Automated Forex Trading Robots ...
The Future is Here!
One of the latest developments for traders is automated forex trading or forex robots, their proper name Expert Advisors (EA's).
Automated trading has been a great development for many traders to save them time from having to watch the markets constantly. Other advantages are that the trading strategy can be traded as intended, without missing trades due to a persons emotional hindrance. For more information on psychology of trading go here.
Users of EA's don't need to learn how to trade, unless of course they decide to try and tweak the EA program to improve it's performance.
What is a forex robot? and how do they work?
An Expert Advisor forex robot is a small program that has a trading strategy pre-programed by a trader. The program is loaded into the MetaTrader 4 trading platform. The good news is that the MetaTrader 4 platform is provided free by most forex brokers. Metatrader 4 is an online trading platform developed and released in July, 2005 by MetaQuotes Software Corp. (www.metaquotes.net) MetaQuotes Language 4 (MQL4) is widely recognized as the best language for automated trading.
From the MetaTrader4 platform you can load your own programed EA or those that you have decided to purchase. For more details about MetaTrader4 software, how to get started building your own automated trading robot or where to get free expert advisor robots go here.
After installing your Expert Advisor program into MetaTrader you can proceed to backtest the strategy and check the results. Just make sure not to 'over optimize' your system by backtesting a large time period without "walk forward" testing. Read more here.
Most programs written by trader programmers allow different variables in the program to be changed from the recommended default. Some come with option to allow for more or less aggressive settings. (Increased profit potential along with increased risk or reduced profit potential with lower risk).
After you are satisfied the EA has passed your backtesting & optimizing criteria you can now proceed and trade the forex robot on demo mode for a few weeks or beter still at least three months. This will show any unexpected problems and if the EA can make money in real live trading conditions.
It is important to note that results will vary from forex broker to forex broker due to the forex market not having a central exchange. Also, each broker offers different spread commissions. Hence, some very short term scalping robots can be profitable with one broker but not on another. Here is a list of recommended brokers.
Reliable computer connection required
It is also important to note that unless you upload your automated forex trading robot (EA) onto a Virtual Dedicated Server you will have to make sure your computer is connected to the internet when it trades. If your computer has a power failure or reboots itself due to automatic updating of windows explorer for example this will interfere with the forex robots trading. As noted above, it is a good idea to look at the option of uploading the EA onto a secure virtual dedicated server that will always be on. This will mean that the EA trades from the hosted server, thereby not requiring your computer to be turned on. This option should be explained to you if you decide to purchase an EA. Remember this will incur a monthly fee which needs to be factored into your decision to purchase an EA.
Should you require a hosting service for your EA robot, I recommend Forexvps.com as they have set up their hosting service with the forex trader specifically in mind. It's good to have a top quality hosting service with fast knowledgeable support available.
Some EA's will only trade certain session times of the day or night. If this is the case of your EA you can monitor your computer closely at those times and not require the hosting service.
Finding best robot
The only way these days to verify if the Expert Advisor Robot (EA) is the real deal is to check 'live' trading results in addition to theoretical back test reports. The developer or other traders using the robot can share their results through an independent third party like mt4stats.com or Mt4i.com.
Brainyforex researches and tests popular automated forex trading systems. We put them onto live demo accounts to start with and then move them onto real money accounts after they have shown that they are robust enough to produce profits. Watch their current trading statistics here.
Quickest Method of Evaluation
The quickest and easiest way to evaluate a automated forex trading robot is by looking at the back test results that most of the systems present on their website sales page. Scroll down the list and compare the size of the losses to the size of the profits. In most cases you will notice a string of consecutive profits of equal size. Say for example +$300 +$300 +$300 +$300 +$300 +$300 +$300 ...... looks good so far..... but then you will see a huge loss of - $2,100. This shows the system is taking small consistent profits, and letting the losing ones build up over time. The potential problems with this type of strategy / system are;
- Does not allow profits to continue and increase with the trend.
- Allows losses to continue with the trend and get worse.
- Our trading capital is not working for us as it is tied up in losing position(s).
- Waiting on losing trades to 'turn around' is not good for our mental health. Read more about the psychology of trading here.
The standard backtest report will also indicate the drawdown factor. This is the figure from the high of the account balance to the lowest before a recovery is made. A good system has a low drawdown factor. The rising equity curve should be smooth and steady. (As opposed to large sharp drops in account balance). What makes a good trading system read more here.
2008 Automated Trading Championships
To review actual system results for the 2008 Automated Trading Championships - Find out what made the top three forex robot systems so good here.
Money Management / Position Sizing
It is imperative that good money management rules are used for any type of trading. Manual or automatic. Hence, the best automated forex trading robots will have this as part of their program. If it does not then ensure you understand money management and apply it when trading the EA. more information guidance with money management
Recommended automated forex trading systems
Those who are interested in buying a top quality automated trading system, see further information on recommended trading systems worth trying.
Also, don't forget if you purchase a automated forex trading system through Clickbank you have the standard 60 day money back guarantee as a safety net if you are not happy with the performance of the system. If the system does not generate a profit on a demo account it will not do so on a live account.
It is recommended to first test the robot on a demo account for at least three months before going live.
Readers with their own private systems thinking of going public
Read about the journey of how a couple of traders found out there was a lot more work involved than they had imagined in releasing their private trading system to the public here.
Don't know much about computers or forex currency markets so as to set up your automated forex trading robot?
Hands on assistance is available for those whom would like a forex expert to set up their forex trading robot for them. Read more about the service provided by RobotSetup.com.
Have you tried a automated forex trading robot in the past? We would love to hear your experience at brainyforex public reviews. Go there now.
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