As well as using this drawdown figure to compare systems, you can also use it to figure out the amount of funds you'd need to start trading the system.

In the example we just mentioned, you'd need at least $16 000 in the beginning ideally, to trade the system. That is $10 000 float plus backup of $6000. This is in case a drawdown occurs when you first start trading, not months or years after you start. It's wise to be prudent and to have backup.

3. What's the win loss ratio of the system?

The “win-loss” ratio of the system, is the percentage of winning trades compared to losing trades. A high win-loss ratio is a bonus, in that the system may be psychologically easier to trade.

But more ultimately, you need to look at both the win loss and profit loss ratio, which we come to now…

4. The “profit-loss” ratio of the system.

The “profit-loss” ratio is the average size of winning trades compared to losing trades.

A high ratio means that the system is pretty robust. And this is a strength.

So if the “profit-loss” ratio multiplied by the “win-loss” ratio is greater than one, then you're on the right track, that is, the system is profitable. You'd want this ratio to be 2 or 3 or more, not just bordering on one, which means that the system is profitable with a good edge.

5. The consistency of the system, by month and by year.

If you can find a profitable system, with a reasonable drawdown, and is very consistent, then that's great. Look at the monthly, quarterly and yearly results to best tell this.

Some people won't mind a slightly higher drawdown and less consistency, if the profitability was much higher. However, others depending on their circumstances and personality may want consistency more than profitability, to an extent. There's a different sweet spot for everybody! What's your sweet spot?

6. How much time do you need to trade the system each day?

Some forex systems require about 15 minutes a day to trade, and these are usually daily systems. And others need a few hours per day to achieve similar returns.

On a slightly different note, some forex systems trade the major economic announcements. In these systems of course, you know exactly when you need to be at the computer. Do you want to be a day trader, or do you prefer to trade a short time a day and then focus your day on other businesses?

7. Is the system quite systematic, quite discretionary, or a combination of the two?

A mostly mechanical system is an advantage in that they're teachable and learnable. There's less need to learn discretionary skills that come from real-time paper and live trading, although it's rarer to find systems that are 100% mechanical.

For example, when putting in your support and resistance lines, does the course give you clear rules so that your lines, and therefore your trading decisions will be close to that of the person that's teaching you, or the mentor that developed the system.

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