There are lots of forex trading systems you can buy off the self and they will all claim to make you money, but the fact is over 95% of them lose. So how do you spot the good ones from the scams? It’s easy if you know what to look for.
The first thing to look for with any forex trading system is the track record and if you see the disclaimer below be extremely cautious. We will explain what it means in a moment but for now here it is and its required by the CFTC.
“Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those show”.
If you have read the above and understood it, you will see that vendors can simply make track records up (and they do), as they can use past data and say what they want! So long as they put this disclaimer on the material their covered.
Of course most forex traders simply concentrate on the gains and do realize these track records are actually meaningless.
Anyone can do a track record in hindsight, knowing the closing prices but it’s not so easy in real life – we have to trade forward!
The fact is most of the currency trading systems sold on the net today are never traded at all - there simply done by marketing people and track records are made up to appeal to the greed and naivety of investors.
So the first step is simply to ignore any forex trading system that does not have a real time track record and believe me, you have cut out at least 95% of systems.
You may say well there must be some honest guys out there selling systems?
Yes there are and some simulations do come good (a small minority) but why should you risk you money?
If the vendor hasn’t the confidence to trade neither should you.
Once you have found a real time track record look for the following:
1. It is over a reasonable period of time at least 3 years.
2. Check the drawdown and look for the worst peak to valley drawdown to see if its in line with your risk – reward criteria.
3. Check the logic is revealed so you can have confidence in it
4. Check the support and find out if you are comfortable with the vendor
While a real time track record does not guarantee profits it is a good indication of the potential of the system and if you know how it works and are comfortable with its worst peak to valley drawdown and time to recovery chances re you can follow it with discipline.
Don’t look to make a fortune over night – the best systems will do up to 50% per annum and that will build you fantastic compound gains over time.
If you want bigger growth you will find many simulations offering you more but you know what will happen if you buy it!
Be sensible when buying forex trading systems and remember, all those track records that look to good to be true are! There is no “free lunch” when it comes to make money.
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Article Source: http://EzineArticles.com/?expert=Kelly_Price
http://EzineArticles.com/?Forex-Trading-Systems---Avoiding-Scams-and-Finding-One-For-Big-Profits&id=732238
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