October 8, 2013

Types Of Long-Term Foreign Exchange Sydney Systems

Foreign Exchange SydneyTypes Of Long-Term Foreign Exchange Sydney Systems

There are three ways that you can trade on the foreign exchange Sydney market and that is long, short and medium-term.  One of the forex trading systems that long-term traders use is directional tactics.  If you are looking at long-term trading you should consider directional tactics and what it has to offer.  It is important that you look at how you develop your strategy and the types of strategies that you can use.

Long-Term Systems

The best way to categorise the systems is through directional and non-directional methods.  There are four different forex trading systems that you can use with long-term trading which are categorised as directional.  These systems are:

  • Breakout systems
  • Pattern-recognition systems
  • Moving average crossover systems
  • Trend-following systems

Breakout Systems

A breakout system is also very easy to develop.  To use this system you need to have set trading rules and use them for all of your trades.  These rules should be based on the theory that a price will move to a new low or high.  When this happens it is an indication of a continuing trend.

This is a very easy system to use, but there are a number of problems with it.  The new high or low may not be a trend continuation as there are times when the price reverses.  However, these times are considered the exceptions and should be classed as acceptable losses.

Pattern-Recognition Systems

Pattern-recognition systems rely very heavily on your understanding of forex charts.  To accurately use this system you need to be able to identify a number of different patterns on the charts and trade accordingly.  Some of the common patterns used with this system include triangles and flags.

There are other patterns that you can look for, but these two are considered the best for long-term trading.  When you identify these patterns you should also know what they are signalling.  This is the only way that you will make a profit with this system.

Moving Average Crossover Systems

The moving average crossover system is one of the most commonly used directional long-term strategies.  This is a simple system that uses to moving averages set at different rates.  One of the averages will be short-term while the other is set to a longer-term.  The exact levels that these are set at depend on the trader and what they are looking for.

The indicators with this system are also quite simple to use and understand.  When the short-term moving average crosses over the long-term average then you should buy the currency pair.  However, when the short-term average crosses under the long-term average you should sell the currency pair.

The one problem with using this system is that it often has false signals.  These false signals do cause losses for the trader.  It is important that you back test the system and try different moving average timeframes.

Foreign Exchange Sydney Trend-Following Systems

Trend-following systems are what the names states.  These systems use a defined market trend and you trade according to this.  When you use this system you need a technical indicator that tells you when you should enter the market and when you should be exiting the market.

If you intend trading one of these long-term strategies, you should ensure that it suits your trading style and personality.




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