Here we will look at advanced FOREX trading techniques and discuss whether you should use them or keep your trading system simple. Lets compare advanced currency trading strategies and tools, with simple ones and see which are the best in making profits.
Most traders who don’t know how currency markets move assume that advanced trading techniques must be better than simplistic ones. After all, the word “advanced” implies it must be better in many areas of our lives and give a better result for the task which is undertaken but in the world of global currency trading, this is simply not so and we will show you why in this article.
Simple V Complex Techniques
We sell a currency trading course on this site which is simple, works and has made money for over 25 years – we have never changed it and it will work today and work for years to come. I was contacted by someone who said he didn’t want a simple method of trading, he knew a lot about trading FOREX and needed an advanced trading system.
Now this trader, obviously thought he knew a lot about trading but the fact he couldn’t make money trading, was nothing to do with having a better trading system which was more complicated – it was down to his understanding of the FOREX markets and what it actually takes to win.
The Limitations of Advanced Trading Techniques
To win long term with your currency trading system, it only needs to be simplistic in design with just a few entry and exit rules. It should not be complicated and because if you make it to complicated (which most people believe advanced means) it won’t make money. The reason for this is the way FOREX pairs move. There is a belief among the trading community that advanced strategies work best because FOREX markets move to a scientific, mathematical or mystical equation. The logic is an advanced trading system, can find it and then start to make money consistently but this logic is wrong.
The markets are comprised of many different people, who all have different levels of education, different emotional make ups and aims in terms of making or in the case of hedgers losing money and they can never be fitted to a set equation. This means, a simple system will tend to work better than one which is considered advanced. The real key is not to try and be advanced with your method but to trade a simple trading system with discipline and we have discussed, why this is so important in other areas of this site.
Advanced Trading Systems: Why They’re Sold
The rise of internet currency trading has seen numerous marketing companies and failed traders, try and sell gullible traders advanced trading strategies and the reason they do this is obvious – they make more money from them! They know they don’t work but its a good story, one that sells and gives them a hefty profit.
All they have to do is use the buzz word advanced and add in some tools or indicators which traders think will lead them to success and they have a product that will sell. I was looking at some advanced trading strategies the other day and they all talked about complex algorithms, neural networks, artificial intelligence, chaos theory, fuzzy logic and it all sounds impressive but these systems all said markets moved to order and science but of course they don’t and none of these tools in my view are better than using a simple price action trading system using a bar chart.
Traders are always looking for short cuts to trading success so they can follow a system, not do any thinking themselves and make big profits and have small losses along the way, as their equity curve goes smoothly upwards – it’s a nice dream but it’s not the reality of trading currencies online!
Best Trading Indicators
over the years, I have seen numerous new trading indicators and methods of trading which are scientifically based but none of them work better than older trading indicators. In fact three of the ones I use are the RSI, ADX and the stochastic. They work and the RSI and ADX are from the late seventies and the stochastic is from the late fifties. Sure their not perfect but they work and will continue to work, if the user has a good FOREX education and has integrated them into a simple trading system.
Simple V Advanced Trading Methods
When learning How to Trade FOREX Markets, its easy to be distracted and feel intimidated by advanced trading techniques, complex systems and the huge number of indicators and methods which have flooded the market in recent years. Don’t be tempted, to learn about them or buy advanced products, because complexity as we have seen is not the way to achieve success.
All the best traders know, they need simple strategies which are flexible to make money and they are sceptical of all the hyped complex products, tools and indicators which claim to have found a way to beat the currency markets. The majority of traders always lose, a small percentage always win and this will always be the case in a market which is driven by humans.
I once met a trader who had devised what he called “The Expert Trading System” it was based on artificial intelligence and could think for itself and adapt itself to ever changing market conditions and it sounded very impressive! Of course the track record was made up going backwards over years of data and it had been bent to fit the data to show a profit. What happened when we used it? It took an account of $100,000 to around $5,000 in just 3 months.
The system failed miserably despite it being a so called advanced trading system.