The deregulation of the Forex market, now offers small investors and traders the chance to trade the Foreign Exchange and this has given rise to vast array of automated Forex trading systems. These give the trader a ‘set and forget’ trading system, where the trader installs a Forex robot onto their Metatrader platform, selects their parameters and the robot takes over. ..well that’s what you hope will happen.

Many are wishing for this Holy Grail, and though there are some intriguing Forex robots out there, thorough testing by experienced traders has exposed many flaws in the claims made by the creators.

Most of the Forex robot performances are based on historical ‘back testing’ results, not live account testing and depending on what platform you are using and the substantiation of the historical charts you download, these will and do vary wildly. We have never yet been able to duplicate the results presented on a sales page. Some Forex robots we have evaluated were remarkably good at cleaning out our demo account, so approach very carefully.

Demo accounts are known for producing much better results that live accounts. Demo accounts will always fill a trade, whereas live accounts are subject to a variety of uncontrollable variables like spread variations, slippage, and liquidity, plus broker quirks and lot sizes, just to mention a few influences. So as you consider this carefully, if a Forex robot cleans you out on a demo account, how do you think it will go live???

Much as I would love to, I am not going to give you the Forex Robot failures, no, I don’t want to get sued!

How does an automated Forex trading system work?

Each is different and reads different signals, an automated Forex trading system analyses and interprets its own series of indicators, then determines entry and exit strategies based on its analysis. It opens a trade automatically, based on risk management strategies and aims to make a profit. It will also close the trade, based on exit strategy.

Most of the modern Forex robots require Metatrader4, which is a very common trading platform and they need narrow trading spreads, often 2-3 pips, occasionally up to 5 pips. They often need time to “bed down” before they begin trading. Some Scalp, which is grabbing small quick trades and others trade over longer periods and all will have loosing trades. You just have to make sure the robot has stop loss strategies built in, some don’t, so check carefully!!

This is another way Forex robots make their paper profits look good. Without a stop loss strategy, they allow uncontrolled draw-downs, keeping the trade open until it returns to into profit. If the draw-down is huge it can also send you broke since you may not have the money in your account to protect the loss, so your broker will close the trade.

If you don’t want to day trade and wish to use automated Forex trading, there are a couple of Forex robots we use, these two robots are constantly updated by their developers, so we are always checking their performance and keep them up to date, it’s all part of our personal risk management strategy for automated Forex robot systems.

To find out more about these Forex Robots, we review them at Automated Forex Reviews, you will also find other Forex Trading tools.