Do Trading Robots Actually Work?

By Shaun Welford

It's a fair question - and one that deserves a fair and objective answer. Which is exactly what most marketing materials promoting these products fail to give us.

But for what it's worth, here's my take.

Forex robots can and do work, but not quite as 'automatically' as you might think. The most successful robots - FapTurbo springs to mind - allow you enormous scope to configure the settings in ways that support your personal risk profile and the relative volatility of the different forex pairs you choose to trade. That's good and bad. It gives you a greater degree of control over your performance but it also demands a level of skill that most of us gain only through trial and error. And that can be expensive.

So Forex Robots are not so much 'plug-and-play' as 'constantly-monitor-and-tweak-or-you-could-lose-your-shirt-very-quickly'.

Yes, most of us are aware that we need to set stop losses and profit levels. But these levels have to be based on current market conditions. Is the market trending or is it ranging? Should you allow for key Governmental and institutional announcements, or ignore them? Are there particular times when you should be out of the market altogether? Or at least when you should adopt tighter stop loss and profit level settings?

Ignore these questions at your peril. While some champions of Trading Robots argue that the designers have already factored the answers into their software, and that the robots are completely prepared for perfect trading, my own hard-won experience tells me otherwise. If these robots really were perfect, those of us who use them would be living as multi-millionaires in tropical splendour (somewhere next door to where many of the robot developer already live, I suspect!)

So, the basic rule echoes the fine old English legal dictum 'Let The Buyer Beware'. Forex robots can and do produce results if used carefully and with constant monitoring. Indeed, some robots have shown tremendous success in both short-term and long-term trading. But you need to understand that these results depend crucially on having the right settings - and that's where experience comes in.

I love FabTurbo, for instance, but what are the precise system settings used to produce the extraordinary live results they show on their website? They don't tell us. Not surprisingly, there are some people out there who make a good living just from selling their own FabTurbo settings formulas.

But ultimately, you need to treat forex robots like any other tool. With caution. With respect. And with the frank admission that they can only ever be as good as the individuals using them.