For newcomers to the forex trading arena, the learning curve never seems to end. Impatience and inexperience tend to “cull the herd”, leading to early casualties, but for the determined few, the mind continually seeks a way to graduate to the next level. There are no shortcuts to gaining valuable experience, but finding a “mentor” or following the insights provided by other more seasoned veterans can make all the difference. Doing your “homework” becomes broadening your research, investing more time in your practice regimen, and recognizing more in-depth correlations in the data before you.
Aspiring forex traders can always attempt to achieve these goals by individual effort, but at some point, you wonder if there is a better approach. Staring at a screen while checking other markets for hints of what is to come can be a frustrating exercise. Quite often, the “perfect” set-up goes unnoticed, lost amidst the mountains of data, and you beat yourself up about how you missed a hundred-pip rally that was screaming at you. More analysis follows, a hope that this mistake can be rectified going forward. It is a fact soon realized that 90% of your gains will come from the un-frequent breakout, opportunities that cannot be missed for consistent positive results to prevail.
There is always a new trading opportunity around the corner, but is there a better way to go about locating it when the move is imminent, not when it has lost its steam? A subset of aspiring traders have discovered that enhancing their trading software to one with more robust features is one sure way to attack the challenge at hand. One subtle secret of forex hedge funds that is beginning to appear in the press is that fund managers deploy multiple trading strategies via their heavily programmed “black boxes”. After this quasi-competition produces a “winner” for the day, emphasis is shifted to what works today, and the race is on.
Market conditions are constantly in flux. What worked last week may have no relevance in this week’s trading. A successful trader must react, change his approach on the fly, and then have confidence to support the revised approach for all it is worth. How does a trader move in this direction? He needs an active “simulator” that allows for easy and quick back-testing of various trading rules and indicators to produce a variety of trading approaches, based on sound money and risk management principles.
There are software products on the market that do just this task. The feature sets do not end with a programmable simulator. Most products expand the level of technical and fundamental support provided to increase your options and provide ample methods for optimizing your chosen trading strategies. The level of complexity may be daunting at first, but the primary benefit is to get the learning curve in a “ramp up” mode once again. More experience with the data and support tools can only enhance your overall judgment abilities down the road.
These packages offer a full array of line drawing tools, hundreds of technical indicators, and unlimited possibilities in designing and back-testing trading systems. The latest artificial intelligence tools are brought to bear to fine tune your trading strategies and construct your own trading algorithms. The software can handle multiple databases, providing correlation insights in real time, and neural network prediction tools can enhance your ability to choose high probability trading entries.
Most beginners to forex trading are unwilling to do the work necessary to become effective and consistent traders. Custom trading software offers a structured approach to achieve this objective.
Tom Cleveland is a market analysis for ForexTraders.com with over 30 years of experience in executive management, corporate governance and business development. Tom served as CFO for various Visa International entities from 1980 until 1999, retiring with the title of Group EVP and Treasurer.