Forex trading robots are promoted as the way to financial freedom but common sense tells you they are unlikely to do this for you otherwise the whole world would use them and they don't. Here are 4 reasons why you will probably lose your money.
- The Track Records are Not Real Trading
The track records look wonderful. Huge gains with little or no drawdown but of course there is a catch - It's not a real track record at all its just paper trading.
"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading"
Look in the disclaimer and you will normally see the above, of course the fact you can make money backwards means nothing in terms of what you could make with the forex trading robot in real time trading.
You also have to question the vendor - if the system is as good as he says where the track record of real money is?
Maybe he simply doesn't have confidence the system will make money and with good reason, he knows its curve fitted.
- There Curve Fitted
Most Forex Robots are curve fitted and this means the rules have been fitted to the data.
If the rules don't work first time around, keep changing them and bending them until they do.
This of course is flawed logic, as no two segments of data are ever going to repeat exactly again and the system collapses in real time trading.
If you look backwards and know the history of course you can become rich beyond your wildest dreams - but it's only on paper and you can't buy anything with paper money.
- Test With a Demo Account
Most of the vendors who sell these systems say you have no risk as they will refund your fee and you can test it in a demo account first.
I often see people proudly saying they made money in a week in a demo account and the system must work in practice - again this shows basic lack of understanding on behalf of the user.
You judge systems over months or years and any system can be lucky in a few weeks - you would need to paper trade for 1 or 2 years to get a real insight into the system and by the end of that period you will either get bored and probably see it lose.
- Drawdown
While the vast majority of forex trading systems have curve fitted track records, it's also interesting to see the amount of money that is recommended to start with and this can in many robots cases be $100 - 200!
The chances of you winning on this amount even with a good system are doubtful, as you don't have enough to cushion losing periods and a few bad trades will wipe the account.
Leverage combined with tiny account balances means a wipe out.
If you want to win at forex trading get a proper forex education and don't believe the sales copy telling you that you can get rich without knowing what you're doing - you can't.
Be realistic and work on the basics and learn currency trading the right way and you can make a lot of money but it's not easy and you would hardly expect it to be with the rewards you can make.
If however you learn the right education and have the right mindset, you can forget about forex trading robots and losing and focus on winning in the worlds most exciting business global forex trading.
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