A while ago I bought a Forex trading system developed by a man who had worked for NASA. He was a genius at programming and developed a Forex Expert Advisor. Let’s look at my experience with it in more detail…
Today, more people than ever look for success via automated Forex trading systems and my experience will give you an idea of how most perform.
The system itself was based on artificial intelligence and adapted itself to changing market conditions, by switching between complex algorithms as market conditions changed. The system on the computer screen looked like mission control Houston, with lots going on all over the screen. I tried the system starting with $25,000 and within two weeks had $7,000 left and quickly stopped trading it.
In hindsight its obvious why this system lost and so do most Forex Expert Advisors and the reason is:
– You cannot beat markets with mathematics because they don’t move to a mathematical formula
– You cannot predict the markets in advance
– Complex Systems break easily, as markets move to the odds not certainties
If you want to win with a Forex trading system, you need to keep it simple and robust and also, make sure you trade the reality of price change and don’t try and predict anything.
To give you an example of how this can leads to success, I will give you a one rule system which beats most of the complicated automated Forex trading systems easily and you don’t even need a computer to run it.
Here is the rule:
Buy a new 4 week high and hold it. Wait for a new 4 week low to be hit take out the long and go short. All you then keep doing is reversing on each 4 week high or low.
Simple enough and it works – try it!
That rule was originally used by trading legend Richard Donchian over 25 years ago and it still works today. Sure its simple but that doesn’t mean it won’t make you money it will and won’t cost you a cent to try it out.
Today traders come up with systems that get more and more complicated but with all the technology advances we have seen in the last 25 years, the ratio of winners to losers remains the same and this shows that being clever or complicated is not the way to make money!
In simple terms – you cannot beat the market with mathematical equations, because markets don’t move to mathematics.
The simple one rule system I gave you earlier works and will continue to work.
While I used the Forex Expert Advisor for 2 weeks, I have used the one rule system (called Richard Donchian’s 4 Week Rule) for close on 20 years.
The message of this article is clear – simple, automated Forex trading systems work best and always will, so keep it simple and enjoy currency trading success.