Are you looking to choose a good forex trading system, one that will be worth your time and effort learning how to trade?

Well, there are a couple of key points to keep clearly in mind, even before you go out hunting for a system to learn.

Firstly, some systems perform better than others in areas such as profitability and drawdown. These are vital.

Secondly, some systems can be taught more easily than others, take less time to trade, as well as suiting your personal daily routine better. You need to ask yourself: Do you want to trade all day long 5 days a week, or trade for 2-3 hours 3 times a week to make the same profit?

So when we're choosing a forex trading system, especially if we haven't had much experience with forex before, we'd want to jump in with some thought and consideration behind it.

We're aiming for this:

We want to find a forex trading system that's profitable enough for us, that has an acceptable drawdown, and that actually fits into our daily routine! If and when any of these 3 factors are not there, we find ourselves not able to continue trading the system.

So continue reading to find out how to choose a forex system that's worth putting in the time and effort in to learn!

So here are the 7 power points when checking out a forex system or training course that you've found:

1. The profitability of the system.

This is shown as either pips per month, or when assuming a certain float amount, the dollar amounts per month.

These profit figures are often quoted in pips per month, as it's one way of comparing trading systems, despite the fact that people are trading different trade sizes.

However, when looking at pip profit figures, just be aware that if you assume a fixed risk model, that the average face value that people will trade with any given float, will depend on the average risk per trade. This in turn, depends on the average stop loss distance for that system. But the stop loss distance is not often quoted.

As an example, say you want to trade with a 2% fixed risk model. If the average risk per trade in the first system is say 30 pips, and in the second system is 60 pips, then the average face value would be twice the size in the first system for any given float. If both systems produce the same average pip profit per trade, say 100 pips, the first system will, in terms of dollar amounts, produce the higher profit.

If on the other hand, we're assuming a fixed dollar risk model, then the amounts you put in will depend on the size of the float.

2. The maximum drawdown either historical or based on real trading.

The maximum historical drawdown of a system is the largest decrease in equity that has happened in the past during backtesting or real time trading of the system.

When comparing drawdown between systems, you can either look at pips, or if using a assumed float, look at the dollar value. Then with this dollar value, express it as a percentage of the cash float used. For example, if the maximum historical drawdown was $6000 based on a $10 000 cash float, then the drawdown is 60%, expressed as a percentage of the cash float.

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