FOREX Set & Forget Strategies

You can make a lot of money trading the markets in your spare time with a Forex "set and forget" strategy. Unfortunately, this misleading phrase is typically used by many less-than-reputable Internet marketers on their websites. They've abandoned the banal terms of "simple" and "easy" for the more modern expression, "set and forget." However, many consistently successful traders employ this technique.

Definition

• Advertisements for Forex trading systems typically refer to the phrase "set and forget" in an attempt to make trading appear straightforward and effortless. These marketers are appealing to those uninitiated opportunity seekers in search of instant gratification. However, the term has a different meaning among more experienced Forex traders. In this case, it refers to enhancing the execution of trades on a brokerage platform through the use of different types of orders.

Function and Benefits

• The ability to set up trades for automatic execution is of enormous benefit to individual traders. In markets like Forex, which are open 24 hours a day from Sunday to Friday, it is physically impossible to constantly monitor the markets. They can move much faster than a trader can physically enter a trade, so automatic execution can result in better pricing. Placing orders for automatic execution allows the trader to focus on other aspects of his business, namely researching new trading possibilities and refining existing strategies. Traders are unlikely to interfere in a trade that executes automatically, making it easy to stick to a plan.

Types

• Many different types of orders can be used in a set and forget strategy, including bracket, conditional, good til cancelled, market/limit if touched, one cancels another and one cancels all. Some of these orders are specific to the exchange on which a financial product trades, while others are unique to the brokerage platform. In some cases, the orders are only used within the broker's trading platform.

Considerations

• It is essential to understand how each type of order functions before incorporating it into a plan. Certain risks may be associated with an order, and some orders can only be applied to specific markets. This information can be found on the trader's brokerage website, and needs to be carefully reviewed. The broker's website may not adequately explain how different orders can be combined, nor their impact. Therefore, it is an excellent idea to have a practice account that can be used as a test bed.

Misconceptions

• Trading in Forex or any other financial market is not easy, despite what trading system vendors may claim. The implementation of set and forget strategies can be helpful in improving trade execution and increasing time efficiency. Still, it is not a replacement for the knowledge and skill required to be a consistently successful trader.