even overtook the interest in futures and commodities trading, we have
seen a lot of forex trading systems being developed. As new technology
evolved, we have also seen the power of the desktop computer being
harnessed for running trading platforms involving all sorts of forex
trading systems instead of using computer mainframes.
The usual way most traders would want to test their forex trading
systems is to use a forex strategy builder and back test on historical
data, and then to discover what parameters in that trading strategy
are important to the results, and to forward test again on past
historical data to check the results.
Some traders will merely back test historical data, and then run the
system to test on simulated data. If they find that the system could
generate good results based on the system parameters, they then adopt
the system for actual use in real trading instead of a paper trade.
There is a lesser known way of testing a forex trading system, and
that is to actually port the trading system to test it on actual
historical individual stock data.
In other words, you can use the forex trading strategy to test it on
historical stock data and to check how the system performed with stock
market data.
Stocks and shares normally have less volatility then forex, the
difference being trading stocks and shares would involve a study of
accompanying volume. In contrast, we are concerned with price and time
action in forex and not volume. Further. many forex traders are more
familar with trading stocks and shares, and to use a forex trading
system on stocks and shares would allow the trader who is transiting
from trading stocks and shares to trading forex, an easier way to
learn how to trade forex.
A general guideline for testing a forex trading system with individual
stock data is this - if you find the forex trading system to perform
well with an individual stock data, returning profits consistently,
you can have reasonable confidence that the same forex trading system
will function as well for trading forex itself. If the forex trading
system does not perform well with stocks and shares, the general
understanding is that the system may not be robust enough for the
volatility and velocity of trades inherent with trading forex.
As always, this is not a dogma, but a general guideline. That is why
any forex trading strategy or system have to be tested prior to being
adopted for trading.
What is significant is that you can uncover the power of a forex
trading stratgey to use on trading stocks and shares in this manner.
Some forex trading strategies have been performing very well on stocks
and shares, and it follows that these will also perform as well with
forex.
Protect Your Profits and Legally Beat the Brokers at Their Own Game:
http://brnightmare.hit.to/
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