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 system, where the trader installs a Forex robot onto their Metatrader platform, selects their chosen inputs 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 out there, extensive 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 platform you are using and the fallibility of the historical charts you download, these will and do vary wildly. We have never yet been able to mirror the results claimed on a sales page. Some Forex robots we have evaluated were quite brilliant at destroying our demo account, so approach very carefully.

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 give you 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 dissects and interprets its preselected series of indicators, then determines entry and exit strategies based on its interpretation. It trades automatically, based on risk management strategies and aims to make a profit. It will also close the trade, based on exit strategy.

Most of the modern Forex robots require Metatrader4, which is a very common trading platform and they should have narrow trading spreads, often 2-3 pips, occasionally up to 5 pips. They often need time to “bed down” before they begin trading. Some Scalp, which is grabbing small quick trades and others trade over extended periods and all will have loosing trades. You just have to make sure they have stop loss strategies built in, some don’t, so double check!!

This is another way Forex robots enhance their supposed performance look good. Without a stop loss strategy, they allow uncontrolled draw-downs, keeping the position open until it turns and comes back 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 protect the loss, so your broker will demand extra funding.

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 constantly 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.