Automated Forex Trading | Forex Robot Scams

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The deregulation of the Forex market, now offers small investors and traders the chance to trade the Foreign Exchange and this has produced a dramatic increase in automated Forex trading systems. These offer the trader the ability of a ‘set and forget’ trading methodology, where the trader installs a Forex robot onto their Metatrader platform, selects their chosen inputs and the robot takes over. ..well that’s what you hope will happen.

This is likened to finding the Holy Grail, and though there are some fascinating Forex robots on the market, extensive testing by experienced traders has exposed many flaws in the claims made by the sellers.

Most of the Forex robot credentials are based on historical ‘back testing’ results, not live account testing and depending on what platform you are using and the accuracy of the historical charts you download, these will and do vary wildly. We have never yet been able to duplicate the results presented on a sales page. Some Forex robots we have evaluated were quite brilliant at destroying our demo account, so don’t believe all the claims.

Demo accounts have always been good at producing much better results that live accounts. Demo accounts will always fill a trade, whereas live accounts are subject to a variety of uncontrollable variables like spread variations, slippage, and liquidity, plus broker quirks and lot sizes, just to mention a few influences. So when you stop and think about it, if a Forex robot wipes you out on a demo account, how do you think it will go live???

Much as I would love to, I am not going to list the Forex Robot failures, why? quite simply, I don’t want to get sued!

How does an automated Forex trading system work?

Every one is different, an automated Forex trading system reads and interprets its programmed series of indicators, then determines entry and exit strategies based on its interpretation. It trades automatically, based on risk management parameters and aims to make a profit. It will also close the trade, either based on a profit margin or a stop loss position.

Most of the modern Forex robots require Metatrader4, which is a very common trading platform and they should have narrow trading spreads, often 2-3 pips, occasionally up to 5 pips. It is not unusual for a robot to “bed down” before they commence trading. Some Scalp, which is grabbing small quick trades and others trade over longer periods and all will have loosing trades. You must make sure they have stop loss strategies built in, some don’t, so check carefully!!

This is another way Forex robots enhance their supposed performance look good. Without a stop loss strategy, they allow vast draw-downs, keeping the trade running until it reverses and comes into profit. If the draw-down is huge it can also wipe you out since you may not have the reserves in your account to secure the loss, so your broker will demand extra funding.

If you don’t want to day trade and want to use automated Forex trading, there are a pair of Forex robots we use, these two robots are constantly updated by their developers, so we are always checking their performance and keep them up to date, it’s all part of our personal risk management strategy for automated Forex robot systems.

To find out more about these Forex Robots, we review them at Automated Forex Reviews, you will also find other Forex Trading tools.

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June 19, 2009 · Filed Under Currency Trading

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