First lets look at the advantages and disadvantages, of using an automatic computer trading system which many people think is the best currency trading tool but you will soon see, their limitations against the human brain.
Advantages of Automated Computerized Trading Systems
They are objective and can generate rules which then can be traded for long term profits and with good money management, they can give traders long term profits. They can save time and also allow you, not to think about your trading so what are the drawbacks of this form of trading?
Disadvantages of Automated Computerized Systems
They can only trade one way which will be set to certain types of market conditions and the two most two most common methods of trading are ones which trend follow long term trends and those which look to trade ranging markets and use overbought or oversold levels, to trigger trading signals in the currency pair their looking at.
When market conditions change, they will have periods of losses or draw down and even the best systems will lose for months on end before hitting a new high in equity and many traders do not want, to trade systems through long periods of losses but this is the reality of trading an automatic currency trading system.
They can't think and filter signals the human brain is capable of independent thought but a computer system cannot do this. Forget all the rubbish you read about neural networks, artificial intelligence etc being advanced in terms of trading the market is ridiculous - there not at all. The so called thinking there able to do is minor. If there were computers who could think, we would all have robots doing the housework, like we used to see on programs when I was a kid, looking at what life would be like in the 21st century. Well were in it now and the most sophisticated robot, can look at a towel, pick it up and fold it. This is seen as major advance in programming so trading the market with one is either years into the future or in my view never.
The only being on earth which can look and think in Forex markets is a human and the human brain will never be replicated in my view its far more complex than any computer but this is a huge advantage for a trader – they can see each trade set up.
The Advantage of thinking in Terms of Forex Markets
If you look at a boxer, he thinks and reacts to his opponent. He has skills and uses them in different combinations, to defend himself against harm and score, the knock out blow. This is true throughout competitive sport. Watch a footballer running with the ball, he is thinking as a tries to get past defenders and while he uses learned skills he again uses them in different combinations – so you should now get the picture, about being flexible in sport is the way to win and so to is it, in many other areas of life, including the global Forex markets.
Forex markets are human, they go where they want, when they want and while they do present high odds set ups, you need to think and react to the markets and the set ups there giving you in any currency pair. The problem most traders have is they think this is to much effort or to complicated but its not – you just have to look objectively at set ups and use, the various skills you have learned to trade them. As the best currency trading methods are simple, this is easy to learn and do.
The Currency markets have never changed since they started their emotional not scientific markets. In terms of one human, you can never quite be sure what they will do but the odds increase dramatically when you are dealing with a large group, driven by greed and fear. Human nature is always going to be the same and you will get high odds set ups to trade. You won't win on every trading signal of course but if you trade them with discipline, you will make money over time.
A Quote to Lead you To Currency Trading Success
“Empty your mind, be formless. Shapeless, like water. If you put water into a cup, it becomes the cup. You put water into a bottle and it becomes the bottle. You put it in a teapot it becomes the teapot. Now, water can flow or it can crash. Be water my friend.” (Bruce Lee)
This is a quote from martial arts legend Bruce Lee, it was part of his philosophy of life and of course the principle his fighting style was based on which was to adapt to his opponent and react – Water isn't rigid it adapts, where ever it is and to whatever it faces it adapts. Adapting to the market is the key to Forex trading success. You adapt to your opponent and use your skills, to defend yourself and strike when the time is right.
Why You Should Use Your Own Flexible System
Today most currency traders are lazy or have fear of failure so they want to delegate their trading signals to someone else and as technology has advanced, that “someone else” has become a computer but while computers have a role in our lives – they work only when a scientific formula is there which works all the time and this of course is NOT so in the currency markets. The fact is despite what many people tell you, computers are no better at trading the markets now, than they were 30 years ago – why? Because only simple systems work and even the ones that do make profits have limitations which include - they will experience long draw down periods and the upside, in terms of profit is generally limited.
A non discretionary trader, has full control over his strategy and can adapt it which a computer never can. Not only will you trade with confidence because you are in control you can also adapt to any situation you see and to do this, takes just a little time to learn various simple trading techniques which can help you, trade any set up you see for profit for profit.
Very few currency traders make money and even fewer make huge gains but the ones that do, are not using computers there using, the best currency tool around, the human brain. If you understand this currency trading tip, you will see why the best way to trade currencies is to think, adapt and apply your currency trading strategy in a flexible way – Be water my friend.