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Shaan Stevens -Technical & Fundamental Trading Systems
Technical & Fundamental Trading Systems
A trading system is a set of parameters that predicts the price movement of a currency. Most experienced traders will use a trading system because it helps to determine when to enter a trade, how long to hold it, and when to sell and take a profit or accept a loss. These are decisions that traders make every day in every trade. Using a good trading system will not protect against a losing trade. However, it will help to keep losses to a minimum. It can also maximize the profits on each trade. In short, a trading system takes much of the guesswork out of trading.
Many beginning traders reject using a trading system because they believe that trading systems are too restrictive or that they will miss out on good trades because they didn't fit into the parameters of the system. But experienced traders know that trading systems will discover good quality trades. Of course, no trading system will find every profitable price movement. But it will make the most of their trading funds.
Choosing a trading system is not an easy task. When selecting a system, the basic question to determine is what kind of trader you are. Are you a technical trader or a fundamental trader? Do you rely on charts and technical indicators or do you rely on economic data and reports? The answers to these questions are critical because it will help you to determine what type of trading system to adopt.
Two Types of Trading Systems
Like traders, there are basically two types of trading systems: Technical and Fundamental. There is another group emerging called the Intermarket trading system, but this type is not yet fully developed or employed by any definable group of traders. Back to the basics, the two types of trading systems are technical systems and fundamental systems. Let's briefly review each type.
1.Technical Trading Systems
Technical trading systems rely on tec