FOREX trading system

At the time of choosing a FOREX trading system for yourself or testing back your own FOREX trading system, you need to be really very aware of all the dangers which are associated with curve fitting. You all know that may be curve fitted of FOREX trading systems appears to be good in theory, but in reality or in practice they hardly works. We all know that they hardly works at the time of practical situations, so now let’s pay a look at an applicable answer to this question.

When you will be seeing most of the FOREX trading systems you will definitely be seeing a different kind of hypothetical track record of all the trading. A track record which is hypothetical in reality is exactly similar to what it sounds – one that has already been made in the hindsight, and that too knowing all the closing prices. You will never ever be able to see illusionary track records which have made many losses! However, when you try your hand on that particular trading system, you really want to trade that system in reality, and all this generally happens because that hypothetical track record which they present to you has already been subject to curve fitting.

Now let us come to the main point that is Curve fitting.
It is the one that simply involves tweaking out all the rules or parameters that are involved in the FOREX trading system and that really helps it to make it really very profitable. Systems having Curve fitted usually collapse down in this brutal and big world of trading. These Curve fitting are generally very easy to identify or spot.
You need to look out for lots and lots of parameters or rules and that too rules which are different, in order to carry out trading with different currencies.
Generally, a technical trading system which is really very successful in its working will surely be having the same kind of rules and parameters for ALL the currencies which has to be traded. But during all this there will only be a specific FEW indicators which are used. By tweaking on to the parameter or rules used for each and every contract which is traded, a trader could have made heavy sum of money, but that would be possible in theory, but not in reality. All this means that the trading system would be less robust or in good working condition in real trading, so the trader would be badly stuck with the best of the lot parameters which gave the highest performance over all the other contracts traded which are traded. Don’t believe in theory, believe in practical experience.

Share and Enjoy: