Maximize profits with Set and Forget trading systems
When it comes to forex trading a set and forget trading system is one of the most commonly used approaches to trading. While it might sound a bit different when you hear it the first time, a set and forget trading system does exactly as the name suggests.
Say for example you have a regular day job and cannot afford to spend endless hours scrutinizing the charts. The only time you get is a few hours during the weekend. This is when you do your analysis based on a trading system that you use and trust.
Once you analyze the charts, you then set the trades with the entry, exit and target levels for the week ahead.
As the week progresses, based on your inputs, the trades will either close with profit or with loss. This is nothing but a set and forget trading system in play.
Many forex traders believe that a set and forget trading system is easy to use. For most, it is just that. Set up the trades and forget about it.
However, as you know trading is a game of constant learning and improvement. Therefore, the set and forget trading system must also follow the same path.
In this article, we will learn about what is a set and forget trading system and how you can improve this method despite it being partly automated.
What is a set it and forget it trading strategy?
A set it and forget it trading strategy is a term attributed to using a mechanical trading system. A mechanical trading system is basically a rule based trading strategy that follows logic.
This is not to be confused with a black box trading strategy such as an expert advisor. On the contrary, a set it and forget it trading system uses a bit of manual intervention as well. This allows traders to pick and choose the time frames and the instruments where they want to apply their trading systems.
As the name suggests, a set it and forget it trading strategy utilizes a combination of both the mechanical trading system as well as human analysis.
You do not necessarily need to use a complete trading system.
For example, after you have done your analysis, you can simply set the entry, stop loss and target level for your trades. This also qualifies as a set it and forget it trading strategy.
Therefore, a set it and forget it system is kind of like a half manual and a half automatic type of trading. But make not mistake. You will have to put in a lot of effort into building your trading strategy to a point that you can set the trade and forget about it.
Risk management is also one of the essential aspects that you need to consider when applying this methodology.
Most traders who do not have the time to nurture their trades by looking at the charts for endless hours of time often employ the set it and forget it trading system.
This allows traders who for example have a regular day job to trade and also manage their jobs.
Improving the set and forget trading system
Many traders might mistake the set and forget trading system to be just that. Once the trades are closed, the process continues with the next set of analysis and setting the charts and trading.
However, with this approach, there is little learning that comes out of it. Sooner or later, your trading will start to stagnate and nothing to show for.
The best way to improve your set and forget trading strategy is to go back and analyze the trades that you set up previously.
This includes looking at both winning trades and losing trades as well.
In doing so, you would be able to build a pattern to identify the most lucrative trading set ups. It will also help you to identify and avoid any potential potholes when following this strategy.
For example, if you find that most of your losing trades comes due to major news releases, then you can improve your set and forget trading system to avoid trading during weeks when there are such releases.
Following such a plan is greatly beneficial is often found in the field of sports. Many sportspersons do not just rest on their laurels or move on after a loss. They closely scrutinize their performance and look for patterns and areas of improvement.
Forex trading is also quite similar, in that you need to constantly critic yourself and find out potential weaknesses in your trading systems.
Tools to improve your set and forget trading strategy
Ok! So far we have outlined the reason why set and forget is not truly a set and forget trading system but one that requires constant analysis. We also discussed the benefits of following this approach and how it will eventually be beneficial for you as a trader.
Let’s take a look at some of the tools that you can use to improve your set and forget trading strategy.
Using Tradingview.com you can easily replicate the trades that you set up in the past. This online charting interface gives you the ability to replay the charts and you can closely scrutinize how your trades fared. Perhaps you will find some crucial data that would have missed otherwise.
Having a trading journal is also very beneficial. It gives you a quantitative view of your trading performance. There are a number of free online trading journals that you can sign up to or even link your trading platforms such as MT4 or MT5 which will automatically track the progress.
An online trading journal can give you more insights such as your most profitable days of the week, or the most profitable weeks of the month. Using this information (which might seem irrelevant) can open insights into things you previously never thought of.
In conclusion, a set it and forget it type of trading requires just the same effort and dedication as any other type of trading. Do not merely fall for the phrase set it and forget it as it will do little in terms of helping you evolve and as a trader.