Forex Trading Robots - Treat With Caution!

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.