Forex System Comparison

There are a lot of things to think about when performing a forex system comparison. There are many forex system providers out there, this list will assist you to pick the one right for you.

1. History - Does the system vendor provide a history? A good system provider should provide details on the systems monthly results for at least the past year. If the system hasn't been running for a year, you should ask what the back-test results were.

2. Draw-down - Unfortunately Draw-downs are unavoidable in forex trading. There are many forex systems making 1000's of pips per year, but they fail to inform you that you would have lost all/most of your account before making those 1000's of pips. Always ask what what draw-downs the system has had in the past and use this information to determine how many lots you are going to trade to ensure your account is not wiped out. Think about how the draw-down would have affected you emotionally, would you have stuck with it?

3. Reviews - Search to see if others are trading the same forex system. Have a look what others are saying about the system. Find out if the system has its own forum and check the feedback the system is getting. Often existing users have tweaked the system and found a better way to trade it, ask if there are any new settings before you get started.

4. Win Ratio - Professional traders generally have a win ratio of close to 50%. The profit is in how they manage the trade, by keeping losses short and letting profits run. Systems that have an unusually high win ratio are not necessarily better and can be too good to be true.

5. Stop/Limit Orders - Find out that the system uses stop orders. A stop order is set to minimize your loss in case the trade turns against you. Without a stop order set your losses could be huge.

6. Paper Trade - Prior to trading any system with real money you should paper trade it, or trade it with a demo account. This will give you an opportunity to get used to the system until you feel comfortable with it, and will give you an idea if you should trade it with real money. Often systems can also be back-tested to give you an idea of how the system performed in the past.

7. Timing - Find out what time commitment the system requires and think about if this will fit in with your schedule. You should also ask when you need to be at your computer to trade the system.

8. Money Management - What kind of money management system does the system use? Systems that recommend you double up 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 system. Does the system require a specific charting package or data feed to run?

10. Refund - Find out if a refund is offered and what the conditions are.
Good luck with your forex system comparison.