Mike Levingstone, Professional Forex Trader & Mentor
Forex trading has always been fertile ground for various scams. Especially when it comes to software that automates trading decisions (EA). Because of this globally popular way of trading,
I decided to solve this ticklish subject topic once and for all time in only 5 minutes.
Are you really ready to hand your trading over to a Forex Robot?
I guess your answer is ‘’YES OF COURSE’’, because otherwise you would not be interested in this topic and read this article. But wait a minute.
Before your money melts away in a second , let me explain to you if it is at all possible to make a robot that will bring you the revenue it promises you from various quarters.
After reading this article, you will be able to recognize the difference between a good and a bad robot and never again gullibly lose money.
Why forex robots at all?
A forex robot is forex trading software that automates trading decisions.
They are designed to remove trading’s psychological element, which can be detrimental.
Ok. That is the one big positive side. But the biggest problem is that forex robots and their pre-wired thinking do not compensate for ever-changing market conditions.
Market behavior is dynamic, constantly moving in an infinite variation of three movements: up, down, or sideways.
Most robots are not programmed for all environments, or to recognize a change in the trading environment.
And making a robot that can keep up with all that dynamic and market rules is no easy task.
Even if you get an insight into the backtest, and that the robot has done well in history, it is never a guarantee that it will work well in the future.
How then to reduce and minimize risk?
First and foremost, you enter trading cold-headed.
Successful forex accounts are built like any successful business.
With a lot of patience and time.
Great traders do not lose their stakes because they are patient and invest in the long run.
Almost all losses are experienced by small impatient investors who try to trade daily and grow faster than market growth.
To answer your question immediately. No, you can’t invest $ 200 and become a millionaire in two months. Don’t be naive and believe in fairy tales.
You have outgrown that! That unicorn they did not invent yet unfortunately in my 15 years of forex trading.
But, the good news is you can get rich with a small stake ONLY if you
- have patience,
- have time,
- have good trading management,
- and choose the right robot.
How will I know how to recognize a real robot from fraud?
Before you buy/rent a robot, my advice is to always contact the seller first.
Instead of “hooking” on promises to retire next year, find out that your robot contains the following features:
- Good robots always uses stop loss
- Systems without it burn the entire account with a single trade
- Backtest is made with 99.99% accuracy
- Good robots don’t use martingale or grid
- Martingale is a system that double the risk after each loss, until sooner or later you burn your account
- Grid is not even a system. It enters a trade in both directions after x pips (usually 5-10) under any market condition
99.7% of robots use one or usually both of those. It is super easy to make those kinds of robots, making only the seller in profit.
- Refund policy
Never, ever trust a seller or a product, which doesn’t offer you a guarantee. If a seller doesn’t trust his product to offer you a full refund, why should you?
How much earnings is realistic to expect?
There are thousands of EAs for sale, especially on famous EA selling sites and I have tested hundreds of them. Some of them are very expensive while some of them are for free. Despite the price or the comments, almost all EAs fail.
Some experts work well during trends but fail during consolidations and some work during consolidations and fail during trends.
And there are some EAs with a massive growth rate in a short period of time.
The picture above of which I consider a realistic and very profitable trading system
If you clearly see the history of these EAs, you will be able to see a very dangerous drawdown which will put your investment at high risk.
My advice is for all my clients therefore always when buying/renting EA to look for insight into live results of at least 2 years and do a backtest for at least 5 years.
And what about earnings? Good robots that passed all my tests on all the features I listed above, earned from 10% to 100% per one year.
That percentage has proven to be the best ratio to multiply your investment, with the least possible risk.
How to find a good robot that doesn’t cost as much as a new Lamborghini?
Like everything else in the world – everything worthwhile has a price.
And yes, good robots cost money.
There are also several robots on the market that are made mainly for “big players”,
such as banks and funds. But they are also allowed to be traded by “small traders”.
But such EAs are particularly difficult to come by.
But fortunately, several creators of successful robots know to sometimes give their EA for free for a certain period of time.
Why? It’s always a good marketing ploy, their good reputation spreads fast that way, and at the same time, they get a well-deserved brokerage commission while you make money on their brainchild too. Win-win situation, right?
Since such actions don’t happen that often, I find my favorite EA creator and follow his work (subscribe to his email list, follow on social media), and wait for him to announce the action.
But before all that, I make sure that such a robot contains all the features I listed above.
I usually look for these types of robots on Darwinex, who have very strict criteria when evaluating their robots.
What is absolutely a must-have with a good robot?
OK, once you find the ideal robot – that’s it. Ummm, not really. It’s like finding a beautiful luxury house that has no foundation at all.
Do you know that story about the three pigs? Yes, it will be like that.
What few will tell you is that you need a good server. But I mean a really good server. Why? Because the bad one will be congested, slow, miss trades, or just fall all the time.
- Latency – Speed from which data travels from a server to your broker.
Good: up to 100ms. Instant trade orders to your broker
Bad: over 100ms. Trades will execute with delay, costing you money.
- Uptime – How many % server is online during the 24/7 period
Good: over 99.5%. Trades will always open/exit as required
Bad: less than 99.5%. Trades will enter or close at different prices.
What good is it to you to have a Porsche, when there is no fuel in it?
But the good news is that is not a problem to find today. There are servers specifically already customized for ea robot settings. Some of them even offer a monitoring service, which is always a good option for added security.
I personally use HETZNER because it is super-fast, reliable, and has great support.
Good luck and remember: Invest in the long run and don’t try to outsmart the market, it’s a painful lesson. There is plenty of “juice” for everyone.