There are a lot of things to consider when performing a forex system comparison. There are a lot of forex system providers out there, this top 10 list will assist you to pick the best one for you.
1. History - What kind of history does the system vendor provide? A good strategy method provider should be able to tell you how the system has performed on a monthly basis for at least the past year. If the strategy method has not been running for a year, ask what the back-test results were.
2. Draw-down - Drawdowns are unavoidable in trading the forex market. There are a lot of forex systems making 1000's of pips every year, but they fail to tell you that you could have lost all/most of your account before making those 1000's of pips. You should always check what what draw-downs the system has had in the past and use this information to determine your trading size to ensure your account is not wiped out. Think about the emotional impact of the draw-down, would you have stuck with it?
3. Reviews - Do a google search to see if others are trading the same forex strategy method. Have a look what others are saying about the system. Find out if the strategy method has its own forum and have a look at the feedback the strategy method is receiving. Often users have found a better way to trade the system by tweaking it, check what the latest settings are before you get started.
4. Win Ratio - Professional traders often have a win ratio of only 50%. They make profit by managing the trade, by cutting losses short and letting profits run. Systems that have an unusually high win ratio are not necessarily better and may be too good to be true.
5. Stop/Limit Orders - Find out that the strategy method uses stop orders. A stop order should be set to minimize your loss if the trade does not go in your favour. Without a stop order set your losses could be huge.
6. Paper Trade - Before trading any strategy method with real money you should paper trade it, or trade it using a demo account. This will give you a chance to get used to the strategy method until you feel comfortable with it, and give you an idea if you should trade it with real money. Many systems can also be back-tested to give you an idea of how the strategy method performed in the past.
7. Timing - Find out what kind of time commitment the strategy method requires and consider how this fits in with your schedule. You should also check when you need to be at your computer to trade the strategy method.
8. Money Management - What kind of money management strategy method does the strategy method use? Systems that recommend you increase your trade size after a loss are not generally recommended by the trading community.
9. Additional Costs - Find out what additional costs you will incur to run the strategy method. Does the strategy method require a specific charting package or data feed to run?
10. Refund - Find out if a refund is offered and what the conditions are and if they can be met easily.by Jon Provencher
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