If you are looking for a trading system to seek long term profits with then consider the one enclosed its simple, it's free and has made millions in the markets for savvy traders for over 25 years. Here we will outline the rules and why it works and will continue to work.
The system was devised in the late seventies by famous trader Richard Donchian and was originally applied to the commodity markets, although it works on any trending market.
Currencies trend well, so it's very popular and effective on these markets. The system is simplicity itself and the rule is revealed in its name - The 4 Week Rule
The trading system maintains a constant position in the market and works in the following way. Cover short positions and buy long whenever the price exceeds highs of the four preceding full calendar weeks. Then liquidate long positions and sell short whenever the price falls under the lows of the four preceding full calendar weeks.
Why It Works
While the system is simple, don't think it won't make money, it will and has for years and many of the worlds top traders Incorporate it in there trading. This system will beat 95% or more of the trading systems sold on the net as it's been traded real time and works, while most robots sold are simply simulations that are back tested.
Here are 4 major advantages of the system.
1. This system is based on sound technical principles with signals that are mechanical and totally objective.
2. It is a long term trend-following system so our trader is virtually guaranteed to be on the right side of every major trend and currencies are one of the best trending markets.
3. It us based on the known fact that most major trends start from new market highs or lows and also follows the well quoted "let profits run, while cutting losses short".
4. This system can be traded with or without the aid of a computer and it will only take 20 minutes a day or less to run so is very time effective.
What are the Weaknesses of the System?
All systems have a weakness and this one does to and that's when markets don't trend it can generate "false" or losing signals and here you can add a filter to smooth the drawdown.
Simply exit on a one or two week high or low and go flat and then wait for the next 4 week signal to trigger a long or short position.
It Will Work and Continue to Work
As a trading system for long term gains though it really is a great robust system which will never go out of date and will continue to catch and hold long term trends. As long as currency markets trend this system will continue to pile up gains long term.
Simple? Yes it is but test it and you will see how much money it makes and while other systems come and go with glossy packages and hyped advertising, this one still remains a favorite of the serious forex trader, who is looking for a simple, robust, trading system which produces results, year after year.
Check out the 4 Week Rule and you will see just how powerful this simple system is.
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