Automated Forex Trading | Forex Robot Scams

The deregulated Forex market has offered the chance for Moms and Dads to currency trade and this has produced a dramatic increase in automated Forex trading systems. These give the trader a ‘set and forget’ trading methodology, where the trader installs a Forex robot onto their Metatrader platform, selects their parameters and the robot takes over. ..well that’s what is supposed to happen.

There are many people who are selling Forex robots who have claimed to have found this Holy Grail, and though there are some fascinating Forex robots available, independent testing by experienced traders has highlighted inaccuracies in the claims made by the vendors.

Most of the Forex robot performances are based on historical ‘back testing’ results, not live account testing and depending on what system you are using and the accuracy of the historical charts you obtain, these will and do vary wildly. We have never yet been able to duplicate the results offered on a sales page. Some Forex robots we have evaluated were quite brilliant at wiping out our demo account, so approach very carefully.

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 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 cleans you out on a demo account, how do you think it will go live???

I would love to, but, I am not going to list 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 dissects and interprets its own series of indicators, then determines entry and exit strategies based on its interpretation. It opens a trade 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 work on Metatrader4, which is a very common trading platform and they need narrow trading spreads, often 2-3 pips, occasionally up to 5 pips. They often need time to “bed down” before they commence trading. Some Scalp, which is grabbing small quick trades and others trade over extended periods and all will have loosing trades. You must make sure the robot has stop loss strategies built in, some don’t, so be careful!!

This is another way Forex robots make their paper profits look good. Without a stop loss strategy, they allow excessive draw-downs, keeping the position open until it reverses and comes into profit. If the draw-down is huge it can also send you broke since you may not have the reserves in your account to hedge the loss, so your broker will demand extra funding.

If you don’t want to day trade and wish to use automated Forex trading, there are two Forex robots we use, these two robots are always being updated by their developers, so we are always checking 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.