As the power of computers increases and the number crunching ability of currency trading software, becomes quicker, programmers continually look for the holy grail system which can crack the code of the market and many systems claim they have found it. You will often see track records of several hundred percent per annum, draw down of under 1% and claiming more than 95% accuracy but these track records are not all they seem.

The fact that people believe there is some hidden code to currency trading is movement is ridiculous and while you can make money with currency trading softwarE, there are limitations to software applications in currency trading because:

Currency Markets Don't Move to Science!

Currency prices are decided by millions upon millions, of humans and there not cold logical beings, their creatures of emotion and for this reason, the currency markets are markets where you have only probabilities NOT certainties.

Despite this obvious fact, you find the far out investment crowd,who believe ridiculous theories such as Gann Fibonacci, Elliot Wave and the numerous Forex robot vendors, who say they can predict the future with science.

If this were true the market wouldn't exist as we would all know the price in advance and there would be no market! These systems sell on greed and naivety and there predictions, end up being as accurate as your horoscope, when you come to enter your trading signals.

The Hidden Order You See When Curve Fitting

Many programmers run tests over past data and they manage to see order and the way they do this is to fit, the track record to the data. The keep adding parameters and changing rules until the system fits the data and this is known as curve fitting. It's very similar to shooting at a barn door with a blindfold on and then, drawing a chalk circle around each one, to make it look like a perfect bulls-eye!

The problem which occurs when these systems are traded is:

No two pieces of data repeat EXACTLY the same way going forward and the system collapses in real time trading. Anyone can bend a system to fit past data and make a profit but making money, without knowing the closing price is a different matter.

A Simple Fact and the Limitations of Trading Software

95% of all currency traders lost 50 years ago and this same number still remains the same today, despite all the advances in technology and currency trading software we have seen in the period; the same amount of traders lose. This should tell anyone, that the pursuit of the Holy Grail currency trading system is a pointless search.

Use Software Correctly and Win!

Currency trading software if applied in the correct way can help you improve the profitability of your currency trading strategy because it can save you time with testing and automate your trading.

What you need to avoid is curve fitting so when testing your rules – make sure the rules are consistent across all currencies trading, there are no special rules for different market conditions and the number of parameters is kept to a minimum. Its a fact that simple automated currency trading software systems work best because, these programs are more robust and less likely to break than complex ones.

Final Words

If you want to win with a currency trading system, forget about looking for the holy grail of currency trading and focus on trading the odds with a robust and simple system. If you employ sound money management, run your winning trades and cut your losers,you will do just fine. You won't be perfect with your market timing and not every trading signal will be a winner but hey, that doesn't matter when your making great long term currency trading profits.

Forget the Holy Grail of currency trading and trade the odds for currency trading success – it really is that simple.