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Author:
Tony Hosea

OK, in our last installment I showed you how a sample of a Forex trading system with a high percentage of winning trades could still be a losing system overall.

The whole point of the exercise was to get you to take a closer look at the performance results of trading systems that you are interested in pursuing. Now that you know that it is possible to lose money trading a system with over 90% winners, you’ll be able to look at the next advertisement for a Forex trading system much more objectively.

Let’s take another look at our example:

Trading System A Performance

Number of trades = 1000
% of Winning trades = 92%
% of Losing trades = 8%
Average Winning trade = $180
Average Losing Trade = -$2100

A few quick calculations tells us that this trading system had Total Net Profit of -$2,400

The Total Net Profit is an important factor in any trading system although it doesn’t tell the full story.

Here’s how the Total Net Profit is calculated:

Total Net Profit = Gross Profit – Gross Loss

In our example above these figures would be:

$165,600 – $168,000 = -$2,400

As stated above the Total Net Profit for this trading system is negative. This is important to note. As you can see, if the only information you originally had access to was the percentage of winning trades you would have started to trade a losing trading system. Now with a little more information such as the Total Net Profit we are clearly able to see that all the glitters is not gold.

Please note that it is unlikely that anyone would be openly advertising the fact that even though their trading system has a high percentage of winning trades that it is a losing system.

In the next part of our series we’re going to take the performance data we currently have at our disposal and generate a very important number to know in evaluating any trading system.

To Your Forex Trading Success!

About the Author :

Whether you're a beginner or a seasoned pro you'll discover the best Online Forex Trading tips, tricks, and techniques at http://www.forex-strategies.com


Article Source: www.iSnare.com

| Article Keywords: Forex

A Quick Note From The Publisher... If you like the article above, you may be interested in the following article which is also related to Forex... Choosing A Forex Trading System - Part 1 There are many different kind kinds of Forex trading systems. Of course, the most important Forex trading system is the one that is right for you. As you search the web for Forex trading systems suitable to you there will be many seemingly appealing offers many promising to be so much better than the rest. It can be difficult to compare some Forex trading systems due to the lack of performance information. You want to have enough information available to you for you to be able to make an intelligent decision. You need this valuable information prior to committing to purchase or lease a Forex trading system and before committing to the money necessary to properly fund a trading account. Here are a few quick tips to help you hack your way through the jungle of available Forex trading systems: 1) Ignore the testimonials. Your first job is to ignore the typically glowing testimonials telling you how great a certain Forex trading system is. Remember that these are most likely not typical results obtained with the trading system. Now I’m not suggesting that you ignore all testimonials about all products. I’m simply suggesting that when it comes to testimonials about money making strategies that we all need to be more objective. Don’t forget that a testimonial about a vacuum cleaner is a lot different that a testimonial about t trading system. For one thing everyone knows how a vacuum cleaner works and what it is supposed to do. Not everyone knows what a Forex trading system is and how it is supposed to work. Not looking at the testimonials will allow you to be more objective in your evaluation. Also keep in mind that it is highly unlikely that you will buy your own private island based the few great trades you see in the testimonials. To Your Forex Trading Success!...