Forex System Trading

DEFINITION of 'Forex System Trading'

A method of trading forex that is based on a series of analyses to determine whether to buy or sell a currency pair at a given time. Forex system trading could be based on a set of signals derived from technical analysis charting tools or fundamental news-based events. The day trader's currency trading system is usually made up of technical signals that create a buy or sell decision when they point in a direction that has historically led to a profitable trade.

BREAKING DOWN 'Forex System Trading'

Forex trading systems can be either manual or automated. A manual system involves sitting at the computer screen, looking for signals and interpreting whether to buy or sell. In an automated trading system, the trader "teaches" the software what signals to look for and how to interpret them. It is thought that automated trading removes the emotional and psychological components of trading that often lead to bad judgment.

Both automated and manual day trading systems and signals are often available for purchase. It is important to note that there is no such thing as the "holy grail" of trading systems. If the system was a perfect money maker, the seller would not want to share it. This is why large financial firms keep their "black box" trading programs under lock and key.

RELATED TERMS
  1. Forex Signal System

    A set of analyses that a forex trader uses to determine whether ...
  2. Currency Day Trading System

    A set of analyses that the forex day trader uses to determine ...
  3. Forex Trading Strategy

    A set of analyses that a forex day trader uses to determine whether ...
  4. Automated Forex Trading

    A method of trading foreign currencies with a computer program ...
  5. Forex Analysis

    An examination of the changes in the forex market that are used ...
  6. Forex Scalping

    A trading strategy used by forex traders to buy a currency pair ...
Related Articles
  1. Forex Education

    5. Sort Out Trading Systems And Signals

    Thanks to the resources available to aspiring traders, getting into FX is now easier than ever.
  2. Professionals

    A Day In The Life Of A System Trader

    Systems traders divide their time between trading, developing, backtesting, optimizing and forward testing, to create viable and high-probability trading systems.
  3. Trading Systems & Software

    Trading Systems: Designing Your System - Part 1

    The preceding section of this tutorial looked at the elements that make up a trading system and discussed the advantages and disadvantages of using such a system in a live trading environment. ...
  4. Trading Systems & Software

    The Pros And Cons Of Automated Trading Systems

    Automated trading systems minimize emotions, allow for faster order entry, lead to greater consistency and resolve pilot-error problems.
  5. Trading Systems & Software

    Trading Systems: What Is A Trading System?

    A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for a given equity. These points, known as signals, are often marked on a chart in real ...
  6. Active Trading Fundamentals

    Beginner Trading Fundamentals: Strategy Automation

    Strategy automation can made the difference between a winning and losing trade; however, there are both positives and negatives to using an automated trading system.
  7. Trading Systems & Software

    Trading Systems Coding: Introduction

    By Justin Kuepper Contact Justin Trading systems are simply sets of rules that traders use to determine their entries and exits from a position. Developing and using trading systems can help ...
  8. Forex Education

    Forex Automation Software For Hands-Free Trading

    Automated forex trading software scans the market for favorable trades based on your input. Find out more about this valuable forex tool.
  9. Forex

    Programs And Systems

    Learning about educational programs and forex trading systems
  10. Trading Systems & Software

    Trading Systems: Designing Your System - Part 2

    The preceding section on designing a trading system examines the different types of markets in which to trade, and takes a look at the two basic genres of trading systems: trend-following and ...
RELATED FAQS
  1. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Answer >>
  2. How do I implement a Forex Signal System into a forex trading strategy?

    Learn how traders use different types of forex signal systems such as trend-based or range-based to create or supplement ... Read Answer >>
  3. How do I pick the best method for forex system trading?

    Discover how to identify the best type of forex system trading style for you based on your available time, your trading preferences ... Read Answer >>
  4. Is scalping a viable forex trading strategy?

    Scalping in the forex market involves trading currencies based on a set of real-time analysis. The purpose of scalping is ... Read Answer >>
  5. What types of accounts are available for forex trading?

    There are many different types of forex accounts available to the retail forex trader. Demo accounts are offered by forex ... Read Answer >>
  6. What is the difference between a capitalist system and a free market system?

    Learn about capitalist and free market systems, how these economic systems function and the main difference between capitalism ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center