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Should You Buy An Online Currency Trading System?
By Philip Gegan
An online trading system that gives mostly correct signals and avoids any substantial losses would be an incredible wealth-generating vehicle. The question is, out of all the dozens of systems being touted around the internet at any one time, is there just one that can deliver?
We all know that only a tiny minority of new traders will succeed in surviving, let alone making stupendous profits, and that the rest will lose all or most of the money in their trading account. If you buy an online trading system you are in effect placing your trust in that system being the one (or one of a tiny few) that can actually work and in addition that you quickly acquire the skills to make it work.
The basic problem is that any software program designed to help you succeed at trading, or forex, is trying to do the impossible, i.e. to use the logic inherent in any software system to forecast movements in price in a market driven by greed and fear, that is illogical and unpredictable, fast-moving and extremely volatile.
The system might get 99 per cent of all the factors right, and 100 per cent of the calculations, and still get it wrong in the forex market. When the system correctly forecasts a trade it is hailed as a success by the designers and sellers. But then you might have achieved the same success by simply tossing a coin. Who can say if the system got it right, or was merely lucky?
Is not any particular system worth a try? That's something only you can answer for yourself. But the odds are stacked against you. What about the guarantee? Most systems carry a money-back guarantee covering 60 to 90 days. The terms of the guarantee usually require evidence and details of your trading and if you have varied from the instructions in any way (which most people do over the course of two or three months) then the guarantee is invalidated.
If in spite of all this you
decide to go ahead and use one of the systems available, use it on a demo account only, or at most a forex mini account. A demo account allows you to experience trading on the forex market without risking real money. The important thing is to treat the money as if it were real, and not to trade recklessly just because the money isn't real.
The plain fact is that the foreign exchange market is made for the big players, not for the small guy. The volatility in price movements means that it's extremely dangerous to trade with tight stop losses, yet incredibly this is what most trading systems envisage and what most so-called "experts" advise. On the other hand, trading with large stop loss levels means you risk large losses if there's a serious move against you, which on the forex market is always possible.
That's why the only winners, in the main, are the big players, who often act on behalf of big banks, which have millions to trade on foreign exchange. They never risk more than one or two per cent of the money in their trading account, yet at the same time they can afford large stop losses to protect themselves from "spikes" and "dips" in the price, which often occur. You as a small trader simply cannot compete (unless you have a few million to spare).
But there is a way of profiting, not so much on the foreign exchange markets, but on the financial markets generally, which includes stocks and shares, bonds, indices and commodities, as well as forex. It is quite different from what the sellers of online trading systems encourage you to do, but there are real traders making large profits every day and who seldom trade forex, at least not as a day trader on a spread betting account.
The important thing you should do is to find one who is willing to teach you how to do the same. It's not as glamorous or glitzy as forex, but it delivers the profits without too much difficulty.
Philip Gegan is a retired UK lawyer who has studied the financial markets since 1991, and actually trades them for profit. You too can make profits such as 70% in less than a week on gold at www.onlinefinancialtrading.com |
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