Forex Articles

A Reality Check About Automated Forex Trading Robots

By Andrew Searle

We love automated Forex trading systems, but as professional currency traders at ForexTradingSuccess we believe that it is important to outline a few home truths about them, which we feel are sorely lacking on the internet these days.

As you are reading this, you will no doubt have come across hundreds if not thousands of other web sites or blogs, which promote Forex robots or automated trading systems.  There is so much hype associated with some of these automated Forex systems these days that you could almost choke on it. Most of these web sites are amateur sites that seem to focus on a just few automated systems like FAP Turbo and Forex MegaDroid, and only highlight the good points without highlighting some of the less positive issues about automated trading systems in general.  Unfortunately it is not all mega profits and good news, so we want to highlight a little reality to you about automated systems.

We also find that the official web pages of most new automated Forex systems show fantastic financial returns and claim or insinuate that all you have to do to make similar profits is plug in the expert advisor into your MetaTrader platform and then let the cash roll in.  We feel it is not only dangerous to make or insinuate these claims, but also morally and factually wrong.

What is reality?
The reality is that you will not make a fortune overnight trading Forex, whether from using a Forex trading robot or automated system, or even from using a manual trading system.  If you are using a good Forex trading system you can expect to make between 5-20% return on capital per month.  Even then, don't expect every month to be a winner!  This is the reality of trading Forex.

The second reality is that most one-page sales-letter-type web sites that show or insinuate $3,000, $5,000 or $10,000 in regular profits from a single Forex trade fail to mention that you need substantial investment capital in the first place to achieve these returns.  To make $5,000 on a single trade you would need to risk several thousand dollars on that trade (that you could also lose), and even then this should represent no more than 1-2% of your total capital base.  The reality is that these large trade profits are only going to be achieved from trading with a capital base of tens of thousands of dollars!  Again, this is far beyond what the average Forex trader can expect to make using a retail automated trading system.

Fortunately, it's not all bad news about automated trading systems. Some of the more positive points about them are as follows.

Automated Forex trading systems offer people an excellent way to start making money from the Forex market, particularly those who do not have the knowledge or time to spend on learning the intricacies of Forex trading.  They are ideal, therefore, for those people who have busy full time jobs and are looking for a way to make additional income from the Forex market.

The Forex market is a 24/5 business. So, even those traders who like to trade using a manual trading system can't trade all day.  Automated systems allow a trader to trade 24 hours a day every day of the week. A number of good Forex trades therefore can be captured using a robot whilst a trader is sleeping or doing something else.  They also allow for multiple currency pairs to be traded in various time frames all at the same time.

Automated Forex systems remove human emotion from the trading equation.  One of the biggest factors causing traders to lose money from manually trading Forex is their emotions, causing them to do things they should not do.  Robots therefore stick to the rules of a trading system unlike most Forex traders.

An automated Forex trading system can be an excellent complement to a manual trading system.  So, when a trader is making losses with a manual trading system, an automated Forex trading system could help offset those losses against trading gains, particularly if they are trading on different currency pairs.

Automated trading systems can be a great way for someone to indulge in the Forex market for the first time and/or to achieve a second stream of income. However, trading with automated systems is not a quick win game. It is not easy money, it is not a sure thing, and it is not a one way bet. Many robot developers and their marketing people make out that it is so.  Unfortunately, winning is not the only outcome when trading Forex. Forex is a difficult profession.  It takes skill, capital and time and even then success is not guaranteed. So, be careful, don't be gullible and don't believe everything you read. Do take your time choosing your automated trading system and choose your system wisely.