By James Woolley
Many people within the forex trading industry will avoid using forex robots altogether, whilst others will be more than willing to invest in any expert advisor that appears to be profitable. So are forex robots worth using or are they a waste of time and money, and should you have some experience of forex trading before you start using them?
Well these are difficult questions to answer because my opinion of them changes all the time, but I would say that you should only start using them if you have some experience of forex trading already. This is because you need to know all about forex trading and how the markets move in order to weigh up how well a robot actually works in reality.
Plus if you see how the robot actually trades and what kind of trading conditions need to be met in order to enter and exit a trade, you can then tweak these rules yourself and maybe come up with a manual system that you can use. That way you can increase your overall profits.
Problems start arising when inexperienced traders start using these robots because they are often very naive about the kind of drawdowns that they may experience. For instance an expert advisor can go along very steadily for a few months, slowly building your account, and then all of a sudden you can experience huge drawdowns when the market suddenly moves dramatically against you. In some cases you may even be wiped out completely if the running losses become too great.
Of course we would all like to put these robots to work straight away because the sales pages of these products explain just how profitable they have been in the past using backtested data. They will also give you live trading accounts as proof of their profitability. However it is often a completely different story when you start trading them yourself using real money. Plus you have to remember that market conditions can change very easily, so just because one of these expert advisors has made money in the past, does not mean that it will continue doing so in the future.
So overall I would say that you shouldn’t disregard these forex robots completely as there are a few good ones out there that will increase your trading capital slowly and steadily. However most of them will not be as profitable as they claim to be, and they are certainly not recommended for people new to forex trading. A little bit of knowledge will help you evaluate these robots and tweak them if necessary. Plus this will also help you to set your own stop losses in order to keep you out of trouble.
About the Author
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