A currency day trading system is a set of analyses that forex day traders use to determine whether to buy or sell a currency pair at any given time. A day trader’s currency trading system is usually made up of a number of currency day trading signals, which are based on technical analysis charting tools or fundamental, news-based events.
The currency market trades 24 hours a day, six days a week, which makes it a popular choice for day traders. While financial institutions trade in “yards”, or US$1 billion increments, retail and professional day traders focus on standard “lots” that enable them to control up to US$100,000 with a single trade risking just US$500 with leverage. Each trade involves buying one currency with another currency in what’s known as a “currency pair”.
There are two types of currency trading systems:
Trading systems are often backtested using historical market data to determine whether the underlying algorithm produces the expected results. Traders may also subject trading systems to extreme conditions to see how they would hold up during unusual market events.
The vast majority of trades occurring across all asset classes are now automated trading systems and the forex market is no exception.
Most traders develop trading systems using special software designed to create and backtest trading algorithms.
The most popular trading system software for retail forex traders is MetaTrader, which is an electronic trading platform that’s widely used. The software is licensed to many different forex brokers that provide it to their clients. Using the MQL5/MQL5 scripting language, traders can write their own currency trading systems that can be executed on the platform through the attached forex broker, making it a unique option for small retail traders.
There are many currency trading systems available for purchase over the internet, but there is no such thing as a “holy grail” that produces consistent profits. After all, a perfect system wouldn’t be sold by a developer, it would be used to generate compounding profits.
Most forex traders are best off creating their own currency trading systems by relying on their experience and comfort level in the currency market.
A currency trading system is simply a set of analyses that forex day traders use to determine whether to buy or sell a currency pair at any given time. These systems can be both manual and automated with most traders preferring software like MetaTrader to implemented automated systems and execute trades through their broker.