Thanks to movies that create an image of a successful person, as well as to financial press and macro economic news, the sphere of financial markets is now considered as one of the best and most promising occupations. However, not everyone is able to succeed there, because approximately 95% of all those who traded on the market, failed sooner or later.
The whole point is that every beginner presumed it to be very simple. There are only 2 buttons, sell and buy, and a lot of techniques can be found online, that teach “to click those buttons the right way”. But the fact is that the market has to be thoroughly understood. You need to know what and who drive the price. This question has to be answered by a professional FIX API trader themselves. Their trading system may help them with that. Today I will make a small FIX API tutorial, in which I will discuss the three key components that help you create or select a trading system based on your preferences.
A trading system is a set of rules and fundamental principles of market analysis and trading. At its core, is a trading algorithm that allows the trader to successful trade via FIX API Forex.
We need to understand that profitable trading is possible only when you have created your trading system. You’ll know exactly which signals does the trading system generate, in which phase or state the market is, which asset you should buy or sell, which amount of funds may be put into a deal, and so on.
Eventually, after a lengthy search of different paid and free trading systems, each trader comes to outlining their own strategy. And it doesn’t have to be your own indicator, mathematical model, or a new combination of indicators not used previously. No. Known and already quite tested analysis methods comprise a comprehensive algorithm.
I do not deny the fact that if you use the strategies that you have been trained on, you may not receive profit. However, profitability will always be lower than that of someone who came up with this system. It is therefore important to create your own system on the basis of general rules.
Today we’ll look at what exactly should a trading system include so that it fits you.
I distinguish three key points in creating a trading system, which in the future may become the basis of your own trading algorithm.
- The strategy of the trading system
- The tactics of the trading system
- Capital management
If you create these three pillars of a future trading system, you will be able to navigate it and use it hundred-percent.
Strategy of a trading system is a global vision of your trading. What moves the market is what shapes its further movement. (For example, the interest rate of the Central Bank, which determines the value of the currency on the Forex market, the direction of the trend, or in which Elliot wave will the quotations be). Strategy can characterize the market as a whole as well as any separate asset.
Tactics of a trading system is the point-by-point interaction with a specific situation or trading signal. If by strategy we identify long-term prospects, the tactics help us decide how to act here and now. It is about the tactics when you need to decide which elements of analysis you will apply in your trade. Whether crossing the moving averages, support and resistance level breakthrough, or FIX API Arbitrage.
In order to understand which elements should be present in the tactics, you need to define your personal trade preferences. Will there be trade on all currency pairs or a certain list of them? What methods have you used in the analysis that fit you most? How many filters will be in decision-making? How will the signals from the trading system be selected?
Upon answering these questions, you can easily make your own trading algorithm that will be simple and straightforward.
Asset management also plays an important role, because thanks to it, you will be able to manage risks. It also helps to identify the desired rate of return. But most important here is the risk. Effective money management helps to achieve success in trading on marginal markets, but learning the techniques by itself, without the necessary knowledge of building trading systems, and psychological stability will not make a trader successful. Maintaning a sensible balance between the potential sum of profits and losses, the trader gets the ability to competently work with capital.
These are the three key components, upon which a trading system for trading on FIXAPIForex must be based. Upon combining these components and meeting all the prerequisites, you can create your own trading system, which is perfectly suited to fit your trading style.