What Should You Check Before Getting A Forex Trading System

What Should You Check Before Getting A Forex Trading System

Currently, there are more than 100 different forex systems available to traders, from MACD crossovers to Bollinger Band Bounces. Each trading system befits a particular personality. If you wish to succeed in this business, you must discover the right system for you. Only then can you trade with minimal resistance. Here’s a guide on what should you check before getting a forex trading system.

Financial Preparedness

Finding a system is fairly straightforward. The challenge is developing a system, which takes time and money to refine. Once you’ve chosen a system to trade with, you’ll have to backtest and forward-test it to make sure its long-term performance is up to par with your desired growth rate and capital drawdown. Testing it in a live account will require you to risk capital. Ideally, you should only open micro or mini lots to minimize loss and preserve the bulk of your trading account.

System Performance

Gauge the system’s performance by testing it yourself and by researching through forums and threads. See if previous users found the system easy to use and consistently profitable. Observe if they stuck with the system’s default parameters or if they changed certain elements to it. It makes sense to check how well a forex trading system performs if you are to make it your long-term method of extracting money from the market.

Automated Vs Manual

Each method generally has its own pros and cons. For example, an automated forex trading system eliminates the stress and labor involved in placing and closing trades. It removes the emotional part and lets you focus on the technical and fundamental aspects of a trade. However, it also fails to account for gut instinct that is, at times, more superior and reliable since it draws a conclusion from experience. And if there is one thing that is constant in a financial market like Forex, it’s that market cycles and patterns repeat themselves.

Trading Mindset

What should you check before getting a forex trading system? How about your frame of thinking? Experts say trading is 80 percent psychology and only 20 percent technical analysis. Others may argue a lesser or higher ratio, but the point is that psychology plays a vital role to your trading performance. Are you mentally prepared to lose it all or win it all? In trading, even winning is a struggle for traders who are mentally unstable and even self-destructive to a point.