, but also of the self in relation to trading.

It’s also having to deal with the beliefs and past experiences that we have to deal with when it comes to money. Our expectations towards what trading will do for us also causes a lot of problems as the markets move up and down.

However, it’s also unrealistic to expect a human being to have no emotions when it comes to trading. Emotions are part and parcel of who we are. While we can manage and reduce the intensity to some extent, I would think it is a very select number who actually are able to “let go” and let the market do its thing while they have a trade open.

Maybe successful traders have undergone some form of training to be monks or something.

So is it possible for someone to be a consistently profitable trader for the long term?

I believe that it’s possible. But not with the approach that so many forex traders have when it comes to the way they trade. If you stop and think about it, the statistics say that about 95% to 97% of forex traders lose money. And if you were to continue with the same approach that the majority of traders are using, I’d say that the probabilities are stacked against you, don’t you think?

When I first started trading, I thought it was all about finding a system that “suited” me in order for me to be profitable. But as I gained experience, I realized it wasn’t just about finding a system that matched my trading personality and compensated for my faults as a trader.

It’s also about finding out what really works, and then doing it.

There’s a saying that successful people do what the unsuccessful people don’t like to do. I’m saying that it’s also a very high probability that this same principle applies to the consistently profitable forex traders too.

The free forex trading course is still available, except that it has now been moved to a new URL:

FREE Forex Trading Course

I’ve also consolidated the relevant reviews of forex trading systems and shifted them to a new location on the site. You can access them through the main page of Smart Trading for Profits using the navigation menu in the sidebar.

Forex Trading System Reviews

Objectives of Smart Trading for Profits

Smart Trading for Profits is about trading smarter. In trading, I realized that it’s not how “hard” you work. It’s truly about how “smart” you trade. Working any harder isn’t going to make you any more profitable when you aren’t doing the right things. But when you know what do do and why you’re doing it, trading can become as simple as just clicking a button.

The goal is to become profitable, and it’s going to be through doing the things that profitable traders actually do. Not what we think they do, or what we want to do.

In order to achieve that aim, I’ll be publishing reviews of the more popular forex trading systems in the different categories so that we can have a common understanding of the system trading rules that other traders use. However, just having the system alone won’t make a trader profitable, because profitability also comes from the ability to use the right system at the right time in the right manner.