Forex Automatic Trading - The Hidden Risks Of Forex Robot Traders
Take one look at the Forex automatic trading industry, and you will find hundreds upon hundreds of Forex robot traders falling over themselves to double your account overnight, give you a 90% chance of having winning trades, and dazzle you with trades in and out every couple of minutes. If you're like me, you know deep down inside that there's something wrong with that story, and by the end of this article, you'll know exactly what it is.
If there's only one thing that you get out of this article, let it be this. In Forex automatic trading, just as in any form of investment or speculation, high rewards are often accompanied by extremely high risks. I don't say that to scare you, but it's true, and it's very scary indeed. With that in mind, I want to uncover the hidden risks that come with the majority of Forex robot traders out there:
1. Rapid Doubling Or Tripling Of Your Account
You might be surprised when I tell you that most people are able to double or triple their money with Forex expert advisors. It can happen overnight, or in a few days, or in a few weeks. So the reality is, your Forex robot trader developer isn't being entirely dishonest with you.
Here's the catch though: you're just as likely to completely and utterly wipe out your trading account as you are to double it. As I mentioned before, high risk follows high rewards, and any Forex robot trader that trades with a big enough leverage and position size to grow your capital that quickly has the capacity to lose it all even faster.
2. 90% Or More Win Rate
This is another Forex automatic trading promise that blatantly panders to most people's need to be right all the time. If you're completely honest with yourself, of course you'd like to see a trade history that has winning trade after winning trade in there, am I right? All developers of Forex robot traders are well aware of this fact, and most of them go so far as to purposely design the their Forex expert advisors to meet this need.
The problem with that is, to have that high a win rate, Forex robot traders will often cut profits short with small profit targets, and let their losses run far and wide with huge stop loss distances. If you do the math, you'll quickly realize that even hundreds of small wins can be wiped out with just one bad loss. It's possible and it's a very regular occurrence to have a 500 or even a 1000 pip move in Forex.
3. Extremely Frequent Trading
It's a known fact that Forex trading is an extremely addictive activity, whether you apply Forex automatic trading or if you prefer to trade manually. Forex robot traders that put on trades with extreme frequency provides entertainment and excitement for their owner, who will often be very obsessive about watching the screen for any new winning trades.
That said, entertainment and excitement has nothing to do with profitable trading. In fact, the fact that Forex expert advisors trade so frequently compounds the first two problems in a major way. It's bad enough for Forex expert advisors to be taking huge risks in pursuit of temporary and small profits, but if your Forex robot trader is jumping in and out of the markets every few minutes, you're virtually guaranteed to catch that unexpected freak move that will completely destroy your account.
There you have it, the reason why most Forex robot traders on the market fail and fail so miserably. So how do you avoid these hidden pitfalls and emerge from Forex automatic trading with slow and steady gains each and every month? Simple, look for a Forex robot trader that doesn't promise the sun, the moon and the stars. Aim for safe, consistent, and slow profits, and you'll be like the turtle who eventually overcame the sleeping hare in the ancient fable.
Thad B. is a Professional Trading Systems Developer who has developed and managed dozens of profitable trading system over the years for a private hedge fund. Forex trading systems are his passion and expertise, and he has a wealth of helpful resources available for any serious Forex systems trader.
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