What About the Hype of Forex Robots - Are They Worth It?
An Expert Advisor(EA) is a "robot" in the loose sense of the word. Robots beat humans at chess and other games, and they can also beat humans at trading. With an EA there is absolutely no emotion in effect - the most likely downfall of the human trader. An EA will observe the charts for you, implementing trades under optimal conditions and utilizing sophisticated strategies transparent to the user. This avoids the fear and greed factor, as well as lack of confidence, and inconsistency which are characteristics of most currency (and stock, option, futures) traders.
It is self-evident - over ninety percent of forex traders realize a net loss}. Traders are emotional humans, and like all humans, we suffer from greed,fear of loss and even fear of what other think. This impairs any traders ability no matter how experienced they are. As with all humans, in critical moments or key market conditions we lack surety, we have fear of what might happen and most importantly, we are typically inconsistent over 90% of the time.
The concept is similar to automobile manufacturing, where automobile companies use computerized robots to spray paint on new cars - a highly boring and repetitive task requiring a high degree of consistency. A human operator might spray too much paint here and too little there, resulting in a sub par quality paint job. A computer robot painter will always spray the correct amount of paint in the right places 100% of the time without fail hundreds of times a day, 365 days a year. It is similar with a forex robot - it will almost always get the timing correct to enter and exit trades - at a much more consistent rate than a human trader. I say "almost" because a robot trader, up till now, has not been able to react in time to the changes in market psychology, which ironically, is driven mostly by human emotion! However, even with this minor drawback, one can still realize profits 80-90% of the time using a robot. That's all you need to make consistent profits month after month. Even if you were right 60% of the time and managed money properly, you could still realize a profit.
In the end, still 90% of traders will lose money in forex. So that means 10% are doing something right or are very lucky. I think it is the former. Most likely the other 10% are using automated or partly automated services (such as a signal service) and sticking with it (that is key - don't attempt to interfere with the robot or system). Forex is a market where the 90% are giving money consistently to the other 10%. This, together with the illusion of becoming millionaires overnight trading some "guru" trading system from an eBook, is what keeps the Forex market a great business for Forex brokers and the so called guru's.
The Expert Advisor has a plan. It sticks to it no matter what, no matter how ugly or uncertain the market looks. It has no greed and will be running 24 hours a day for you.
Some quick highlights of a great forex robot/ Expert Advisor:
* Average returns of 10-25% per month, sometimes more with aggressive strategies.
* Requires no technical indicators - it uses it's own built in algorithms and indicators.
* Averages +100 to +500 pips per month, or more.
* Uses an automatic strategy to free up your time (usually a few initial settings).
* Makes trades several times a day (scalping) or once a week for long term strategies.
* Requires only minimal setup.
* No losing month for over one year
* Can trade multiple currency pairs - although you can make a lot of profit from one pair.
* Is fully automated with a Metatrader MT4 (or later, when available) platform.
Remember to always test a new robot on a demo account first for a few weeks to test how it works without risking real money. Only if it is making a profit, then switch to a real account.
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