Forex Trading Systems and services – do they really work?

Forex Trading systems and servicesForex Trading systems and services. We are a group of 4 traders with over 50 years trading experience between us. All of us have been full time traders at some time or another, two of us still are, the other two still trade on a part-time basis. We set up and now run this new forum in our spare time with a specific purpose in mind.

Many people find it extremely difficult to find completely independent and honest reviews of trading systems and services. This is because many products do not live up to their expectations (as advertised on their own websites) and many product reviews are carried out by other websites promoting and benefiting from selling that product. Our intention with this site is to facilitate a 100% independent and honest forum for such products.

We use our spare time and our experience to produce initial reviews of as many of these products as we can. Reviews are based on our limited exposure, limited because we just do not have the time to review each product for months upon months and trade them all in parallel. However, this fits with our intentions, which is not to test each product to its extremes but to use our experience to get a general feel for it so as to be able to produce our initial review. To achieve this, for each product, we endeavour to do some form of back-testing/result verification and also run the product in real-time (on a small account) for at least a few weeks. Not ideal, however we believe our experience permits us to produce what we consider a reasonable initial review.

Our intention is not to be Judge and Jury, our limited exposure does not permit this.  Following our initial review, the hope is to promote further (hopefully honest) discussion and feedback within the forum from those with more experience of the product, who will add further value. All being well this will result in a forum that the whole trading community can come to rely on and benefit from, not just based our experiences but from the experiences of the collective.

We police (moderate) every single post on the site so all forums will stay on topic.  It will not become another clogged up forum for others ego’s or for off-topic unrelated discussion.

Regarding affiliations, we are completely open and honest about this too.  We do not and will not ever endorse or promote any of the products we review. Nor will we ever accept payment or otherwise for a favourable review.  We do however set up affiliations where possible and ask, that, should anyone decide to purchase any of the products we review that they use our links. The commissions we receive from purchasing via our links (where available) will allow us to fund the future purchase of new systems and services to review as well as keep the site free.

We also ask that users return to the forum from time to time and provide their own feedback. It is only through this interaction that the site can be of benefit to all of us.

Forex Trading Systems AND SERVICES

Forex Trading Systems

These usually come in the form; peruse the website, part with your cash, receive a manual (usually in pdf form), read the manual, set your charts up, learn the strategy, trade the system, make the same profits advertised on the website, never look back.

Forex Trading systemsMost of these systems are mechanical in use, thus, a certain set of criteria (indicators) have to meet certain conditions before placing a trade.  For example, MACD (12,26,9) has to turn up, 10 Day Moving average has to be sloping up and RSI(14) must be less than 70 on a 15 minute chart.  Please don’t trade this system, its an example.  But basically, most systems are rules based (mechanical) and need to be set up and “learnt”.  To us this involves reading the manual, setting up the charts, observing historic charts (back-testing) and live-running on a small (or demo) account.  We will never use a system out of the box based on the claims on the website and we would never advise anyone else to do so.

Occasionally a system will come with an EA, this is short for Expert Advisor.  These EA’s are usually pre-programmed indicators that are downloaded and applied to Meta Trader charts (they will only work on Meta Trader charts).  This is quite a standard charting package offered by many of the Forex brokers out there so is usually not a problem for most.  The EA is usually incorporated into a systems rules.  E.g. it is basically another indicator that has to be a certain value, shape, etc. in order to place a trade.  The advantage of some EA’s is that they create an audible alert when a trade is setting up/has set up and thus saves the trader some trouble and hopefully, some screen time.

Most systems we come across are Forex related, this makes sense, as it’s the largest (most traded) market and most flexible (its open 24×5 typically).  Some systems are designed specifically for indicies, e.g. FTSE, DOW, S&P and occasionally we come across some commodity based systems too.  However, it is fair to say that for every system we come across 2 out of 3 will be Forex based.

Forex Trading Systems Services

This category could also be called Signal services at the moment as to date we have only really encountered Signal services in this category.  There are though, two quite distinct (Signal) services, “Standard” and Fixed Odds.

By “Standard” we are referring to signals which are executed, as trades/orders, using a standard brokerage (trading) account or, particularly in the UK, with a Spread betting company.  Fixed Odds is a newer form of trading than the “Standard” form and involves placing a trade direct with a Fixed Odds broker or with a Spread betting company which offers Fixed Odds functionality.

