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Forex Trading System: Finding the Right Trading System for You
Given the existence of literally thousands of different trading systems available (free or otherwise) the hardest question facing new Forex traders is "Which Forex trading system is right for me?" This article will explain how to marry your trading style with the right Forex trading system to give yourself the best chance at a successful Forex trading career.

Spend more than a day searching Forex forums or any of the mass vendor sites and it will quickly become apparent to the new trader that there are literally hundreds of different Forex trading systems to choose from. That leaves the new trader facing the inevitable question: which Forex trading system is right for me?

Before any new trader can attempt to answer that question, some honest self-evaluation must first take place.

A new trader must honestly answer this question: do I have the patience and the discipline to sit in an open trade for hours, possibly even days, as price moves both in my favor and against me, causing my account to grow or shrink accordingly?

If the answer to that question is Yes, then the new trader should start searching for systems that are designed to make money when the markets are trending (which simply means the price of the pair is moving consistently in one direction).

If the answer to that question is No, then the new trader should look for a system that is designed to make money when the market is either ranging (moving back and forth between two obvious price points) or breaking out (where price breaks through one of the previously mentioned price points).

Trending systems are designed to get a trader into a trade and then allow them to sit back and let the market take its course. These systems normally rely upon large stop-losses which allow market price to range up and down without taking the trader out of the trade before price has had the chance to make a significant move in the "right" direction. Trend traders must have an abundance of patience and be willing to risk a large number of pips on each trade, at least initially.

However, trend traders can oftentimes find themselves in trades that move in their direction several hundred pips over the course of a few days, earning them massive profits in the process.

Ranging systems are designed for the trader who does not have the patience to sit in a trade for hours or days at a time. Range systems are designed to spot two prices (a high and a low) and then give the trader signals when to place Buy or Sell orders.

Most of the Range systems are designed to make a quick 5-50 pip score and will normally allow the trader to be in and out of a specific trade within the course of a few minutes. Rarely will the trade remain open for more than an hour or two.

Breakout systems are trading systems designed to spot those same types of Range trades discussed above, but instead of trying to Buy low and Sell high, Breakout systems will not give off a signal until price has either broken up through the previous high or down through the previous low.

These types of signals do not occur all that often during a normal trading day...it's been estimated that true Breakout trades occur only about 10% of the time, with Trend trades making up another 30%. This leaves the market trading inside a range of some sort the remaining 60% of the time. This would also explain why Range trading systems are by far the most popular, followed by Trend trading and then Breakout trading.

Since Range trading makes up about 60% of the average trading day, and further, since most new traders do not possess the patience and the discipline to successfully trade a Trending market, it just makes sense that new Forex traders should focus their attention first on finding a Range trading system. If over a period of time the new trader is able to successfully trade the ranging markets, the addition of a Trend trading system or even a Breakout trading system might then be called for.

J.J. "Jeff" Glenellis is a Forex trader and the author of a best selling book on Forex Trading ("Survive and Prosper in the Great Depression of 2009-2012"). He is recognized world-wide as an authority on trading with Renko Charts, and shares his Renko wisdom both in print and on video. To see Renko trading in action, visit http://www.youtube.com/watch?v=Pt9blwAoGKI

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