All too often when we look at new Forex trading programs and Forex trading reviews we don’t take into consideration how the system creates a signal and more importantly what kind of statistical data is available to determine if the trading method is viable.
How often have you looked at a trading program and seen the results that someone has shown from a trading account but you never get a complete explanation of what constitutes an entry? Not to mention that there is no way to know from the trade results if a completely different method was used to create the results and with computer graphics, the way they are today, who knows if what you are looking at is actually true.
Cynical I know, but every trader should make it a habit of getting deep into the trading program they are about to use because not only does it cost money to buy it, it will cost you the money you risk to trade it, and if it fails you will lose money as well as time.
Many traders do not take into consideration the time that is spent and often wasted when it comes to learning something. If you waste a year trading a method of trading that is not a solid trading method, you have wasted important time as well as money. The simplest illustration is two people who have $5000 to spend to trade and starting on the same day. If everything is equal and the second trader in year three loses money and the first trader makes money, the second trader has also lost time. It’s no different than if you were in a race and one racer decided to stop for a while.
Statistical data is important when a trading method is reviewed because trading boils down to finding a trading method that allows your wins to be at least (a good goal) 3 times more than your losses. That is just good common sense. When you look at someone that is offering a trading program in which 70, 80 and 90 percent of the trades win, then there is a good chance that something is not right. If you were looking at that program to trading system you would want to ask some important questions.
Ask any highly successful trader and most will say they shoot to be right all the time but their success rate is around 40%, 50% if they are lucky. What they want are the winning trades to run and far exceed the losers. This is how a trader makes trading for a living possible.
To do that they look at statistical data. Solid trading methods should be able to provide good hard data for how the signal being used has worked. What is the ratio of success? What is the ratio of drawdowns? Under what circumstances does the signal work best.
By considering these and many other statistically asked questions, the smart and successful trader will find that he/she is making money and not losing time with poorly designed trading systems.