In the first part of our series – Choosing A Forex Trading System – Part1 we covered a few quick tips to get you a few steps closer to choosing the Forex trading system that’s right for you.
In Part2 we will take a look at a few other do’s and don’ts for choosing a Forex trading system. With that in mind her is “don’t” number 1.
1) Don’t be overly impressed by a high percentage of winning trades
Often times you will see Forex trading systems advertising a high winning trade percentage. The ad might contain information a line like the following:
“Over 90% Winning Trades”
You might look at that and say, “Wow, with numbers like that I’ll be rich in no time!”Before you stop reading the ad to call your local real estate broker about buying that private island just realize that this one figure does not tell the whole story.
The fact is that most successful traders the world over have made their money with far smaller percentages of winners than many of the trading systems you will see advertised.
I would suspect that the reason the high winning percentages are advertised is to attract as many customers as possible. Many buyers believe that the closer the winning percentage is to 100% the closer the trading system is to being a “sure thing”. In the trading world there is no such thing and you would be well advised to run as fast as you can away from anyone who tells you otherwise.
Here’s a quick illustration of a losing trading system with a high percentage of winning trades:
Trading System A Performance
Number of trades = 1000
% of Winning trades = 92%
% of Losing trades = 8%
Average Winning trade = $180
Average Losing Trade = -$2100
That’s just a quick illustration of how a Forex trading system can have a high percentage of winners and still lose money. We’ll go into even more depth in the next part of our series as we continue to explore choosing a Forex trading system.
To Your Forex Trading Success!
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