Auto forex system trading seems to be all the rage right now. Many traders always seem to want some sort of short cut to trade the forex market. However, the forex market is not the stock market and many great stock market traders have been brought to their knees by the foreign exchange market.
The foreign exchange market or forex market for short is huge with more dollars trading hands each day then all the stock markets of the world combined. This makes it appealing for the average person to trade since it is probably the most liquid market in existence, trades 24 hours a day for 5 days a week and you can start with as little as $ 50.00.
Trading with a robot or EA (expert advisor for the metatrader 4 trading platform) should not be entered into blindly. I have traded the forex market for 5 years now and have tried as many as 30 trading robots. One robot I attached to my trading platform one night just before I went to bed had a program bug and was stuck in an endless loop. It would buy and then immediately sell and then buy again and sell. It did that around 500 times before I could stop it. Fortunately, that was on a demo account. It is important to note that if you try a trading robot, that you first use it on a demo account to get the feel of what it is actually doing.
Before you start trading with robot or EA, you should have at least an understanding of how the forex market works and how the robot works. For instance, what criteria does the robot use to take trades? Does it scale trades – trading larger lots as your balance increases? Does it use stop losses? Beware that many robots look great in backtesting because they won’t use a stop loss.
So they could take a trade in February but not close the trade until August when the trade is in profit. In the meantime you could have a 1,000 pip loss or more which the backtest won’t show.
To help you understand how the forex market works read as much as you can. There are many good books out there and free information on the internet. Apply for a demo account on preferrably a metatrader 4 platform as it has many features and easy to understand. Also you may want to learn to trade manually first using simple indicators such as support and resistance levels, pivot points and trend lines. Afterall, if they came out with a device to automatically drive your car, you would still want to know how to manually drive your car incase the the device malfunctioned.
That being said, I believe that robots do have their place in trading but do your homework. If you purchase a robot, make sure it comes with a money back guarantee and you get free updates of the software as the forex market is constantly changing and robots have to be optimized every once in a while. A trading robot can make you some good money and save you time.