Forex Game Nation

There are lots of different Forex trading systems on the Internet, some are commercial, some free. But not all systems are equal and by far not all are profitable. So which systems are profitable?

First of all let me make things clear. I’m writing this article for beginners. Different systems behave differently in the hands of experts and beginners. So it’s important to understand that what is good for the experts, may not be good for the beginners.

The first time of Forex systems are the scalpers. I would not recommend them to the beginners as profitable systems. The reason is because scalpers aim to make just a few pips in profit while risking big. For that reason they are very risky and beginners should stay away.

Speaking of the risk, it’s important to know how risky is a system. And it’s simple to tell. If the system sets a stop loss higher than the profit target, it’s too risky. Think about this, if it makes a profitable trade it’s great. But if it makes a loss, having a stop loss higher then the last won trade, wipes out not only the last profitable trade but possibly several others. At the very least, the stop loss has to be equal to take profit. Don’t use the systems that don’t have the balanced risk.

Some traders think that it’s OK to have a higher stop loss (risk) as long as the system has a big winning rate. But you may immediately notice the problem with that. The idea relies on the winning rate which something not to be trusted. Markets change every day and you can’t know how long will the system keeps its winning rate up. There may be just a few bad days and wipe out your account.

A system with a small risk (the higher the profit target vs stop loss, the better) will always outperform a system with a higher risk in the long run.