1. The Mechanical System
2. The Discretionary System

In the Mechanical system, the trading signals are mainly based on the technical analysis, which is applied in a systematic way. While in the Discretionary system it is the judgment of the trader that actually takes center stage. Both the systems have their own advantages and disadvantages, and so one cannot identify just one, as the best.

Mechanical System: This system can be easily automated. The rules being rigid the traders dealing with this kind of system are less driven by emotions. However, in this system there is a tendency that the traders may back-test the Forex trading signals incorrectly. This is solely because a system which ran successfully in one year may not run as smoothly in the succeeding year.

Discretionary System: A major benefit in adopting this system is that it is highly adaptive to new market conditions. Here all the decisions are based on the experience. Traders can analyze the signals and can asses the probability factor. But this system cannot be automated. It depends on experience to obtain success and hence takes time. At the initial stage it might be a bit risky but the trader needs to have patience and must learn from experience.

If one has to decide on any one of the systems it is always better to stick to the one which best suits ones personality. Persons who does not like to rake their brains and finds difficulty in following trade signals should go the mechanical way. But if one is a disciplined person having ample patience and is eager to learn and take decision, he or she should go the discretionary way. Starters should opt for the latter to gather efficiency.

Whatever system you decide to choose, let it be according to your personality. Both can be profitable if adopted correctly and in the right spirit. Always prepare to give yourself the best market feel!