What Every Day Trading System Should Have

By: Harold Hsu

There are countless of Forex day trading systems available online for retail traders to follow. Unfortunately, most of them are either simply ineffective, or are downright scams.

Selecting a reliable online Forex trading system is not an easy task. In this article, I will briefly discuss two main issues you should consider when looking to purchase your own trading system.

Issue #1: What's the biggest drawdown?

It's not difficult to make tons of money in Forex trading. A blindfolded monkey can probably do that. What's tough is making lots of money, AND managing to keep it.

Be careful of Forex "systems" with unrealistic propositions that claim to consistently make 300 or more pips a day. Pay attention to the biggest losses that the "system" suffers from. A system that makes you 300 pips a day could very well lose you 500 pips in the next!

All reliable trading systems will have relatively low drawdown figures. You can't be a profitable trader if your losses are too large. Remember, even if a "trading system" enjoys a high-winning probability, it can still be an overall losing system if the losses are large enough.

Issue #2: Is the track record of the system simulated?

Even systems with the 'best' track records are essentially useless if the track records are simulated.

Simulated track records are easy to 'manufacture', since everyone already knows what has happened in the past. For example, if I know that the EUR/USD currency pair shot up 300 pips yesterday, it would be easy for me to come up with a 'trading system' that can make me 300 pips in only 1 day... I just have to test it using yesterday's data!

The true acid test for a profitable system would be to test it using live market data. So try and look for a real track record for any trading system before purchasing one.

Foreign Exchange
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Foreign Exchange