Currency System Forex Trading
Pros and Cons
Currency system Forex trading is a type of trading that involves following a specific set of rules and sticking to them no matter what. t might not be as exciting as trading with "your gut," but it's usually a lot more profitable. Most "gut traders" end up without very much sustenance to put in their guts by the time it's said and done. This type of trading can provide you with a few advantages, but it can also have its drawbacks. Here are some of the pros and cons of this method.
Eliminate Emotion
One of the best reasons to use a system when trading the Forex market is that it helps eliminate emotions. Many people make the mistake of relying on their emotions when trading. They try to overcome a losing streak and end up losing even more money. They are unwilling to close out a trade that is losing because they do not want to lose any money. Then they end up losing even more money as a result. With a proven system, you can simply follow the rules and do exactly what they say. Just be the sheep and follow the rules and you will get to where you need to go.
Limit Losses
Another big advantage of currency system Forex trading is that you can cut you losses short. With this type of strategy, you have specific entry and exit rules on trades. You know exactly when you are going to get in and get out of each trade. If the trade starts to move against, you...you get out of the trade. Unless of course, you're the kind of trader that is incapable of following the rules, in which case you will probably blow up your account pretty quickly. With these systems, you can cut your losses short and live to trade another day. In the Forex market, it's all about stayin' alive.
Boxed In
One of the disadvantages of this type of trading is that it can box you in. You have to stay within a narrow set of rules that may not account for everything that could happen in the Forex market. The market is changing all the time and what worked one day, might not work any longer. By limiting yourself to a particular strategy, you might become a Forex dinosaur and find yourself extinct pretty quickly.
Cost
Another potential disadvantage of this type of trading is that it can be costly. Depending on what type of system you buy, you might have to pay an arm and two legs for it. If you happen to enjoy walking and waving at people, it might not be worth it for you. You'll have to weigh the cost of the trading program against the potential benefits that it might bring you. i.e. money.
