Automated Forex Trading | Forex Robot Scams
The deregulation of the Forex market, now offers small investors and traders the chance to trade the Foreign Exchange and this has generated a huge rise in automated Forex trading systems. These offer the trader the ability of a ‘set and forget’ trading system, where the trader installs a Forex robot onto their Metatrader platform, selects their criteria 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 available, independent testing by experienced traders has shown up many failures in the claims made by the sellers.
Most of the Forex robot performances are based on historical ‘back testing’ results, not live account testing and depending on what broker software you are using and the substantiation of the historical charts you obtain, 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 tested were quite brilliant at cleaning out our demo account, so don’t believe all the claims.
Demo accounts also have the reputation for 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 taking this into consideration, 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 provide the Forex Robot failures, to put it simply, I don’t want to get sued!
How does an automated Forex trading system work?
Each is different and reads different signals, an automated Forex trading system reads and interprets its preselected series of indicators, then determines entry and exit strategies based on its interpretation. It trades automatically, based on risk management strategies and attempts 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 work on 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 taking small quick trades and others trade over longer periods and all will have loosing trades. You must make sure the robot has stop loss strategies built in, some don’t, so check carefully!!
This is another way Forex robots make their results look good. Without a stop loss strategy, they allow uncontrolled draw-downs, keeping the position open until it turns and comes back into profit. If the draw-down is big it can also crash your account since you may not have the funds in your account to secure the loss, so your broker will close your account.
If you don’t have the time to day trade and wish to use automated Forex trading, there are two Forex robots we use, these two robots are constantly updated by their developers, so we constantly monitor their performance and keep them up to date, it’s all part of our trading management strategy for automated Forex robot systems.
To find out more about these Forex Robots, we review them on our new Blog, you will also find other Forex Trading Tools.
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