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 given rise to vast array of automated Forex trading systems. These provide the home based trader with a ‘set and forget’ trading methodology, where the trader installs a Forex robot onto their brokers charting system, selects their criteria and the robot takes over. ..well that’s what is supposed to happen.

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

Most of the Forex robot sales claims are based on historical ‘back testing’ results, not live account testing and depending on what system you are using and the substantiation of the historical charts you download, these will and do vary wildly. We have never yet been able to mirror the results offered on a sales page. Some Forex robots we have evaluated were quite brilliant at destroying 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 as you consider this carefully, 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?

Each is different and reads different signals, an automated Forex trading system analyses and interprets its preselected 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, based on exit strategy.

Most of the modern Forex robots run on Metatrader4, which is a very common trading platform and they require 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 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 be careful!!

This is another way Forex robots make their results look good. Without a stop loss strategy, they allow vast draw-downs, keeping the trade open until it returns to into profit. If the draw-down is large it can also send you broke since you may not have the reserves in your account to protect the loss, so your broker will demand extra funding.

If you don’t have the time to day trade and would like to use automated Forex trading, there are two Forex robots we use, these two robots are constantly updated by their developers, so we regularly watch their performance and keep them up to date, it’s all part of our financial 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.