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In this article we will look at how to find one with the potential for making capital gains.
1. Don’t Buy a FOREX day trading system!
Most novice traders do this and lose.
Day trading simply does not work – All short term volatility is random.
If you are trading FX, ignore the promises of profits, the reality is your account will get wiped out – which leads me onto my next point.
2. Always ask for a real time track record
Most FOREX Trading systems don’t have real time track records.
You do however get a hypothetical track record.
For those of you who don’t know what this is – it’s a track record designed in hindsight, knowing the closing prices already.
No wonder they all make a profit!
Ask yourself this question:
Why would you give money to someone who does not trade their own system?
If they don’t have the courage to trade it why should you?
Look for a track record of at least two years, ask for audited proof of the systems performance and this should be net of all fees.
3. Make sure you understand the systems logic
Never buy a black box system where the logic is not revealed.
The reason for this is that if you don’t know the logic the system is based on you probably won’t have the discipline to stick with it when it runs into a period of losses which all systems will do.
From understanding the logic comes confidence and from confidence comes discipline.
4. Drawdowns
Always look at the worst peak to valley drawdown and time to recovery and then ask yourself the question:
Can I handle that without throwing in the towel?
Many systems have great gains over the long term but can draw down by 50% or more – if you are not happy taking this risk you will probably not stay with the system.
Always assume your worst drawdown is ahead of you.
5. Guarantees and support
I like to know who I am dealing with find out something about their past, their views and what support they offer and think this is something all FX traders should do.
I also like a money back guarantee as well so if this is part of the package all the better.
Reputable vendors if you ask serious questions will normally be more than happy to answer your questions and queries so do so and don’t deal with a vendor until you feel comfortable with them.
Most FOREX trading systems sold are:
Junk and not worth the cash, the best way to weed them out is to do the track record test – get a real one or don't buy.
That may not guarantee you currency trading success, but if it is over a long period of time and has produced profits you can at least assume the logic is soundly based.
Picking a FOREX system to trade is really all about using common sense, cutting through the advertising copy and seeing the facts.
If you spend some time shopping around, you can find one of the minority of systems that not only can deliver you value for money, but also give you big profit potential from global FOREX markets.
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