Regular followers of our blog will notice the absence of articles lately and this is due to the fact that we have been so busy working on further development of our trading systems and building some new ones.
So what are we looking for in our forex trading systems? Is it a high winning percentage with smaller gains or lower percentage hit ratio with larger profits? The question has been debated many a time and in truth there really is no right answer or holy grail to trading or trading systems. The bigger question is can you apply and follow the rules of your system in the long run and make it pay dividend?
One system we uncovered recently had a hit ratio of somewhere near 80% however when we started live testing it was pretty clear that the high risk and small reward meant that even at 80% this system would be very difficult to follow, by the time you factored in spread and a bit of slippage it would prove extremely difficult to make good consistent returns and the threat of getting hammered hard on certain occasions was ever present. Anyone who has traded a little will have heard about high percentage systems meaning a trader will eat like a bird and sh** like an elephant and this is exactly what tends to happen.
There are many companies and individuals all over the internet today selling trading systems, offering advice and information for new traders and it can be extremely confusing for a new trader deciding where to start. There is simply so much BS talked about trading these days, the lure of easy money and the appeal of being a trader seems to haul people into the business in droves. Here at WCM we are focused on and dedicated to the business of trading, only providing education to those showing true interest and determination to succeed. We tell everyone the same thing – we can give you the theory and some practical training but then it is really about what you are prepared to put in.
When it comes to developing your trading system or method there are a number of things which need to be considered. We have found this article to be very useful and often refer our clients here when the subject of trading systems is raised. http://www.mercenarytrader.com/2011/03/the-siren-song-of-high-winning-percentage/