Automated Forex Trading | Forex Robot Scams

The Forex market is now open to retail traders and this has generated a huge rise in automated Forex trading systems. These provide the home based trader with a ‘set and forget’ trading system, where the trader installs a Forex robot onto their brokers charting system, selects their criteria and the robot takes over. ..well that’s what you hope will 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 out there, independent testing by experienced traders has shown up many failures 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 platform you are using and the fallibility of the historical charts you access, these will and do vary wildly. We have never yet been able to replicate the results offered on a sales page. Some Forex robots we have tested were incredibly efficient at wiping 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, no, 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 programmed series of indicators, then determines entry and exit strategies based on its analysis. It opens a trade automatically, based on risk management strategies and attempts to make a profit. It will also close the trade, in line with its pre-coded parameters.

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. 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 just have to make sure the trading software has stop loss strategies built in, some don’t, so check carefully!!

This is another way Forex robots enhance their supposed performance look good. Without a stop loss strategy, they allow uncontrolled draw-downs, keeping the trade open until it returns to into profit. If the draw-down is huge it can also crash your account since you may not have the funds in your account to protect 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 a pair of Forex robots we use, these two robots are regularly 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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