Things To Look For When Choosing A Forex Signal Provider
There are some red flags that should be easy to spot that will help you to protect your forex account. Many of the traders available as third party signal providers look good for a few weeks, or even months, but are really just ticking time bombs. Don't be around when the timer stops.
This article is meant to assist you in uncovering and bringing to the front a few items you need to be aware of and avoid. Do not consider it to be an all-encompassing document of alerts. Look for:
Stopless Trading
Avoid any and all traders without stops. The trader may look fine but there are uncontrollable factors that are lurking that you cannot avoid. Factors such as power outages or connection failures can effect you because the market runs fast and far on incoming news. You must avoid this type of trader like the plague. It is the first pitfall that a trader learns to steer clear of.
Disproportionate Win/Loss Sizes
Some traders get excited and pull profits off of the table far too early. Generally this is a good idea for a losing trade. You want to cut your losses short and let your winners run. This should cause your winners to be bigger than your losers. Any trader who regularly takes 10 pips of profits and has 200 pip losers on his books is no one that you want trading your account.
New Trading Accounts
These are not actually red flag traders but you should still avoid them. Any trader with only a few weeks worth of records should not be traded on a live account. You can absolutely run them on a demo for a month and take a look at the results, but if the trader is worth trading, they will still be there in 6 months. And by then you'll have a much better idea of who you're dealing with.
Large Gains Following a Draw Down
Abnormally big winners are the sign of a trader who has seen the end of an enormous draw down and is betting it all on one last ditch effort. The account indeed recovers and to the new onlooker's eye, the guy looks like a true winning trader. The reality is for every 10 tries, the trader is lucky if even 2 make it to survival and recovery. These are the 2 that are wafting about in cyberspace searching for you. At their next draw down, they will almost certainly go for the "hail Mary" pass and the end could be ugly. Better not to pray your way into a winning situation, stick to more scientific methods.
Remember what was said in the beginning of this article. These pearls of wisdom are only scratching the surface of things to be aware of in the world of forex. - 23162
This article is meant to assist you in uncovering and bringing to the front a few items you need to be aware of and avoid. Do not consider it to be an all-encompassing document of alerts. Look for:
Stopless Trading
Avoid any and all traders without stops. The trader may look fine but there are uncontrollable factors that are lurking that you cannot avoid. Factors such as power outages or connection failures can effect you because the market runs fast and far on incoming news. You must avoid this type of trader like the plague. It is the first pitfall that a trader learns to steer clear of.
Disproportionate Win/Loss Sizes
Some traders get excited and pull profits off of the table far too early. Generally this is a good idea for a losing trade. You want to cut your losses short and let your winners run. This should cause your winners to be bigger than your losers. Any trader who regularly takes 10 pips of profits and has 200 pip losers on his books is no one that you want trading your account.
New Trading Accounts
These are not actually red flag traders but you should still avoid them. Any trader with only a few weeks worth of records should not be traded on a live account. You can absolutely run them on a demo for a month and take a look at the results, but if the trader is worth trading, they will still be there in 6 months. And by then you'll have a much better idea of who you're dealing with.
Large Gains Following a Draw Down
Abnormally big winners are the sign of a trader who has seen the end of an enormous draw down and is betting it all on one last ditch effort. The account indeed recovers and to the new onlooker's eye, the guy looks like a true winning trader. The reality is for every 10 tries, the trader is lucky if even 2 make it to survival and recovery. These are the 2 that are wafting about in cyberspace searching for you. At their next draw down, they will almost certainly go for the "hail Mary" pass and the end could be ugly. Better not to pray your way into a winning situation, stick to more scientific methods.
Remember what was said in the beginning of this article. These pearls of wisdom are only scratching the surface of things to be aware of in the world of forex. - 23162
About the Author:
To learn more about Automated Forex Trading Systems or to choose a signal provider at Zulutrade visit http://www.automatedforextradingsystems.com .
posted by X - Men @ 6:48 AM
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