In the main, both types of service tend to fall into what we class as, Set & Forget.  This means one receives a signal (by email and/or sms), enters a trade/order and walks away.  The intention here is to emulate the results advertised on the website, to which you will have signed up.  Effort should be minimal.  The user should have to do little more than translate the signal into an order/trade with their broker and walk away until instructed to do otherwise by the provider.

Forex Trading Systems Robots

There are many of these in the market.  For those of you that do not know what a Robot is, in basic terms, it’s a piece of software that runs on your brokerage account (usually via Meta Trader) and trades automatically without any human interaction at all.  All you have to do is buy it, set it up, run it, walk away, and it makes money whilst you eat, sleep, drink, etc.

We are not interested in them at all and have no interest in ever reviewing them. Those wishing to pursue Robots will find many (sales) websites which are neither independent nor honest (in our opinion) featuring reviews. We will continue to focus on providing independent reviews of trading systems and services only, no Robots.

We have our reasons for this, most of them based on the horror stories we read all too often.  In the main we have also found that most (sensible) traders (rightly in our opinion) are just not interested in them either, we may be wrong but we think not.

WHAT MAKES A GOOD Forex Trading Systems

A question we are frequently asked and one we took some time to agree on, in order of importance:

Mechanical Profitable Proven Technically Sound & Usable It Works In Practice Being A Little Bit Picky

Next month we will focus on what, in our opinion, makes a (Signal) Service good.

Forex Trading  Mechanical

Many are surprised that this is the most important factor, more important even than Profitability.

If a system is not Mechanical, in our opinion, it cannot be operated consistently (according to a specific set of rules) and thus cannot be easily measured.  If a system cannot be easily measured, it is difficult to even consider claiming that it is or can be Profitable.

How do we apply the term Mechanical?  What we mean is that a set of clear rules must be in place for Entry, Stop(s) and Target(s).  For example, x, y, z has to occur for Entry, Stop is xx and Target is yy, Exit if zz occurs.  This is a very broad example, however it illustrates our point.  Human intervention and discretion should be minimal thus negating emotion completely, or as best possible.

Forex Trading Profitable

This is self explanatory, a system must be Profitable.

This is demonstrated in a number of ways.  Some websites provide previous results, some are actual, some are from back-tests, some are account (usually demo) snap-shots, etc.  A lot of websites provide examples of the finest trades from the last few years and most are also backed up with some glowing testimonials.

The point here is that every system has some form or another of demonstrating its Profitability.  We take none of these as a given as it leads onto our next criteria.

Forex Trading Proven

The 3 key criteria now come together.  A system cannot be Proven unless it is Mechanical and there is no point in proving a system unless it is Profitable.

  • We do and we also recommend that everyone else, do their own homework here and remain cautious in doing so.
  • We approach this in a number of ways.  If we can back-test a system, we do.  If we can have access to a list of actual trades we take them and verify them.  If we can have access to live accounts we take that opportunity.  The idea here is that whatever historic data we can get our hands on to examine and verify we do it.
  • We don’t listen much to testimonials, choosing more so to have a competition between us on who can find the most hilarious.

Now, before moving on.  Just because historically something looks like the best thing since sliced bread, as mentioned above, we still proceed with caution.  For example, we have encountered indicators which repaint themselves or repaint after the event.  They look fantastic on the screen and highly profitable but this does not mean this is how they behave in a live environment.  Having proven a system, by whatever means, does not mean one can or should jump in without first using that system.

Forex Trading Systems Technically Sound & Usable

What we mean here is two-fold.  First a (mechanical) system must be simple enough to be used and secondly it must not take up 10 hours of our day 5 days a week, staring at a screen waiting for a setup.

Even the most mechanical of systems can be overly complicated, the chart can look like spaghetti junction and the criteria for trade entry can be so convoluted that 6 or 7 different events all have to occur at the same time.  We are not interested.

Also, we are not interested in trading say, a 5 minute chart, for 10 hours a day.  Trading is about making a profit and having a life.  As a matter of note, most of the systems we trade at www.systemsfortraders.com require less than 15 minutes a day on our part.

This is not to say we do not mind putting in the effort, we have put in a lot of effort over the years to get to the point we have.  Our point is that now, once we have decided upon a specific trading approach, our effort, in terms of executing our strategy and our screen time, should be minimal.

We say this because in our opinion, there are enough opportunities in this environment across the many different timeframes we can chose to trade.  We do not need overly complicated systems nor do we need to be tied to our screens all day.

