Posted June 4th, 2010 by sharkdancer
Forex Robot software is popular but very few traders win with a robot, here we will look at the main reasons why and how to find a Forex trading system that wins…
Forex Robots fail in real time trading because the vast majority are based on unsound logic and have never made any money in real time trading sure, the track records says they have but look a little closer and you will see the reality which is:
The track record is a simulation in hindsight or presented by the vendor with no independent verification.
The claims are extraordinary and are obviously not true:
Double your money each month, little or no drawdown, trade with over 90% accuracy etc and you can get access to these systems (which beat the best traders in the world) for the cost of a night out.
If you listen to the sales copy, you have to make no effort and simply make money while you sleep. Common sense tells you these systems don’t work, they simply look to good to be true and they are.
Now I am not saying you cannot make money with automated Forex software because you can – but let’s look at the reality of trading robots and leave the fantasy behind.
The reality is there are some good solid programs you can use which have made real gains and the best normally make about 50 – 100% per annum with drawdown being around 20 – 50% depending on the risk profile of the system and a typical drawdown period will last for a few weeks.
So great long term gains, if you can ride out short term drawdown with discipline.
So if you buy a Forex trading system, look for real gains and check the logic so you can follow it with discipline.
You can buy a system and surprisingly, there are a few great free trading systems you can use that work (we like Richard Donchian’s 4 Week Rule) and they can if applied over the long term, lead you to currency trading success.
Posted June 4th, 2010 by sharkdancer
Forex Robots are chosen by a huge amount of new Forex traders, they believe they can make money with them, make huge returns and make no effort but this is simply not true and These robots son destroy the users accounts. Let’s take a look at why you won’t make any long term gains with a Forex robot.
The Forex robots never present an independent track record of gains that is verified over the long term.
All you get are back tests or figures from the vendors themselves. So they have no proof of making money but tell you that you can make more money than the worlds best traders (who earn millions) by following their robots which cost just a few hundred dollars.
Anyone who believes the Forex robots make money will be disappointed.
A track record based on back testing where the vendor knows the closing prices and simply buys and sells at highs and lows, is far easier than trading when you don’t have the luxury of knowing the closing price in advance! Of course if we all knew the closing price in advance, we could all be trading millionaires but that of course is not the reality of Forex trading.
Traders are always looking for easy ways to make money but in Forex trading to make money, you have to work and learn skills. Forget the ridiculous claims the Forex Robots make and concentrate on getting yourself a decent Forex education and if you do, you can then trade with confidence and win.
If you do make an effort, no other venture can make you as much money for your effort as Forex trading.
Posted June 3rd, 2010 by sharkdancer
Forex robot trading is not the easy route to huge profits that most traders believe. If you want to win with an automated trading system make sure you don’t believe the 3 common myths enclosed…
Here are your 3 common myths
1. Forex Robots Offer Huge Gains and Low Risk
Does anyone seriously believe you can double your money each month with little or no risk and make money while you sleep? This is the advertising copy and it’s laughable. No robot does this and the user gets handed a lesson by the market.
2. Complex Mathematical Algorithms that Predict Price Changes in Advance
I see many robots which claim 90% accuracy and they say the complex mathematical equations they use can predict price changes in advance but they don’t. Most of the equations are actually crude, not complex and lose. These systems also tend to trade too much and have no concept of money management.
Mathematics to predict the market is a huge myth why?
Because markets don’t move to mathematics, they move to probabilities. In an odds based market a complex equation is of no real use, as simple systems always work best as they are more robust than complex ones.
3. You Have no Risk Because you Can trade it in a Demo Account
This is normally part of the advertising copy. Trade it for a month and see how it performs in a demo account and see for yourself.
Well since when was a month long enough to judge a system and its performance? Two years should be the minimum any system trader should consider and by the time you have done that, the guarantee no longer applies.
The Reality of Forex Robot Trading
Never matches the hype and deep down most traders know they wont get rich for a few hundred dollars but they still buy them. In recent years we have had the rise of online trading and account minimums have fallen to just a few hundred dollars.
People want to get in on the action and the Forex robot myths sell a lot of systems but if you believe them you will lose.
