Free Forex Trading System - A Review of the 4 Week Rule and Its Profit Potential

FinanceStocks, Bond & Forex

  • Author Monica Hendrix
  • Published February 12, 2009
  • Word count 440

The free Forex trading system we are going to review here is incredibly simple to understand, use and has worked for over 25 years and will continue to work. Let's take a look at it...

You can buy Forex robots but most make unrealistic claims and they never make the money they claim. For example, most claim you can double your money every month, have no drawdown and predict market movement in advance and all for a hundred dollars or so - you know it's not true and so do I.

Let's look at an automated Forex trading system that the real pro trader's use and the reason they do, is it works.

Its called the 4 Week rule and it was devised by famous trader Richard Donchian.

It only has one rule here it is.

Buy a breakout above a 4 week high and hold the position. Wait for a 4 week low to be hit and reverse the position to a short. Always keep a position in the market and keep reversing, as new 4 week highs and lows are hit - that's it.

What I like about this system as a trader is its simplicity - its one rule only and that means it's robust (simple systems always work best) and its obvious why it works:

Forex markets trend for long periods and this system is designed to catch these trends and hold onto them. In fact you will never miss any of the mega trends you will be in on every one.

Of course its also buying breakouts and all major trends start form these so it's a sound strategy.

It also doesn't take long to use, you don't even need a computer to do the calculation and as for time, you don't even need to look at it everyday!

The system however requires patience and discipline to use, as its a long term trading system, so you have to accept short term open equity drawdown but all systems have those so that's no problem.

It can also have filters added to it to smooth the equity curve. For example, on the for a closer exit I use a 2 week filter, to go flat and wait for the next 4 week signal to re-enter which soothes the equity curve.

The system is capable of 50 - 100% + annual gains and that's up there with the best systems.

Most traders today, like glossy packaging and systems which have only ever made money in simulated back testing. They think they are going to make a killing over night and end up disappointed.

Any trader who is serious about making money should look at the 4 Week Rule.

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