Tag Archive: mechanical

How Do You Define A Mechanical Forex Trading System

The term mechanical trading system is quitte popular nowadays. The concept just simply means “trading wiithout being subjective”.

These kind of trading systems have become a mainstay of the current forex environment.

Most traders like the idea of having a fixed set of paramaters in which to trade a currency. It requires rules instead intuition. This is the reason why its so popular with the part time traders, who aren’t lucky enough to have time to study the markets.

Mechanical trading systems usually rely on a set of indicators, in which tell the trader when to open or close a trade. For instance they might use a combination of Stochastics and MACD.

They might decide only to open a trade when the Stochastics lines have crossed each other and are above the 20 or 80 line, meamwhile MACD must show some kind of divergence.

Another example would be the Moving average trading systems. Many traders use moving averages to help them dictate where the current trend is. They might use a couple of different moving averages such as 45 day MA or 90 day MA and wait for the two lines to cross over, before opening a trade.

These are fairly common kinds of mechanical trading systems. It can be traded by anybody, once they understand how to look at the respective indicators.

Traders can quickly scan through every single currency pair in a matter of minutes using this kind of mechanical trading system. It doesn’t require any kind of fundemental knowledge, nor the ability to keep track of the current market conditions.

Many traders have been able to come up with very success trading systems during any kind of market conditions. Are they always right? No. But at the end of every week, if they are making more money than they are losing, you can say tthat you are doing much better than the majority of forex traders.