Before you trust your financial destiny to mass produced piece of software, think about the above and try a different route; Get yourself a decent Forex education and learn skills, apply them with discipline and you will be on the right route to Forex trading success.
Posted June 2nd, 2010 by sharkdancer
Most forex robots lose there are some that are good but to say they are better than humans is simplistic there not for two reasons…
There are two limitations which you need to be aware of when using even a good robot.
1. Robots can only do tasks programmed into them by Humans
2. Markets do NOT move to a mathematical formula so of course they have limitations
Humans are capable of independent thought and that is why most of the major top trading houses in the world still use human dealers and computer trading systems combined. The human brain is simply the most powerful computer on the planet it may not have processing speed but in terms of different calculations it can make its way ahead of any computer.
Also consider this.
In the last 50 years the same number of traders lose as they did in yester year – that’s 95% and this is despite the awesome processing speed of computers. Your PC On your desk, is far more powerful than the computer which put man on the moon.
While processing power is a help, the markets are not mathematical and don’t move to a scientific theory (if they did we would all know the answer in advance and there would be no market) so if they don’t move to science, computers can only do so much.
Why most forex Robots lose
The ones that are sold and appear to have fantastic track records, have actually have never been traded in the real world. They have simply been back tested and the rules bent to fit the data ( this is known as curve fitting) and while they work on the segment of data tested, this exact price history never repeats again and the system breaks in real time trading.
Check most of the sold track records on robots and there is NEVER a real track record and they never work.
Are there any good forex robots?
Yes but you must understand they have limitations and are not perfect – they will have periods of losses that last weeks but you can find ones that make money and that’s the aim of forex trading.
The best forex trading systems tend to be simple and robust. The forex markets will soon break a complicated system.
Many traders like the idea of a forex robot working away and them making no effort, we all do but remember, you have to have the discipline to apply it and that means knowing how and why it works and sticking with it, through periods of losses, until you hit a home run.
To say that computers are better than humans at trading is incorrect, as a computer is simply a reflection of the programmer and while they can make money, anyone who thinks that building ever more complex computer programs will make money are wrong.
Computers have there place in trading – but just like humans they have limitations. Both a human and a forex robot can make money and neither is necessarily better at trading than the other.
Posted June 2nd, 2010 by sharkdancer
Forex Robots will generally wipe out your account and do it quickly. Only a tiny minority win and they’re not the ones you see heavily advertised. Normal, sensible people fall for the myth they do make money and here are 3 reasons, why you are odds onto lose with them…
The first point to make is that the automated Forex trading systems you see all produce great track records – better in fact than the worlds top fund managers and all for $100! Now, why haven’t banks brokers etc, sacked their multi million pound dealing teams and use a robot instead? This leads to the first key point.
1. The Robots Produce Made Up Track Records in Hindsight
All you need to do is look at the small print and you will see the Robot has never been traded for real, it’s a back test on historical data knowing all the facts and closing prices. The vendor simply buys and sells to make a profit knowing the closing prices and bends his system to fit the data. You can’t bend going forward though and these Robots get a reality check from the market and get wiped out.
2. Starting Equity
Even if the systems were good, the amounts they say you can start with – like $100 are just too small. You are going to have losses on any system and $100 will soon be taken by the market.
3. Money Management is non Existent
Because the track records are bent to fit the data, money management rules are generally non existent.
The reason for this is that they have bent the rules and will leave trades open you would never do in real life. I once saw a robot which claims in several years it had never had one single loss yet, look at the track record and you could see a trade closed for a profit of under 10 pips but losses were several hundred pips before the trade turned around. You wouldn’t do that in real life!
Any Forex Trader knows that success is built on money management and these robots have rules that in most instances are laughable.
Fantasy Profits Reality Losses
If you want to win at Forex trading forget the fantasy of plugging in a $100 dollar software package, with a simulated track record and it giving you profits with no effort instead, focus on learning Forex trading the right way.
How to Win
You need to make an effort and get the right Forex Education – but your efforts will be well rewarded. You can learn to trade in a few weeks and soon be making big profits in around 30 minutes a day.
Treat the markets with respect and you will be well rewarded with a great second or even life changing income, trust a robot with a simulated track record and you will be in the majority of losers.