We also like a system to be what we call, Technically Sound.  By this we mean that we like to agree with the principles by which it operates and everyone will have their own baselines here but we can give a couple of examples.  A system that goes long when RSI(14) is over-sold would not be Technically Sound in our opinion, nor would one that has a 100 point stop and a 10 point target.  Anyway, the premise here is that we at least agree the systems fits within some sensible trading boundaries and guidelines.

It Works In Practice

So, finally, once we are reasonably satisfied with our main criteria we always determine a systems credentials by trading it in real-time, usually on a small account, we just prefer this to Paper trading, personal preference really.  Paper trading is fine but even with a small account at least there is something to be won or lost based on your trading decisions.  As a tip, we usually imagine there is a zero on the end of our £’s per point when trying out a system on a small account, just helps us to involve some emotion that will always be there if the system is used for real.

Of course, some systems fall by the way-side before we get to this point.  For example, we may deem it too complicated, it may not be mechanical enough, it may require too much screen time, we may have deemed it as not profitable, etc.  We may be wrong in our judgement but we generally go with our experience and gut feeling here.  If we are incorrect and do not progress we hope that we will soon be put right in the forum by our users.  If we are we will of course revisit a system and offer a follow up review.

Being A Little Bit Picky

And, really we are.  But sometimes we just get fed up with poorly written manuals and untimely customer support.  Believe it or not over 10% of those systems we review never respond to support emails, remember, we have already parted with our cash at this point.  We will now avoid reviewing any product where we receive no response to our initial enquiry, we suggest this is a sensible option for others to adapt.  Well, if someone is not interested in selling you something, what makes you think the product will be any good or that they will be interested in the slightest after they have your money.

Summary

So, we like Mechanical systems which are Profitable.  We like to perform some form of Proving exercise and to ensure the system is Technically Sound and Useable.  Lastly our final steps are to use the system in a real environment using a real account.

Only after we have taken the following steps do we make our only real judgement.  This is never a recommendation but if any of us use a system (without modification) after writing our review we will give it a “Systems We Use”.  We will also, typically, update a live journal on the forum of all the trades we take using that system.

SYSTEMS IN FOCUS

To date only one system has made it into our “Systems We Use” category and that is the LMT System by Dean Saunders.

LMT System  –  Works For Us!

This is a system we liked as it is about 95% mechanical and takes about 2 minutes to operate 3 or 4 times a day.  This should be once a day but we cannot trade the Daily candles as they close when we are asleep so we trade the 4 hour time-frame instead.  The system slipped up in the month of July but before this it ticked all our boxes; Mechanical (95%, some exception rules to be applied that require some judgement), Profitable and Proven (on back-testing and live running), we agree with the principle of the system which is trend based and obviously we are happy with its usability as one of us is trading it and using it on our own trading accounts.  See our site for our real-time journal.

5 EMA’s Forex System  –  Complicated!

A Mechanical system based on 1 hour and 15 minute time-frames.  Although titled 5 EMA’s, the system actually uses MA’s, Williams, MACD, RSI, amongst others.  Just way too complicated for us.  Back-testing was really hard (impossible) and attempting to trade this is real-time well, there was just too much going on for our liking.  We just prefer systems to be more straight forward than this.  This is not to say this system cannot work, it’s just not for us.  We welcome feedback from others that have experience of this product particular those that are actively trading it.

Easy Trade Forex System  –  Don’t Get It!

A manual we feel may not have been written by someone who’s native language is English, nevertheless, it is comprehensible enough.  The recommended time-frame for this system is 4 hours (so a timeframe we like) and it “has been successfully tested for any time frame”.  The system itself is based on a rudimentary version of Fibonacci which is used to forecast a “Power Turn Point”.  However, the methodology behind this system just didn’t make sense (was not Technically Sound) to us and we didn’t back-test or attempt to use this system in real-time, just for that reason.  It would be interesting to hear from anyone actually trading this system to determine its usability and profitability.

London Rush  –  Just About Made It!

The only other system we have come across that has almost made it to “Systems We Use” category.  Claims of “Only 2 Hours A Day Is Required” actually equates to about 2 minutes a day around 08:00 (UK local time) most days.  The system is pretty much 95% mechanical and our live running in July produced a nice return of about 6-7% risking 3% of account balance per trade.  Even though we have an outstanding issue (and receive no response to any of our emails) we continue to run with this system and it’s on our “Systems We Use” list.  See our site for our real-time journal. Forex Trading Systems.

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