In forex, it is crucial to make mechanical trading systems. They are the ones that make trading signals that the trader will take later on. But before anything else, it would be best if the trader also knows how to make a trading plan first. In addition, the trader must also know his own trading style.
Mechanical trading plan
As its name suggests, a mechanical trading plan is mechanical because a trader should take that trade regardless of the market’s current situation. This is a helpful idea if you want to have a trade that is not based on emotions and biases. After all, this is the reason why you are making a system, right? Therefore, you should stick with it regardless of any situation.
Two ways to have a mechanical trading system
First, you can pay for a trading system. Because we are living in the modern world today, it is easy to search. In fact, there are a lot of them. Some are cheap, and some are expensive. You just have to choose and research thoroughly for the best one. The only downside of these systems is that they will all promise you no losses, only profits. Most of them are good, but of course, some will only say things for marketing purposes. If you decide to pay for a trading system, at least have the discipline to stick with it, just like what we mentioned a while ago, for them to work.
On the other hand, you can also create your own if you are very articulate and detailed with how you like your forex trading system. This is also a more practical option because it is free and pretty easy to make. You are free to make all the rules of your system. And since you are the one who called the shots, you should also be firm with the rules you set for yourself.
What if I decided to make my own trading system?
Your mechanical trading system must be able to detect trends at the earliest. Also, it should save you from getting whipsawed. If the trading system you made can make at least these two things, you can most probably see profits in no time. However, there are times when a system gets confused since these two things can be contradicting. The system wants to catch trends at the earliest, so there are fake out risks. On the other hand, the system also wants you to avoid getting whipsawed, so there is a risk that you will be late for some trading opportunities.
Here is what you can do
Compromise. You should create a trading system that will identify trends at the earliest time possible but can also tell whether the signal is real or fake. This can be a challenge in making your trading system, but as we have said, it is not rocket science. The internet is broad, and there are a lot of forums. You can take a few ideas that you like and put them all together to help you build a mechanical trading system of your own.