A ‘Systems’ Approach

Filed under: Learn Forex Trading |

 Before I did forex trading, I did some sports betting for a couple of years using various systems, some of which I made myself, and some which were from signals service providers. The idea behind a system is to find a market edge, and then to exploit that edge over a long series of bets (or trades as the case may be). I had moderate success with these sports betting systems, but I found that the liquidity was finite at a fairly low level and I wanted to be involved in a market with more liquidity because I wanted to utilize the vast power of compound interest.

 

It might sound like a strange thing to say, but the transition from sports betting to forex trading was not a very big one. Both methods need to use money management systems to be successful. The principle with regards to this is exactly the same. You must have a betting (or trading) bank, and you must bet (or trade) a percentage of that bank on each bet (or trade). You must also look at risk-reward scenarios and get good value for your money.

 

Once I found a market edge in the forex markets, that of using price action signals at significant areas of support and resistance, my job was simply to put a plan into action and stick to it over a long series of trades. In the short term, this plan could either win or lose. But over the long term, with probability on your side, providing that you have a good system of money management (i.e. Never risking more than 2% of your bank on one single trade), you should eventually come out on top.

 

Sport betting and forex trading systems have a lot of similarities, and if you have followed or created any sports betting systems in the past, then you might find that the world of forex is not such a great leap.

One Response to A ‘Systems’ Approach

  1. Good article. I think the ‘systems’ approach is a great tool to leverage your time, and highlight a short-list of potential selections/trades. Cheers, Paul

    Paul Whelan
    December 14, 2011 at 2:14 pm
    Reply

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