Most successful FOREX traders use a handful of diverse trading strategies. Which strategy used may depend on the particular currency pair, recent price action or patterns, market volatility and/or a myriad of other variables.
The simple fact that a trader needs an arsenal of strategies suggests the need for at least one mechanical trading system.
The Turtle Trading System is a great example of a mechanical system that has proven successful over many years with many different securities. For the complete turtle rules, view our previous article: Original Turtle Trading Rules
In the recent past, the obstacles to develop, test and run a mechanical trading system were significant. Expensive, complex software platforms, coupled with costly real–time data feeds required a significant investment of time and money. In addition, the quantity and quality of brokers offering such services was limited.
Today, this is no longer the case. There are several free automated trading platforms available from a number of different brokers. One popular platform is MetaTrader 3.0, which uses the MQL II language to develop what MetaTrader calls an Expert Advisor. (In addition to MetaTrader 3.0, there is a newer version, MetaTrader 4.0. MetaTrader 3.0 is generally easier to learn by a non-programmer and is a better choice for a trader creating their first mechanical trading system).
Since this platform is free, and most introducing brokers offer demo accounts, it is an excellent opportunity for a FOREX trader to evaluate mechanical trading without incurring any upfront costs.
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I have always liked the idea of mechanical trading because it helps to eliminate the emotional aspect of trading. Sure, sometimes you will make decisions that end up working out well when you trade discretionary, but most of the time you will end up wishing you hadn't made that last trade. I believe that for any trading system you should be able to write down the rules so that you know exactly when and what you are supposed to do. Otherwise, you are just making up things as you go.
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