Before you can evaluate a Forex day trading system it makes sense to understand what a day trading system is. Simply put, it is a method of trading which involves opening and closing trades all within one day. Let’s take a look at why intraday trading has become so popular.
The thrill of trading – There are many traders who enjoy the excitement of short-term trading. The “rush” of opening and closing a trade is very enticing to many. While it is true that grabbing a quick profit is exciting, the thrill of trading must never overshadow the profits involved.
No overnight risk – Some traders feel that not having any overnight positions helps them to minimize their risks. In reality, this can be viewed is true. The fact is that if you have no open positions then you can’t lose money.
Fast feedback – The rapid feedback that daytraders experience is one of the biggest reasons people are drawn to trading intraday. There is no doubt that it is thrilling to get in and out of the trade profitably and then have the rest of your day to do with as you please. Visions of making a profit before lunchtime and then going out and playing a round of golf have filled the heads of many traders.
Now that you have an idea of what intraday trading is let’s take a look at some criteria for evaluating intraday Forex systems.
Account size — it’s very important to know how much money is needed to trade a particular system successfully. If you see a system that appeals to you make certain that you fund your account properly with what the system suggests. It’s also good idea to add a little monetary cushion to give yourself some breathing room.
Hours of execution — we’re all on the schedule of some type. This means that the strategy that we choose must be in sync with our schedule. If the particular strategy that you like trades during the time you are asleep, it may be best to select another system to use. The exception here, of course, is if your strategy is automated and does not require any input on your part.
Track record — it’s always a good idea to see a nice long track record. The reason for this is that you can then evaluate how well a strategy has withstood the test of time. Don’t use a strategy that only has a few months of results. It is important to see the performance of the system through numerous sets of up, down, and sideways market conditions.
We have just a few of parameters that are necessary for us to research in order to properly evaluate Forex day trading systems. The key thing to remember is that it is important to thoroughly evaluate any strategy prior to using it in live trading.
Article Source: http://www.articlesbase.com/day-trading-articles/how-to-evaluate-forex-day-trading-systems-4654688.html
About the Author
Richard Davieess is an expert in evaluating automated Forex trading system. Richard runs the very successful and popular website about Forex trading. He has helped people all over the world become better Forex traders. Visit his site at http://www.Forex-Strategies.com right now for more information and/or help on successful Forex trading.