Is Mechanical Forex Trading the Key to Success?

It’s interesting to find that many of the successful traders have the same basic opinion that some type of mechanical forex trading system puts a majority of traders in the best position to succeed. However, it’s not the sole contributor to a winning trading record.

Knowing how to utilize a mixture of mechanical trading and discretionary (manual manipulation) techniques is a formula for profitable trading.

Many traders want an automated trading platform operated by a robot that makes every trading decision and then performs them. Some individuals are more in their comfort zone creating the strategy and turning over the actual execution to the automation platform.

There are traders who consider discretion the key element in the art of trading. And as such, a machine is unable to inject the level of intuition a person is capable of, so they disregard mechanized trading entirely.

However, there is some value in automation for every trader, including the basic trading techniques used in automated trading platforms. Experienced traders can be profitable with a variety of methods. In some instances these systems will be purely based on manual execution of entry and exit.

A few examples of these methods include event driven, non-quantitative, and highly discretionary systems.

Event driven systems are based on a series of spontaneous events and market news therefore manual entry is essential for these systems. However, an automated system can support event traders by taking over complete control after manual entry all the way through the exit of the trade.

While technologically driven systems have grown in notoriety, numerous traders remain faithful to fundamental indicators that don’t readily lend themselves to mechanization. Under these circumstances traders may choose to employ automated entry or exit to stay in control of the trade.

A few traders prefer the discretionary approach to trading going on the pure feel of the markets or use little-known chart patterns to dictate their trading choice.

Traders build systems and test them historically letting the results speak for themselves. Several systems will produce dramatic results with no intervention. Other systems may generate good results but have a tendency toward givebacks which is a clue that perhaps some manual tweaking is necessary.

A quick look at the actual trades in the historical test report will allow the trader to determine what happened and what corrections they could have possibly made to get better results.

When mechanical forex trading systems with a reliable set of parameters are in place live testing can begin. Test trades should be identical to your live trades so demo trading with complete automation or with some manual manipulation will replicate live trading conditions.

Test trades that have profitably met targets places the trader in a position to have automated trading techniques like these positively affect their bottom line.

When you find systems that are a suitable fit for automation set them up to test against live feeds and leave them alone. Systems you think might need manual manipulation set them up to test and be sure to monitor them as they enter the market. Use force exits when you feel that the exit in place in the system will pull back too far below your optimal exit point.