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The deregulated Forex market has offered the chance for Moms and Dads to currency trade and this has produced a dramatic increase in automated Forex trading systems. These offer the trader the ability of a ‘set and forget’ trading methodology, where the trader installs a Forex robot onto their brokers charting system, selects their chosen inputs and the robot takes over. ..well that’s the theory.

This is likened to finding the 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 broker software you are using and the accuracy of the historical charts you obtain, these will and do vary wildly. We have never yet been able to replicate the results presented on a sales page. Some Forex robots we have evaluated were remarkably good at cleaning 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 as you consider this carefully, if a Forex robot wipes you out on a demo account, how do you think it will go live???

I would love to, but, I am not going to list the Forex Robot failures, why? quite simply, I don’t want to get sued!

How does an automated Forex trading system work?

Every one is different, an automated Forex trading system analyses and interprets its own series of indicators, then determines entry and exit strategies based on its interpretation. It trades automatically, based on risk management parameters and aims to make a profit. It will also close the trade, either based on a profit margin or a stop loss position.

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 longer periods and all will have loosing trades. You need 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 vast draw-downs, keeping the trade open until it reverses and comes into profit. If the draw-down is big it can also send you broke since you may not have the funds in your account to hedge the loss, so your broker will demand extra funding.

If you don’t want to day trade and wish to use automated Forex trading, there are two Forex robots we use, these two robots are regularly updated by their developers, so we are always checking their performance and keep them up to date, it’s all part of our personal risk 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.