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Forex Courses Online: Finding The Best Forex System

By James Roshwood

Republish: EasyPublish™ Published: 05Jan2010 Word count: 688 Viewed: 209 time(s) Get Free Content For Your Site

One of the things that you will need to cover in forex courses online is how to find the best forex system for your situation. There are many different types of forex trading system and they can all have their advantages but there will be one style or model that will suit you better than others.

It is very important to understand this point. There is not a perfect forex system that will make money for everybody. If there was, there would be no need for any others. And it is clear when you think about it that this could not be the case. Too much depends on your means, trading opportunities, skills, and amount of risk that you are prepared to take.

Therefore, you should never feel that you have to operate a system that does not feel right for you or that you do not understand, no matter how many people say it is the best. It may suit them but not you. If you are trying to operate in a way that is not right for you, you will not make money.

So look around for a system that will suit your individual skills or areas of interest. For example if you enjoy the technical analysis side of things, you will want a system that is based around that and you may be able to handle a system that depends on several different indicators. Another type of person would be confused by that and would want something as technically simple as possible.

The second important factor is profitability. This can be a difficult factor to evaluate. Do not fall into the trap of relying entirely on what somebody else has made with the system. You will not necessarily have the same results. So no matter how much confidence you have in the person who has developed the system, you need to do your own testing.

The quickest way to test a system is to use back tests. This involves going over the forex charts for a period of several months at least, looking for circumstances that would trigger a trade according to the rules of your system, and then checking what would have happened if you had made that trade. Look for as many qualifying trades as possible, including trades that overlap. Record them all and see if you have profits.

Generally speaking, a system will do better in back tests than in real life. This is due to several factors. First, most traders make some mistakes in real time and you are not so likely to do that when back testing. Second, you are likely to experience some slippage in real time, when you do not get the price you want, either at the moment of opening a trade or when closing it.

So you can use back testing to filter out any systems that do not make money. Then go on to test the best performing systems in real time in a demo account. This is a slower process but the results will be more like what you could expect to get when you are trading for real.

Keep good records of all of your tests. You will need them to figure out the expected profits of your system. You can calculate this with a simple formula: (Probability of Winning Trade x Average Win) - (Probability of Losing Trade x Average Loss). You can then multiply this by the average number of opportunities per month to figure out the potential profit per month of the system.

Remember that these are averages and many times you will have a very different result for one actual month taken in isolation. The more test results you have, the more accurate your results will be, and the more trading opportunities you have in a month, the closer you are likely to get to the average monthly result.

You need patience to do these tests and calculations before starting with real trading, but it will pay off. An impatient trader is a losing trader. This is one of the most important lessons you can learn from forex courses.

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