3 Things To Know
When looking for a good trading system to follow, itâs important that:
1) You understand the logic behind how the system works
2) The system has an actual, consistent positive trading record
3) Youâre comfortable with the system / You like the system
These 3 criteria are generally in order of importance. Notice how the most important factor is that you understand how the system works. Many traders purchase trading system after trading system without understanding the reasons behind how they work.
These traders are looking for a magic pill that doesnât exist in reality. The moment one trading system starts to lose in a few consecutive trades, these traders will move on to the ânext big thingâ and buy another different system.
The truth is that if you understand the logic behind a good system, youâll understand that there will be times when such a system will occasionally fail. The important thing is to remember that on the overall, many systems will give you a positive profit at the end of the month. It is not these systems that fail: it is the undisciplined traders who donât understand their systems (and thus give up) that fail themselves.
As the saying goes, âA good trader will take an average system and make money with it. A bad trader will take a great system and still lose money with itâ. The key is in understanding how a system works, and having the discipline to stick with it when the going gets tough.
Once you understand how a system works, itâs also important that you agree (and like) the logic behind it. If you donât like it, chances are itâll be even harder for you to be disciplined when following it.
One more thing that many traders overlook when purchasing a trading system, is the ACTUAL track record. Many scam sites out there use hypothetical (or back-tested) results to lure ignorant traders into buying their âtrading systemsâ. Always ask for an actual track record (i.e. traded with real money) and donât fall for those âin August, this system would have made $XXX!â-type of claims. You shouldnât care about how much the system âwould haveâ made, you should care about how much it DID make!
To learn more, download my free 26-page guide here: "Forex Trading Traps!"
Harold Hsu is the owner of http://ForexSystemProfits.com where he provides premium Forex trading information and resources.
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Keywords: 3 things, best trading, discipline, forex trading, logic, magic pill, money, trades, truth.
