Many forex traders lose money within the first months of doing forex trading, i have writen this article to help and guide new forex traders by asking questions to them self before the forex trader needs to know before he or she will be back-testing their forex system.
these are the most basic question that a forex trader should ask to his self.
What kind of data type are you using when trading forex?
bid, ask, mid and indicative, these are the different data types in the forex market you can have up to 4 different data types but Each have their own little light degree of difference.
it is also important to know the indicative prices, remember that you need to be careful on how stop and limit orders are placed.
another question is, What spread does your broker offers on the currencies you are bask testing?
this is very important and you need to know this as this can help you set the slippage settings on each currency.
take note that knowing at what price to buy is only half of the traders problem. a trader should know how and what quantity to buy? In this case a trader should also know
What margin does your broker offer?
If a traders knows what price to buy on our currency and inform our broker on what quantity to buy to fill the order. traders only know what quantity to buy by the margin that the brokerage firm offers.
Most brokerage firm offer the 100:1 leverage, however, some other firms offer mini accounts with 200:1 leverage, and some others only 50:1 leverage.
Traders should need to find out the margin required.
What restrictions does your broker firm obtrude?
what a trader needs to find out are the details and resriction of the broker firm obtrude.
This is probably the most important question for a trader to ask himself, traders success and failure can be found in the details.
The brokers firm restrictions are only half your systems success, as a trader you also need to find out about another more important restriction.
What traders restrictions do you have?
Most traders test their systems and fall in love with the results but find out when they trade their system and they have lost their account and that most of the best signals occurred in trading is while traders were sound asleep.
The forex market is a 24 hour market, and a trader need to put restrictions in your system.
it is important as a forex trader that you are aware of these important things before testing your forex system.
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