After back testing, assuming the system looks rewarding, you may then test it in a demo account on the live market. This gives another range of valuable currency trading info relating to your system. Demo testing is still no risk because you won’t be using real money, but you are reacting to the state of the market in real time. Obviously this is a slower process because you have to wait for a trading signal rather than scrolling thru past charts. It gives very valuable feedback about how you would essentially operate the system. On the other hand if you intend to operate more than one system simultaneously when you switch to real money, it’s a neat idea to try this in demo first so that you can see the effect on your trading.
Testing your system effectively can take a while, but it is time very well spent. While you are testing you’ll be learning a massive amount about the behaviour of the market and your own trading behavior, as well as the system itself. Traders frequently forget to take into account their own behaviour or trading style, but it is vital to the success of the system and is often the reason why people who follow systems that have worked OK for other traders, have difficulty making them profitable. They look for more FOREX trading information but do not see that their own character has an effect on their trading too.
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