Learn to trade – Questions to ask before buying any forex or futures trading strategy

I strongly suspect that novice traders when they are learning to trade  spend more money buying useless “never could work “ trading strategies than they suffer in actual trading losses. They endlessly move from one “too good to be true” system to another without first standing back and trying to validate the claims made.

Here are a few pointers for the sorts of questions you should be asking before you buy any trading strategy or training course.  Let me say right at the start that from over 30 years of trading experience I can tell you that the vast majority of trading strategies that are sold today not only do not work but they could never work. They are sold to frankly naive and gullible traders on the basis of ridiculous and unsubstantiated claims made by the vendors who are almost invariably marketing men not traders.

Firstly try to validate the trading credentials of the vendor themselves. If they have this fantastic system for sale then they must be trading it with their own real money. Asked to see a few of their own real money brokers trading statements and don’t accept any excuses. This will eliminate over 95% of all trading strategies and course on the market today. Yes that is right over 95% of vendors selling such strategies and courses do not trade them with their own money – that is telling you something very important – and it is not telling you something good !

Having purchased a strategy always trade it on a demo account initially. Prove the strategy works with Monopoly money before risking your own. If you think it’s bad enough losing $1500             buying a strategy or course then believe me it is far worse if you then go on and drop another three grand trying to trade something that could never work !

Ask what the worst theoretical historical drawdown has been over say the last five years. If they say they do not know then ask why they do not know such a critically important figure.

Asked how long this particular strategy has been available for sale to the  public in a completely unchanged state. Often vendors will release a strategy then  find that it has crashed and burned after three or four months so they then  release a new version with a few tweaks that make it look tradable again. This is often a never ending repeating pattern every few months they release a new version. So when you buy version 27 of  a can’t lose trading system don’t think that this version has finally ironed out all of the problems  – think precisely the opposite

Ask what is the average trade profit and if this is before or after allowance for commission and/or spread. Often you will find, with short-term systems especially,  that once you take into account a realistic spread then an apparently winning system turns into a losing system

To be honest the real key to not getting ripped off is point one above. If the vendor can prove he makes real money on a real trading account then he’s probably worth listening to and buying from.  if he cannot then is almost certainly he is just another snake oil salesmen – walk away. It is THAT simple.

Posted in:
Articles by: