Forex Robots - Why Are Most Of Them Destined To Fail?
James Woolley
August 27, 2009
Forex robots are currently some of the most popular forex products on the market. These automated expert advisors are usually configured to work with a platform called MetaTrader4 and are able to basically trade the currency markets on autopilot. They are pre-conditioned to enter trades based on specific market criteria however the trouble is that most of them ultimately fail to make consistent profits. So why is this?
Well I think the major problem is that many of them don't use proper money management principles. If you want to generate some decent profits from forex trading, you need to grow your capital slowly over time. You should forget about using leverage to target those really big gains. This will usually end in disaster.
What you need to do is to target steady gains whilst protecting your capital from any losses you may incur. Unfortunately when you use one of these automated robots, this is often out of your hands. The stop loss is often set by the expert advisor and it's generally recommended that you stick to the recommended stop losses set forward by the creator of the robot.
Worst of all you will usually find that many of these expert advisors use excessive stop losses in the region of 400 or 500 points, for instance. So if one of these stop losses is triggered soon after you start using the expert advisor, this could well be enough to blow up your account, and if it doesn't it will certainly make a huge dent in your trading capital.
Not only that but the profit targets per trade are often in the region of 20-50 points. So they are essentially holding onto a trade long enough for it to move into profit, and by using such excessive stop losses they are giving themselves every chance of achieving these profit goals.
So you should pay close attention if you notice that the forex robot you are using yourself is using similar targets and stop losses. Ideally a top quality robot should be looking for healthy returns from each trade using small stop losses, but sadly there are very few of these robots that actually do this.
So to conclude this article, the major reason why most of these forex robots ultimately fail to make any money is because they fail to employ proper money management rules. There are other reasons of course, such as the fact that a lot of them simply cannot adapt to changing market conditions, but this is one of the main reasons.
Click here for a highly effective forex trading course and to discover lots of free tips and strategies relating to forex trading including the exact 4 hour trading strategy that James Woolley uses to trade the markets.
Well I think the major problem is that many of them don't use proper money management principles. If you want to generate some decent profits from forex trading, you need to grow your capital slowly over time. You should forget about using leverage to target those really big gains. This will usually end in disaster.
What you need to do is to target steady gains whilst protecting your capital from any losses you may incur. Unfortunately when you use one of these automated robots, this is often out of your hands. The stop loss is often set by the expert advisor and it's generally recommended that you stick to the recommended stop losses set forward by the creator of the robot.
Worst of all you will usually find that many of these expert advisors use excessive stop losses in the region of 400 or 500 points, for instance. So if one of these stop losses is triggered soon after you start using the expert advisor, this could well be enough to blow up your account, and if it doesn't it will certainly make a huge dent in your trading capital.
Not only that but the profit targets per trade are often in the region of 20-50 points. So they are essentially holding onto a trade long enough for it to move into profit, and by using such excessive stop losses they are giving themselves every chance of achieving these profit goals.
So you should pay close attention if you notice that the forex robot you are using yourself is using similar targets and stop losses. Ideally a top quality robot should be looking for healthy returns from each trade using small stop losses, but sadly there are very few of these robots that actually do this.
So to conclude this article, the major reason why most of these forex robots ultimately fail to make any money is because they fail to employ proper money management rules. There are other reasons of course, such as the fact that a lot of them simply cannot adapt to changing market conditions, but this is one of the main reasons.
Click here for a highly effective forex trading course and to discover lots of free tips and strategies relating to forex trading including the exact 4 hour trading strategy that James Woolley uses to trade the markets.
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