Why No Forex System Will Ever Work

When I first started to trade the forex market I was all "caught up" in this idea about having a trading system. It sounded so good to have a solid system to follow. No need to make any decision, just follow the system. Consistent profit over time. I even heard some banks use them.

Then I learned they could stop working. You would have to be able to construct a new one. You need to know when to not trade your system, for example during macroeconomic news. Perhaps you need two or more systems, one for trending and one for ranging markets. Full article: http://www.investordave.com/255-why-no-forex-system-will-ever-work

Views: 224

Comment by Pompidun on August 7, 2011 at 7:55pm

Hi Dave, in your view, what is the best way to identify what market it is: trending or ranging at the earlier stage?


Comment by Trebs Acre on August 7, 2011 at 8:43pm

A trading system's best work is on the traders psychology. it guides him when to trade and not to trade or what risks are involved. without a trading system, it may lead to trading paralysis or worse it may lead to impulsive trading that may wipe out your account.


Comment by fxretracer on August 8, 2011 at 4:22pm


no , seriously, pretty good article imo. I think it comes down to knowing how to read mrkt psychology and applying your system to that. If your system says dont trade, then forget...crying over missed opportunities in the mrkt is like crying over spilled milk. What counts if you clean the mess up before it starts to sour.

Comment by Dave on August 8, 2011 at 8:37pm

@Pompidun that is really a hard question, as trending market can suddenly go into ranging, and ranging can break out into trending. I don't know if I'm the right person to answer this as I most do day trading and play the opening/close of different markets. However, I think you have to look technically at different time frames, especially long term and at the same time you want the fundamentals to be in play.


For example, if the economy recovers in some years. That could send the high yield JPY crosses into a nice long term uptrend again (i.e the carry trade). You would want to find a good entry technical in the same time you think things will turn around fundamentally.

Comment by Dave on August 8, 2011 at 8:48pm
I believe in trading rules, if you need them, not to be limited by a system.
An experienced trader doesn’t trade impulsively. Just sit back and relax and let the market come to you, if you miss it just wait for the next opportunity. If you can’t be that disciplined, trading is not for you.
Comment by Dave on August 8, 2011 at 8:49pm
Thank you Lisa and fxretracer :-)


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