As the popularity of Forex trading has grown, the number of strategies has also multiplied. Simply defined, a Forex trading strategy is the plan designed to allow a trader to successfully participate and make a profit in the Forex market. Most trading strategies take the form of a software package that will either signal a trader when they should make a particular trade, or in some cases automatically complete the trade for the trader.

For those not willing to spend the time to create their own strategies there are alternatives. It is possible to purchase or lease a strategy, but a trader should learn the basics of evaluating a strategy before acquiring one. The following key evaluation points will serve as a guide:

Price: It is very important to know if the program has a minimum account balance. Some programs will only function if you start with a minimum balance as high as $10,000. If this is above the money you are willing to trade, it would be best to choose a different strategy. If the price is not clearly listed, it would be best to choose another strategy.

Account Risk per Trade: How much of your total account are you risking per trade? The higher the percentage of the account risk per trade, the easier a loss can cause you to be taken out of the game.

Total Net Profit: Total net profit is the sum of all trades completed during a certain time period. It is important that transaction costs be factored into this figure or the data will be misleading. Transaction costs can be high, so make sure all figures you look at have the transaction costs figured into them.

Percentage of Winning Trades: This evaluation measurement is frequently misunderstood. Many users assume they must have a have a high percentage of winning trades in order to have a profitable Forex strategy, however this is not the case. In fact, often Forex strategies advertising percentages between 95% and 100% are set that way to lure those with limited experience in Forex trading that don’t understand that such a strategy would be unsustainable.

Although strategies with high percentages of winning trades look good at first glance, usually these strategies have risked a lot and gained little. Most experienced traders would advise new traders to steer clear of these strategies.

These simple evaluation methods will allow you to pick the Forex trading strategy that is right for you. Remember to keep these in mind as you search for you Forex trading strategy, and don’t allow yourself to be taken in by scams. If it looks to good to be true, it probably is. Once you find a strategy you believe fits your needs, test it out with a free Forex demo account before risking real funds. If you are pleased with the results of the free demo count, then you can use the strategy to begin trading with your real account.