Is Automated Trading Misleading?
What is automated trading? Automated trading can also be known as expert advisors (EA’s), or Robots. EA’s are most commonly thought of as a system that once turned on will open and close trades by itself and make a fortune in the currency market. Ideally, the EA would work 24/7 and require little or no trading knowledge to run it. The idea is exciting but the EA’s that do all of the work usually only work part of the time. At least in all my years of Forex market experience, I have not seen or heard of an EA that works all the time if it is making all the trading decisions.
Allow me to explain: EA’s are written to work when the market is moving in a certain way. When the market is moving the way the EA is written then it can make some money. Here is the problem: The market does not always move in the same way! When the market changes then the EA will start to lose on the trades and in many cases wipe out the trading account… Not such a good thought huh?
There are EA’s that are written for when the market is trending; others are written when the market is in a channel, and still others work on break out situations. For them to work, a person would need to be awake all the time and turn the EA on or off depending on which way the market is moving. If that is the case the trader would need to be a good trader to be able to determine what the market is going to do. This defeats the purpose of a fully automated trading system.
Am I totally against using an EA? No. There are a few types of EA’s that work and by no means have I seen all the EA’s because there are thousands of them. So which ones work? The EA’s I see that work or those that require you to be involved in the process. For example, an EA that will find a closing point once you turn it on at the appropriate time. This requires that you know how to trade and when to set the EA so you do not have to be in front of the computer to close the trade or set a take profit for your best guess as to where the best place is to close a trade. The EA can be set to close the trade when the market indicates that it is changing directions.
Another example is an EA that will alert you when the market is setting up to make some kind of a move. The trader will still have to make the decision to take the trade or not. The main advantage of this type of EA is that a trader does not have to always be in front of the computer. More currencies and time frames can be monitored at one time with less effort.
In summary the only EA’s I have seen that work are those where the trader has to be involved in part of the trading process.
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16 Responses to “Is Automated Trading Misleading?”
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Well forex robots can definately help you learn better & analyse the markets.
However not all forex robots work, if you’d like to know more come visit us on out site.
I heard of this new Forex Robot Expert Advisor coming out in December 2009 called 4XGREED, only 1000 copies supposed to be sold.
http://4xgreed.com
I think we should watching for it too
according to an artticle that i have read human interrvention in tyrading is still the best way that using some sort of systems or programs..
I bought 4xgreed back in november with the discount price, It took some time to get configured but this robot does an awesome job placing trades, I read over at Indo investments that they say its a copy of genius but I can say for certian its not. Its a very fast scalper that trades in just a few seconds. I’ve already made over 6000.00 from a micro account. This is one robot I can highly reccommend.
Normally Forex Trading softwares are not quick and not work in real times and in tradings only the real time software can work, what you say about it
http://www.auto-forex-trading.co.uk/
Thanks,
John
Hi Pip,
I thought your comments were spot on. An EA that can remain profitable would have to be very sophisticated on many levels. Perhaps a variety of EA’s running under ‘master’ EA’s would be a step in the right direction.
Regards,
James
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Forex robots are good, but we can not trust on them blindly. Even they are as reliable as a forex broker. I think so manual trading is best.
Thanks for this post ! I am a complete fool when it comes to Forex trading and this comprehensive post just helped me understand it more,
Hello, many, many thanks for taking the time to share.. It was useful for my team. Thanks for all of your hard work!
wow great i have read many articles about this topic and everytime i learn something new i dont think it will ever stop always new info , Thanks for all of your hard work!
Hi
Forex robots are good, but we can not trust on them blindly. An EA that can remain profitable would have to be very sophisticated on many levels.
Hi
Forex robots are good, test it with spread variations
Hi Pip,
I thought your comments were spot on. An EA that can remain profitable would have to be very sophisticated on many levels. Perhaps a variety of EA’s running under ‘master’ EA’s would be a step in the right direction.
Regards,
James