Do Forex Robots Actually Perform ? New Forex Training Video
Trading with Forex robots, referred to as Forex EA, has become highly popular and a new robot springs up on a daily basis. However, you must note that as much as the robots are appealing, promising huge gains and hands-off fully automated trading experience, the robots are just automated programs that are based on mathematical models and historical market patterns.
Some of the robots proved to be profitable, but some do not work. In fact, you should look for real live results on live accounts and not demo accounts and you should look for proper money management.
So in fact, most traders using robots are still loosing money, because some of the robots have disproportionate RISK MANAGEMENT rules built into them.
What the Robots go after are small, quick profits — 3 pips, 7 pips, 9 pips. And over the course of a series of trades, the Robot’s ‘Winning Percentage’ will be very high — 85-95% winners.
BUT some of the Robots have a fatal flaw: their stop losses are out of line with typical reward to risk ratios, usually on the order of 1:5 or 1:10 (that means you, the trader, are risking $10 to win $1).
Here’s what’s really going on with those Robots: The stop losses are set so wide that ONE TRADE can wipe out the profits from those “85%” winners. That’s because the gains you’re making on the winners are very small compared to the losses you take with the built-in risk – or lack therein.
Also, the percentage of winning trades is inversely proportionate to the reward:risk ratio. The higher the percentage of winning trades, the lower your reward ratio; the lower the percentage of winning trades, the higher your reward ratio.
This means if a Robot claims to have 90% winning trades, your reward to risk ratio will be around 1:10.
Truth? Don’t fixate on ‘winning percentages’ — focus on managing the risk in every trade and keeping the reward to risk ratio in YOUR favor.
Watch this video proof of how this concept can radically change your forex trading: