How To Profit Using Forex Trading Robots

FX-KITS - Not Now, Not Yet...Probably Not Ever

2010-03-04T08:06:00.000-08:00

The FX-Kits website is up and I'm not impressed. It is full of unattributed quotations - you know the sort of thing: "The Most Consistently Profitable Forex Trading Machine Ever" and "The Ultimate Game Changer For Automated Forex Trading". But no references, no authority, no credibility.

Worse still, it is being sold on a monthly subscription basis. And worst of all, it requires you to set up a trading account with a specific broker through a link that FX-Kits gives you. So by the time we discover that the thing doesn't work and we demand our money back, they've already made tens of thousands as a broker affiliate.

This one touches too many danger buttons for me. I'll pass and take the risk that I am missing out on the Albert Einstein of forex robots. Gut feeling tells me that I'm probably not.

Back to FapTurbo for me...

FX-KITS Is About To Be Launched...

2010-03-03T08:08:00.000-08:00

Like me, you've probably received the email from Daniel Su at Forex Kinetics announcing the launch of the FX-KITS robot tomorrow.

They claim (don't they always?) that FX-KITS will change Forex trading as we know it forever. Equally predictably, they have created a false scarcity by 'limiting' the launch to just 100 copies. Since that's almost certainly not the case, it raises serious questions in my mind about the credibility of the claims they make for the software itself.

Still, I will hold judgement. I may even be tempted to buy a copy (although they haven't spelled out what this 'never to be repeated' offer will actually cost). So, watch this space...

Truths, Half Truths and Forex Robots

2010-03-02T03:54:00.000-08:00

By Shaun Welford

In principle, automated trading is great. Simply install a Robot - or Expert Advisor as it is commonly called - activate the settings, and wait for the cash to flow in.

That's the explicit promise made by pretty much every Robot vendor I've ever come across. But I am a sceptic, and not just by nature but by harsh experience. The idea of forex robots is exciting, but the reality is that they typically work only half the time. And the half when they don't work is where you will sit back in horror and watch your trading capital disappear before your eyes.

Why should this be? Simple. Forex Robots - like all software products - are designed using key criteria and assumptions. In this case, those criteria and assumptions relate to the programmer's understanding of how the forex market works. As a result, forex robots tend to be written to work only when the market is moving in a certain way.

The problem is that that Mr Market is a bit of an unpredictable swine. As seasoned traders have always discovered to their cost, the market just doesn't do what's expected of it - at least, not with any consistency that you should be willing to bet your house on. So when the market changes, the robot will often start to lose on the trades and you run the very real risk of being bumped out of the game.

So there are robots that work well when the market is in a channel, others that offer stellar performance in a market that's trending, and others that come into their own when the market breaks quickly to the upside or the downside. The problem is that I have yet to find one robot capable of adapting to these different scenarios - and that really raises a question about whether you should ever rely on a fully automated trading system. I would suggest not.

Which isn't to say that I don't use robots. I do - and with some success. But that's only because I tend to use those robots that require some input and judgement from the user. As I've said elsewhere, the real secret of forex robots is in the settings: how you configure them, tweak them and selectively override them will ultimately determine how much money they make you. Or lose you.

And there, dear Reader, is the real issue. In order to make those judgements, you need some understanding of forex trading and, yes, the courage to make your own assumptions based on practical engagement with the trading process. Trading isn't about pushing a button and waiting for results. It's about thinking for yourself, learning from your mistakes and developing strategies that fit your trading style and your appetite for risk. A forex robot such a FabTurbo can make a huge difference to your success - but only if you are prepared to be its master rather than its slave.

Do Trading Robots Actually Work?

2010-03-01T11:57:00.000-08:00

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.

Choosing The Right Forex Robot - It's All About YOU

2010-02-26T09:38:00.000-08:00

By Shaun Welford

Let's face it, you could spend days exploring the range of forex robots on the market - and still be none the wiser as to which one is right for you. Unless, of course, you know exactly what kind of trader you are. Are you into day trading? Are you a swing trader by nature? Are you inclined towards long-term trading? Perhaps you prefer to trade just one forex pair, or do you want buzz and variety of using robots that trade multiple currency pairs simultaneously?

Answer these questions and your search for the right robot becomes a lot more focused. A forex robot that only recommends one or two trades a week won't suit you if you're a day trader - so avoid it. Equally, if you're a swing trader, you'll want to avoid robots that recommend several trades a day. The latter can lead to overtrading which can deplete you account at a disturbing rate. It will also adopt a scalping strategy designed to return small profits rather than a larger number of pips. Just make sure that you're comfortable with the style of trading built in to your chosen system.

All of which raises another important question: should you trade one pair or multiple pairs? Robots designed to trade a single pair - most often the EUR/USD pair - capitalise on the fact that this is the most traded pair in the world. This can work well in a strongly trending market, but may perform weakly in choppy markets with very tight trading ranges.

What then are the advantages of choosing a Robot that trades multiple pairs? Well, to claim that these typically return a higher pip score would be misleading. There is no statistical evidence I'm aware of to support this. But you might simply be more comfortable trading multiple pairs - partly because of your desire to select specific pairs or pair clusters depending on your understanding of the market on the day.

And there's the rub. Ultimately, choosing the 'right' robot means choosing the one that's right for YOU. If you're in harmony with its trading strategy, comfortable with its risk management features, and willing to devote the time it needs to tweak and customise the settings, there's every chance you'll make more money than you lose.

Forex Trading Robots - Treat With Caution!

2010-02-26T01:22:00.000-08:00

By Shaun Welford

How good are automated forex trading robots? Do they live up to their hype - or are they designed to dupe the greedy and the gullible? This short article will give you a broad overview of the questions you should be asking yourself when considering the many options out there in the marketplace.

For a start, you are spoilt for choice when it comes to available automated robots. Some really are automatic and require little or no input from the user. Others demand more involvement and a degree of judgement in the way you apply the signals. So the first challenge is defining what your own objectives are, your appetite for risk and, of course, your available trading resources.

If you are newbie, it probably makes sense to go for a system that automates the trading process for you. Some of these work by identifying potentially possible trades that you then need to place manually. Others will - if you allow it - place the trades for you. Which one you choose will inevitably reflect how comfortable you are relying on technology. The obvious advice applies: never trade with money you cannot afford to lose. Received wisdom in the Forex trading community is that 'scared' money tends to run away from you. If you can't afford to lose your stake, don't trade. It's as simple as that.

If you have some practical experience of forex trading, and especially if you've developed sufficient skill to make some money at it, you will probably opt for a system that gives you a much greater degree of control over the trading process and decision-making. That way, you have the final say over whether or not a particular trade is placed, and the system becomes a decision-support tool that will prompt you when statistically positive trades emerge.

Of course, another vital consideration is the cost of the different systems - and, more specifically, the kinds of features, updates and guarantees that each product offers you. You should be able to see proof that the system works, although I have yet to find any advertising or marketing material that fails to claim extraordinary - indeed, 'life-changing' - results for the product it is marketing. So treat those claims with due scepticism and always, always trade in demo mode before you risk real money. If the system vendor gives you a link to a live demo, use it. It will take you relatively little time and experimentation to decide if it is right for you. A cheap system that loses you money definitely isn't better than an expensive one that at least covers its cost and provides a source of consistent profits.

So, now you know what to look out for. It's time to start exploring your options and to develop the only truly reliable and trustworthy investing expertise: practical experience.