Is a forex simulator really effective in determining the success rate of certain trading strategies? As I saw some sites that market their trading strategy that claims it achieved 70% to 80% success rate in their trades by putting it thru a 5 yrs forex simulator.
Any decent programmer can “curve fit” a set of indicators to match historical data with a high degree of accuracy. The difficulty is that the market conditions to which the system was “fitted” may not exist going forward. Use simulators to back test and gather a ball park idea of whether a trading set-up you are considering may be valid.
IMO, you do not need to buy any software or indicators. Your time and money will be better spent learning what makes markets move and how indicators and charts reflect those movements. Try out the babypips school, then check out the “holy grail” section of the forum for some starter ideas. (That’s not a recommendation of the systems in the forum or any system. )
like toptick07 said, also I think you need at least one descretionary trait when trading whether it be the exit or whatever(well more exit then entry). Many times the mechanical system will fail, but they wouldn’t show those times right? They are there to make money off of you, that’s it. So many people get sucked into it. besides maybe it did achieve a 70% rate at one point in time, but others it achieved success. What’s the long run rate of the system. That’s why it’s best to create your own or at least test them to see if they work. You know the in’s and outs of the system, you learn more about it and how to react to what the market does. A quick buck is lying on the floor but are you willing to get down on ur knees and dirty in front of everyone to get it? notice I said “buck” and not “a lot of money”. Anyways there have been those before and those after that go for the simulator. I suggest you ask thoroughly about, the return policy(if any?), any guarantees, etc. Of course I would say stay away. But most of the time learning through experience if the true way to gain knowledge. However, do as you must, have a good one, and best to you eh!
I recently bought Forex tester from forextester.com, a trading simulator and back testing programme.
I have found it to be a great tool. A tool is all it is though and it will not garauntee success.
As has been mentioned, back testing is fraught with dangers such as curve fitting. One must take this into account when using a simulator. However, what I have found to be the most useful thing about the programme is the ability to speed up the time sequence. This allows me to watch the charts and gain practice at recognising my trade set ups as they occur “at the right of the screen” so to speak. Previous to buying the programme I only had the option of watching the markets in real time and seeing maybe 1 or 2 trade setups in real time each trading day. Now I can watch months and months of data and trade set-ups in a single day. The familiarity with my trade set-ups this brings is invaluable.
Whilst that is not the same as real trading with all the emotions and pressures, it is a great step forward. I would recommend the programme as a very useful tool.