Posted June 4th, 2010 by sharkdancer
Forex trading robots are sold as an easy way to make money with no effort so, why don’t banks and major dealing houses sack their dealing teams and save millions in annual salaries – Why? Because Forex robots lose money…
It never seems to occur to traders that the Forex robots sold heavily online, say they have better track records than the world’s top fund managers and yet, anyone can get instant wealth (if you believe the sales copy) by spending just a few hundred dollars. Doesn’t add up does it?
The reality of Forex Robot trading is that users quickly lose money, because the robots don’t work and are based on unsound logic.
They use back tested simulations over historical data and then a make hypothetical track record of gains but this is easy, as you know all the closing prices and when they trade forward not knowing this key data, they fail and lose money.
Because these systems have bent a track record to fit the data in hindsight, don’t have any proper money management rules. Losses are huge and as money management is the key element of successful Forex trading, a wipe out of equity soon occurs.
As yet, no major banks, brokerages or fund managers, have sacked there dealing teams on millions of dollars in salaries and replaced them with a team of Forex robots.
The buyers of these robots tend to be naïve or greedy investors, who dream of instant riches and are rewarded with a wipe out of equity.
If you want to win at Forex trading, get yourself a decent Forex education, learn skills and your efforts will be well rewarded.
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 3rd, 2010 by sharkdancer
Forex trading is a huge industry now days. There are gigantic fortunes that are gained each day by successfull traders. Unfortunately a lot of people that don’t know what they are doing are loosing lots of money also. If it were easy, everyone would do it, right?
Recently a few companies have come out with what they call Forex robot traders. What they are, are robots, or better yet computers, that do all the calculations of when to buy and sell. It’s supposed to take all the guess work out of the equation for you. You just set up the program and put it on auto pilot and watch the cash just pour into your bank account. Ahh, if only it were that simple. I won’t lie, these robots are pretty good and you can make money with them, but they also, like anything, do have their flaws. Here are a few that I have discovered.
First, MT4 robot systems work only on MT4, while the services that have an auto alerting buy/sell system are not limited to any particular platform.
Second, MT4 EA’s are based on pure mathematical formulas (mostly they are combinations of simple and exponential averages). Forex auto alerting is a self-learning system based on neural networks and genetic algorithms and as input it takes a lot of parameters (such as the day of the week, part of the year, other currencies prices, gold price, oil price, holidays, etc.).
MT4 EA’s can’t do it (or maybe they can, but they don’t as it’s a very complicated schema requiring a high computational power, which is impossible to obtain on a home PC). EA’s usually take in account only the history of the given pair and that’s all. We believe that the market can’t be described with such a simple math model with one parameter only. It’s a non-linear system like weather or flowing water.
While the robots are great, they are limited in what they can do. I’d suggest a program that
will give you ready-to-use Forex trading signals. Using them you can make money on Forex without thinking. This is most efficient and modern money making methods today. It can be used by anybody in all countries of the world. All you need is access to Internet few times a week, few minutes each time. That’s all. That way you can capture the the entire Forex market, not just the MT4 systems.
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.