Mechanical Forex Trading Systems Or Forex Indicator System?
There are a large quantity of ways to trade the Foreign Exchange which range from using a mechanical trading system, to learning Forex systems to using expert advisors for automated trade execution. As a trader, you need to find the way of trading Forex that fits your trading style and personality. In this article I want to focus on mechanical Forex strategies versus learning a Forex system based on indicators and rules. We will leave using expert advisors for another discussion.
The most clear example I can give for a mechanical Forex trading method is Set and Forget Forex Signals. At the same time every trading day, entry levels, stop loss levels and take profit levels are calculated and placed on the trading platform. Then there is nothing more to do as you just let the trades develop until the next day of trading. It should be clear, this way of trading is completely without trader intervention and does not require reading the markets or using your trading skill and knowledge to analyze the markets.
In comparison, there are a lot of Forex trading systems out there that use a variety of indicator alignments to determine an entry. To make the system work, the trader needs to be able to read the indicators correctly and stick to the trading rules. Trading one of these systems profitably relies heavily on the skill of the trader.
On the one hand, a mechanical method is very easy to trade and can be done by just about everyone, regardless of experience. On the other hand, traders using the same Forex trading indicator system are going to succeed with the system based more on their trading skill than the system. For this reason, I suggest searching for mechanical Forex trading systems instead of Forex systems where the trader is the most important factor.
Some people think purely mechanical Forex systems do not exist and do not work. They claim to have tried many mechanical systems and each one has failed. The truth is, no system wins all the time. Most of the time people claim a mechanical method does not work without using it long enough to make that determination. In short, they abandon the system after a few losses when the system is profitable over the long haul.
For example, Set and Forget Forex Signals is based on a mechanical trading system. Over the past 7 months of trading, this signals service have had 6 profitable months totaling 4437 positive pips. As you can see, this type of trading can be very successful. If you have overlooked mechanical style trading systems because you thought they do not work, it might be time to give it a try.