There are plenty of forex trading systems to choose from – the problem is over 95% will lose you money. The good news is: If you use the following simple tips, you will be able to find the ones that are likely to make you big consistent profits.
Here are your tips for choosing your trading system:
1. Look For a Real Time Track Record
This would seem obvious, but most forex traders don’t look for the proof before buying and wonder why they lose!
Every system sold on the net comes with claims but most of these are made with no substantiation at all, so ignore the:
“90% success rate”, “scalp 20 pips a day”, or “earn a regular income”
Look for the proof.
Many vendors try and dupe investors, by giving a hypothetical track record but if you look at the disclaimer – this is a track record done in hindsight, knowing the closing prices!
Well, if I knew tomorrow’s prices today, I Would be rich!
Unfortunately we don’t have that luxury of knowing prices in advance when trading in the real world.
The first rule is â no real time track record don’t buy it.
2. Check the logic
Make sure you understand why the system is likely to make money and you have confidence in it.
You must understand a currency trading system and have confidence in it, to follow it through inevitable periods of drawdown.
Avoid any day trading forex systems. They don’t work – this is linked to point 1 above if you have checked that you will know they don’t! and also any Black box
Systems where the method is not revealed.
If you don’t have the confidence to follow a system with discipline you have no system!
3. Peak to Valley Drawdown
Always look at the worst peak to valley drawdown and time to recovery.
You need to assume that you are joining the system on the worst possible day.
Make sure you are comfortable with these short term down swings â All systems have drawdowns and they can last for months so it must fit your risk tolerance.
Always assume your worst drawdown is ahead of you.
4. Subjectivity Or Objectivity
Some forex trading systems require you to make subjective judgements â avoid these. If you are trading a system you want it to do the work and you follow it.
5. How Much Time Does It Take?
Any currency trading system should only take 30 minutes or less a day if its objective – subjective systems will take longer so make sure you have the time to run the system.
6. Know Your Vendor
Find out a bit about the vendor who has developed the forex trading system and of course their track record. Remember – if they have not traded it and made money why should you risk yours?
If they have a track record – see how keen they are to answer questions and what support is provided.
Go with your gut feeling – most reputable vendors will answer questions, give support and reveal their history â simply avoid those that don’t.
To trade a forex trading system and have a chance of success you should know the logic, have confidence in it and have seen some evidence that it works in real time.
Be prepared to take at least the worst drawdown the system has had in the past cheerfully and stick with the system.
Achieving Long Term Success
Trading any forex trading system is long term and the above points will help you choose the best, stick with the system through bad periods and lead you to long term currency trading success.