I bought a currency trading system and the track record was outstanding, it only traded Japanese Yen V US Dollar and it cost me just a few hundred dollars. Here I am going to give you my experience with this system called "Mega Yen".

This story is from 1990 and you probably won't be surprised to learn that I lost all my money however here is a lesson for anyone buying a system, as the disclaimer on this system is still used today and if you fall for it you will lose to. The disclaimer is printed below. At the time I never paid any attention to it and over a decade later, people are still selling systems using this disclaimer read it carefully:

CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Of course at the time I was naïve and simply accepted the track record and didn't bother reading the disclaimer which meant the vendor simply made it up!

Does this continue today?

Yes it does and 99% of Currency trading systems sold on the net use it. Just like me forex traders who are naïve greedy or both simply accept the track record and trade the system and the market takes their money.

The vendor of course has a guaranteed profit and the reason he simulates a track record in hindsight, he doesn't have a real one - is he knows it won't work so doesn't bother trading it! There is a better way to make money...

He knows he can get a guaranteed profit from a sale and can let the naïve forex trader take the loss.

So what's the lesson?

Pretty obvious really - if it looks to good to be true, it probably is and never trust a simulated track record from a vendor. Think about it - if he hasn't had the confidence in his own currency trading system to trade it, why should you trust it?

There is a lot of money to be made in forex trading but its not easy and there is no "free lunch" In fact, you can devise your own forex trading system in around a week and this is a far better way to trade.

In part 2 of this article we will look at making your own simple profitable currency trading system and devising a forex trading strategy for long term currency trading success.