subject: Is Your New FOREX Trading System Profitable? [print this page] Author: Denis Marsili Author: Denis Marsili
Looking for a profitable FX trade system?
The market is just flooded with them! You have many to options and you can also find many free trade systems on the Internet.
You must take into account your own finantial goals and trading style at the time of picking a good fx trade system. For example...you'll agree there's no point in getting a scalping system if you panic under pressure, regardless of how much money it could make you or has already made for others. That system isn't the right one for you.
Why would a FX system suit some people and not others?
The answer depends entirely on the individual trader. Many factors will come into play, such as how much time the person has available for trading, how they react to stress, and whether they can psychologically handle the system.
It could be related to some skill such as interpreting a complex mix of indicators that some people will handle with no trouble while others can't get their heads around it no matter how hard they try.
Another factor is the risk involved: Some FX systems require a level of risk which would be way outside some people's comfort zones. In this situation you are dealing with a lot of stress, which could lead to either subvert the system or make mistakes.
So you got your new FX trading system and want to learn to test it? Any concious trader knows that testing your new trading system before going live is a must. There isn't one perfect system that will work for everybody making millions. Testing your system will allow you to see how you feel using it and to analyze the results. What you're trying to do is see how it works for you, before you risk any money. It doesn't matter if the rest of the world is making easy money with that same system, first thing you need to do is test it.
So let's learn 2 good ways to test your FX trading system; best thing to do is to perform at least two types of testing which you can do at the same time:
Backtesting:
In order to backtest, you take your system and figure out on paper how well it would have done on the recent historical market, i.e. the last year, the last six months or whatever period you choose. To backtest your system scroll through historical charts looking for the signals that would have led you to make a trade if you had been trading with your system live at that time.
By backtesting you'll have a better idea of whether that system has potential or not.
Backtest should be done over the longest possible time and you should split your tests, to avoid testing particular periods when the market might have been strong or weak.
Demo Accounts:
Another good option to test your new forex systems is by using a demo account. When trading demo accounts you're not risking real money, it's virtual credit, and you get the chance to deal with the live market! A demo account emulates real live trading methods with the possibility of slippage and other factors which obviously aren't going to show up in back testing.
Provided you keep separate performance records, you can test more than one FX systems at the same time, or use several demo accounts.
Most forex brokers will provide free demo or practice accounts which you can use to test forex systems. Demo accounts also have the advantage that you are running tests and developing your live trading skills and familiarity with a software platform and charting service all at the same time, giving you solid real time training preparation for the moment when you go live trading real money. I hope you've found these tips on how to test your trading system useful. Now all you have to do is pick a trading system and test it out with no risk! I can only wish you happy and profitable trading...much success!About the Author:
Denis is posting tips for new forex investors you may find useful if looking for Trading Forex Easy.
More information on FX Expert Advisors found online at Easy Forex Advisor
